Salary Breakup for 16000 with ESI/PF: How Should We Update Our Record-Keeping Practices?

Salary Breakup for 16000/- with ESI/PF

Please guide me on how to show the salary breakup for 16000/-. ESI/PF is there.

Current Salary Structure

Till now, the firm had all employees below 11k salary and showed only (Basic+DA) + (HRA) = (Gross salary). For example, 10000+1000=11000/-. Is this process correct?

Record-Keeping Practices

Also, the firm prints this on paper and notes them down with a revenue stamp and sign while paying salary instead of maintaining a wage register. The firm agreed to change this process but is worried about their past style of record-keeping.

Certainly, statutory contributions like ESI and EPF, as well as contractual contributions like insurance premiums, if any, by the employer, would not form part of the wages/salary payable to the employee, though they can find a place in the CTC. In the existing scenario as of now, no law relating to wages other than the Minimum Wages Act, 1948, imposes any restriction on the bifurcation of gross monthly salary into components. However, based on the ratio decidendi of the judgment of the Supreme Court in the RPFC-II, West Bengal & Others v Vivekananda Vidyamandir & Ors [2019 LLR 339 S.C], the EPF authorities can question the bifurcation if it reduces or nullifies the contribution amount.

Further, section 2(y) of the Code on Wages, 2019, excludes other allowances from the definition of the term wages and therefore imposes the restriction that when the sum total of all other allowances exceeds 50% of the gross monthly wages comprising of basic + D.A + Retaining Allowance + other allowances, the excess amount shall be added to the sum of the basic + D.A + R.A.

The COW, 2019, is expected to come into enforcement w.e.f 01-04-2021.

Therefore, devise your wage structure accordingly so that the sum of basic and D.A. always remains not less than 50% of the gross monthly wages.