With regard to the components of minimum wages, there seems to be a difference of opinion, and it is not clear what exactly the components to be considered are. Are allowances to be included as components of minimum wages, or only Basic + D.A.? And if so, which are those allowances?
From India, Nuvem
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2From India, Nuvem
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Dear Kenneth Dias,
You can refer to the judgment of the Supreme Court of India in "Airfreight Corporation Ltd vs. The State of Karnataka and Others" regarding the answer to your question. The ratio decidendi of the judgment is that the wages should be taken as a single package despite the fact of it being comprised of different components. In the exercise of determining the parity between the statutory minimum wages and the industry wages, only those components that fall under the included part of the definition of the term 'wages' as defined under section 2(h) of the Minimum Wages Act, 1948 have to be taken into account, and any excluded component in the industry wages to be left out.
However, the apportionment of industry gross salary/wages among the included components under section 2(h) may reduce the value of components of basic and dearness allowance, which would certainly affect certain indirect benefits like gratuity, statutory bonus, contributions to ESI and EPF, leading to unnecessary industrial disputes later by the affected employees. To avoid this, my suggestion would be to simply adopt the statutory basic and DA in the industry wage structure.
It is also to be noted that the Code on Wages, 2019 [enforcement yet to be notified], has modified the definition of the term 'wages' under section 2(y) in such a manner as to ensure the proportionality between the included components of basic, dearness allowance, and/or retaining allowance, and other excluded components forever at a ratio of 50:50.
From India, Salem
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You can refer to the judgment of the Supreme Court of India in "Airfreight Corporation Ltd vs. The State of Karnataka and Others" regarding the answer to your question. The ratio decidendi of the judgment is that the wages should be taken as a single package despite the fact of it being comprised of different components. In the exercise of determining the parity between the statutory minimum wages and the industry wages, only those components that fall under the included part of the definition of the term 'wages' as defined under section 2(h) of the Minimum Wages Act, 1948 have to be taken into account, and any excluded component in the industry wages to be left out.
However, the apportionment of industry gross salary/wages among the included components under section 2(h) may reduce the value of components of basic and dearness allowance, which would certainly affect certain indirect benefits like gratuity, statutory bonus, contributions to ESI and EPF, leading to unnecessary industrial disputes later by the affected employees. To avoid this, my suggestion would be to simply adopt the statutory basic and DA in the industry wage structure.
It is also to be noted that the Code on Wages, 2019 [enforcement yet to be notified], has modified the definition of the term 'wages' under section 2(y) in such a manner as to ensure the proportionality between the included components of basic, dearness allowance, and/or retaining allowance, and other excluded components forever at a ratio of 50:50.
From India, Salem
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SALARY CAN BE SPLIT INTO COMPONENTS BUT NOT LESS THAN THE MINIMUM WAGES.docx
Delhi Minimum Wages w.e.f. 01.10.2015.pdf