Dear All,
There is a certain amount specified in the minimum wages act for different states. My query is how to structure a CTC based on the minimum wages.
a) Should the CTC consist of the minimum wages, which include Basic salary, PF, and ESI?
b) Is it necessary for the basic salary to meet the minimum wages requirement, or should the overall CTC comply with the minimum wages?
Please help.
Thanks,
Amit
From India, New Delhi
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4There is a certain amount specified in the minimum wages act for different states. My query is how to structure a CTC based on the minimum wages.
a) Should the CTC consist of the minimum wages, which include Basic salary, PF, and ESI?
b) Is it necessary for the basic salary to meet the minimum wages requirement, or should the overall CTC comply with the minimum wages?
Please help.
Thanks,
Amit
From India, New Delhi
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Dear All,
There is a certain amount specified in the minimum wages act in different states. My query is how to build a CTC breakup in accordance with the minimum wages.
a) Should the CTC be the minimum wages, which include Basic salary + PF + ESI?
b) Should the basic salary adhere to the minimum wages, or should the CTC breakup comply with the minimum wages? Is this industry-specific?
Please help.
Thanks,
Amit
From India, New Delhi
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There is a certain amount specified in the minimum wages act in different states. My query is how to build a CTC breakup in accordance with the minimum wages.
a) Should the CTC be the minimum wages, which include Basic salary + PF + ESI?
b) Should the basic salary adhere to the minimum wages, or should the CTC breakup comply with the minimum wages? Is this industry-specific?
Please help.
Thanks,
Amit
From India, New Delhi
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The minimum wages means Basic + DA as prescribed under The Minimum Wages Act. PF and other statutory contributions do not form part of the minimum wages. The minimum wages rates are industry-specific. The Minimum Wages Act has fixed different minimum wages for various types of industries such as Engineering, Shops & Establishments, Hotels, etc.
Please check which category is applicable to your company and then find out the rates of minimum wages from the Act. Also, in Maharashtra, 5% HRA on Basic + DA is a must.
From India, Mumbai
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Please check which category is applicable to your company and then find out the rates of minimum wages from the Act. Also, in Maharashtra, 5% HRA on Basic + DA is a must.
From India, Mumbai
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Sir, you mentioned that minimum wages consist of Basic + DA. In our establishment, we receive other allowances such as Petrol allowance, Washing allowance, Telephone allowance, Conveyance, and H.R. allowance. Do these additional allowances, when added to Basic + DA, constitute Minimum Wages? Please guide.
Thanks
From India, Sholapur
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Thanks
From India, Sholapur
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You mentioned that minimum wages mean Basic + DA. In our establishment, we receive other allowances such as petrol allowance, washing allowance, telephone allowance, conveyance, and H.R. allowance. Do these other allowances, together with Basic and DA, constitute minimum wages? Please guide.
Thanks.
From India, New Delhi
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Thanks.
From India, New Delhi
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Reference to Supreme Court Decision on Minimum Wages
Reference is drawn to the decision of the Apex Court, the Supreme Court in (Air Freight Ltd. v. State of Karnataka and others) reported in 1999 (4) LLN 395. Reliance is placed upon the following passage:
"It is one pay package. Neither the scheme nor any provisions of the Act provides that the rates of minimum wages are to be split up on the basis of the cost of each of the necessities taken into consideration for fixing the same. Hence, in cases where the employer is paying a total sum which is higher than the minimum rates of wages fixed under the Act including the cost of living index (variable dearness allowance), he is not required to pay variable dearness allowance separately. However, that higher wages should be calculated as defined in Section 2(h) of the Act. Section 2(h) specifically provides that the value of the following items is not required to be computed for finding out whether the employer pays minimum wages as prescribed under the Act:
• The value of any house, accommodation, supply of light, water, medical care, or any other amenity or any service excluded by general or special order of the appropriate Government;
• Any pension fund or provident fund or under any scheme of social insurance;
• Any traveling allowance or the value of any traveling concession;
• Any sum paid to any person employed to defray special expenses entailed on him by the nature of his employment; or
• Any gratuities payable on discharge.
But while deciding the question of payment of minimum wages, the Competent Authority is not required to bifurcate each component of the costs of each item taken into consideration for fixing minimum wages, as a lump sum amount is determined for providing adequate remuneration to the workman so that he can sustain and maintain himself and his family and also preserve his efficiency as a worker. Dearness allowance is part and parcel of the cost of necessities. In cases where the minimum rates of wages are linked up with variable dearness allowance, it would not mean that it is a separate component that is required to be paid separately where the employer pays a total pay package which is more than the prescribed minimum rate of wages.
