Can We Set Basic Salary Below Minimum Wage if Total Pay Exceeds It? Seeking Legal Insights

We are splitting our aggregate/total salary into two parts: one part is the basic salary, and the second part is additional income.

My query is whether the basic salary can be kept lower than the minimum wages. We are providing a total salary [BASIC + additional income] that is more than the minimum wage. Which law permits or does not permit this?

Thanks.

Bankim Sheth

Minimum Wages Package

The minimum wages package is a lump sum composite package notified by the respective governments for the territorial area under its jurisdiction. By varying the package, the principle that an establishment cannot pay less than the minimum wages is breached. It is unethical and beyond logic that an establishment could not pay the minimum basic pay but affords additional allowances more than the required amount. The result, it appears, is that the intentions are malafide and mischievous. The Supreme Court in the Air Freight matter 1999 (1) Supp. SCR 22 has deprecated such a practice.

Provident Fund (PF) Notification

As regards PF, there is a specific notification issued by the EPFO stating that PF has to be ensured on the notified minimum wages as basic pay and DA irrespective of the splitting up done by the establishment. Refer to the EPFO Circular of 23.05.2011. A similar notification is not present in other enactments.