Dear seniors,
Good evening. Recently, I have joined a company, and starting from 15th March 2017, ESIC is applicable. The company is basically a showroom and falls under the Shops and Establishments Act.
Salary Calculation Method Change
Up until now, they have been dividing the total salary by 26/27 days instead of calculating based on the number of days in a month to meet the minimum wage requirements. However, they have now agreed to switch to the concept of using 30/31 days in the calculation. This adjustment results in the total salary falling below the minimum wage requirements.
Concerns Regarding Minimum Wage Compliance
My question is, will there be any issues from the minimum wage perspective if we switch to the 30-day concept? Please advise on the potential problems that may arise.
Thank you.
Kishwar
From India , Ponda
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1Good evening. Recently, I have joined a company, and starting from 15th March 2017, ESIC is applicable. The company is basically a showroom and falls under the Shops and Establishments Act.
Salary Calculation Method Change
Up until now, they have been dividing the total salary by 26/27 days instead of calculating based on the number of days in a month to meet the minimum wage requirements. However, they have now agreed to switch to the concept of using 30/31 days in the calculation. This adjustment results in the total salary falling below the minimum wage requirements.
Concerns Regarding Minimum Wage Compliance
My question is, will there be any issues from the minimum wage perspective if we switch to the 30-day concept? Please advise on the potential problems that may arise.
Thank you.
Kishwar
From India , Ponda
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You have to find out whether your employees are engaged as per the appointment letter on a daily wage basis or a monthly salary basis. For monthly-rated employees, pay salary as mentioned in the applicable minimum wages notification. To determine daily wages for monthly-rated employees, divide the gross salary by the total number of days in the respective month.
From India, New Delhi
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From India, New Delhi
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Methods of Calculating Daily Wages
There are two legal ways to calculate daily wages. One, by dividing the declared wages by 26 days; and two, by dividing wages by the actual days of the month. In the case of the former, weekly off days will not be paid; in the case of the latter, the weekly off days will have to be paid.
Legal Considerations Under the Industrial Disputes Act
Now, the Industrial Disputes Act is applicable to your showroom. If you change the method of calculation of wages for employees, you will be required to issue a notice of change 21 days prior to effecting the change as provided under section 9A of the Act. Generally, no employee of the showroom will raise an industrial dispute, but you need to be legally correct on this aspect.
Cost Implications of Overtime Payment
If you are required to pay overtime at double the rate of wages, then the second way will save your costs.
From India, Mumbai
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There are two legal ways to calculate daily wages. One, by dividing the declared wages by 26 days; and two, by dividing wages by the actual days of the month. In the case of the former, weekly off days will not be paid; in the case of the latter, the weekly off days will have to be paid.
Legal Considerations Under the Industrial Disputes Act
Now, the Industrial Disputes Act is applicable to your showroom. If you change the method of calculation of wages for employees, you will be required to issue a notice of change 21 days prior to effecting the change as provided under section 9A of the Act. Generally, no employee of the showroom will raise an industrial dispute, but you need to be legally correct on this aspect.
Cost Implications of Overtime Payment
If you are required to pay overtime at double the rate of wages, then the second way will save your costs.
From India, Mumbai
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Wage Calculation.xls
Minimum Wage of UP & UK.pdf