In the result, it is held that:
1. The appellant-company would be covered by the expression "shops" and/or "commercial establishment" as it is carrying out various systematic commercial activities with a profit motive and also it sells services on a retail basis.
2. The notification issued under the Act prescribing minimum wages applies to all kinds of shops and commercial establishments "big or small" and that payment of more than the prescribed minimum rates of wages is not relevant for deciding its applicability. It cannot be stated that as they are paying more than the prescribed minimum wages, the Act or notification would not be applicable. For determining whether they are paying minimum rates of wages or not, the amount paid for the value of items which are excluded under Section 2(h) of the Act is not to be taken into consideration.
3. Minimum rates of wages fixed under the Act are remuneration payable to the worker as one package of a fixed amount. In cases where the minimum wage is linked with the cost of living index, the amount paid on the basis of dearness allowance is not to be taken as an independent component of the minimum wages but as part and parcel of the process of computing the rates of minimum wages which is to be determined after taking into consideration the cost of various necessities. In this view of the matter, the order passed by the High Court holding that the State Government has fixed two separate categories of minimum rates of wages to be paid to the employees, one basic and the other allowance, that is, dearness allowance, is erroneous and is set aside.
The fitment has to be in the light of the above Judgment which is the "Law" on the subject.
Regards,
rajanlawfirm https://www.citehr.com/285737-legal-...-industry.html
From India, Madras
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Reference is drawn to the decision of the Apex Court, the Supreme Court in (Air Freight Ltd. v. State of Karnataka and others) reported in 1999 (4) LLN 395. Reliance is placed upon the following passage:
"It is one pay package. Neither the scheme nor any provisions of the Act provides that the rates of minimum wages are to be split up on the basis of the cost of each of the necessities taken into consideration for fixing the same. Hence, in cases where the employer is paying a total sum which is higher than the minimum rates of wages fixed under the Act including the cost of living index (variable dearness allowance), he is not required to pay variable dearness allowance separately. However, that higher wages should be calculated as defined in Section 2(h) of the Act. Section 2(h) specifically provides that the value of the following items is not required to be computed for finding out whether the employer pays minimum wages as prescribed under the Act:
• The value of any house, accommodation, supply of light, water, medical care, or any other amenity or any service excluded by general or special order of the appropriate Government;
• Any pension fund or provident fund or under any scheme of social insurance;
• Any traveling allowance or the value of any traveling concession;
• Any sum paid to any person employed to defray special expenses entailed on him by the nature of his employment; or
• Any gratuities payable on discharge.
But while deciding the question of payment of minimum wages, the Competent Authority is not required to bifurcate each component of the costs of each item taken into consideration for fixing minimum wages, as a lump sum amount is determined for providing adequate remuneration to the workman so that he can sustain and maintain himself and his family and also preserve his efficiency as a worker. Dearness allowance is part and parcel of the cost of necessities. In cases where the minimum rates of wages are linked up with variable dearness allowance, it would not mean that it is a separate component that is required to be paid separately where the employer pays a total pay package which is more than the prescribed minimum rate of wages.
In the result, it is held that:
1. The appellant-company would be covered by the expression "shops" and/or "commercial establishment" as it is carrying out various systematic commercial activities with a profit motive and also it sells services on a retail basis.
2. The notification issued under the Act prescribing minimum wages applies to all kinds of shops and commercial establishments "big or small" and that payment of more than the prescribed minimum rates of wages is not relevant for deciding its applicability. It cannot be stated that as they are paying more than the prescribed minimum wages, the Act or notification would not be applicable. For determining whether they are paying minimum rates of wages or not, the amount paid for the value of items which are excluded under Section 2(h) of the Act is not to be taken into consideration.
3. Minimum rates of wages fixed under the Act are remuneration payable to the worker as one package of a fixed amount. In cases where the minimum wage is linked with the cost of living index, the amount paid on the basis of dearness allowance is not to be taken as an independent component of the minimum wages but as part and parcel of the process of computing the rates of minimum wages which is to be determined after taking into consideration the cost of various necessities. In this view of the matter, the order passed by the High Court holding that the State Government has fixed two separate categories of minimum rates of wages to be paid to the employees, one basic and the other allowance, that is, dearness allowance, is erroneous and is set aside.
The fitment has to be in the light of the above Judgment which is the "Law" on the subject.
Regards,
rajanlawfirm https://www.citehr.com/285737-legal-...-industry.html
From India, Madras
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