Minimum Wage Confusion: Is It Based on Gross or Basic Salary? How Do You Structure It?

Can anyone help me?

Minimum wage: Gross or basic salary?

Kindly help me prepare the salary structure.

Kindly advise me if the minimum wage is equal to the basic salary or the gross salary. Thank you.

The sum total of the gross industry wages minus those of the excluded items mentioned under Section 2(h) of the Minimum Wages Act, 1948, should be equal to the sum total of the statutory minimum wages.

Minimum wages, basic salary, and gross salary are all different. Normally, the term "wages" is used for laborers, not for employees.

The minimum wages under the Act consist of Basic and Special Allowance (Dearness Allowance). Therefore, they are not considered gross wages.

Regards, Vinayak Nagarkar
HR and Employee Relations Consultant

As per the new code on wages:

Section 7

(1) Any minimum rate of wages fixed or revised by the appropriate Government under section 8 may consist of:

(a) A basic rate of wages and an allowance at a rate to be adjusted, at such intervals and in such manner as the appropriate Government may direct, to accord as nearly as practicable with the variation in the cost of living index number applicable to such workers (hereinafter referred to as "cost of living allowance"); or

(b) A basic rate of wages with or without the cost of living allowance, and the cash value of the concessions in respect of supplies of essential commodities at concession rates, where so authorized; or

(c) An all-inclusive rate allowing for the basic rate, the cost of living allowance, and the cash value of the concessions, if any.

Therefore, the minimum wages are equivalent to the basic salary.

Understanding Minimum Wages

As per the present definition of minimum wages, it includes Basic, DA (Special Allowance wherever applicable), and HRA. Different states are publishing minimum wages as Basic and DA in most cases. There are states where HRA, as per the State Act, is applicable.

Changes in the New Wage Code

According to the New Wage Code, it includes only Basic and DA. HRA has not been considered. In both the above cases, many organizations are considering only Basic as minimum wages, but it should not be less than the published minimum wages of the states.

Regards, S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions

Friends, who are referring to Section 4 of the Minimum Wages Act 1948, stating Basic Rate of Wages + DA. Can anyone confirm what is the definition of "Basic Rate of Wages"? Does it mean "Your Basic Salary"? If it is Basic Salary, what is relevant to give a "Wage Definition" under section 2(h)?

Is Minimum Wages = Basic Mandatory?

Yes, it is agreed that Minimum Wages = Basic is good to have. But is it mandatory? That is the question.