Salary Breakdown Guidelines: Does the Indian Government Provide Any for Private Sectors?

Need to know if there are any guidelines available by the government to the private sector to calculate the salary breakdown for their employees. If something is available, please do let me know. Or if there is nothing concrete from them yet.

Workers covered by the Minimum Wages Act. The salary structure would be as prescribed. If extra payment is made, it would be under a different category.

Where I can refer this minimum wages act. Seems it doesn't have the break up details?

Dear colleague,

To the best of my knowledge, there is no law or any guidelines for salary breakup in the private sector from the government. The Minimum Wages Act of almost every state government does provide for basic and special allowance (D.A.). Please check for your state and follow them.

Regards, Vinayak Nagarkar HR Consultant

Dear Sunil, The government is required to fix and revise minimum wages according to the classification of industries every six months, i.e., January to June, April to September, and October to March. This is known as Basic and Special Allowance (D.A.). You can pay anything more under a different head as per your preference as another allowance.

For example, if you are paying INR 20,000 per month to an Accounts Clerk and the minimum wages (Basic + DA) are INR 10,000, you can split the breakdown as follows (keeping in mind tax savings):

Basic: Rs. 8,000 (or as per MW)
Special Allowance: Rs. 2,000 (or as per MW)
HRA: Rs. 4,000
Medical Reimbursement: Rs. 1,250 (Tax Exempt)
Conveyance: Rs. 1,600 (Tax Exempt)
Tel./Mobile: Rs. 1,750
Other Allowance (LTA): Rs. 1,400
TOTAL: Rs. 20,000

(Basic and Special Allowance can be clubbed together and shown as Basic only, but ensure that it should always be more than the MW.)

Please check under which scheduled employment your industry falls and accordingly pay their Basic and D.A., and the remaining part as Special Allowance. For better understanding, I am attaching the Maharashtra Minimum Wages file for the period from January 2018 to June 2018 for different scheduled employments for unskilled, semi-skilled, and skilled category-wise employees.

You are required to check what the minimum wage payable is for your industry according to the classification of industries and split the salary breakdown. No law will stop you from doing that.

Regards, Suresh