Dear Seniors,
I have recruited a few employees for company roles. As per our company policy and structure, we have allocated them grades and finalized their basic salary, HRA, Conveyance, and other allowances.
The query: Is it necessary for the basic salary allocated to them to be not less than the minimum wages if I have hired them for company roles or as trainees? Is it sufficient if the total gross salary is not less than minimum wages multiplied by 26 days? Please clarify whether one of these conditions needs to be satisfied or if neither is required.
Regards,
Kiranikumari
From India, Bangalore
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I have recruited a few employees for company roles. As per our company policy and structure, we have allocated them grades and finalized their basic salary, HRA, Conveyance, and other allowances.
The query: Is it necessary for the basic salary allocated to them to be not less than the minimum wages if I have hired them for company roles or as trainees? Is it sufficient if the total gross salary is not less than minimum wages multiplied by 26 days? Please clarify whether one of these conditions needs to be satisfied or if neither is required.
Regards,
Kiranikumari
From India, Bangalore
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First of all, be clear in mind whether these employees fall under the definition of a worker under the Minimum Wages Act, i.e., whether they are engaged for manual, unskilled, skilled, or clerical nature of work. If they fall under the Act, then when you decide on their pay grades, you must ensure that their gross monthly wages for 26 days are not less than the minimum rates of wages fixed by the government for the scheduled industry under the Minimum Wages Act. Also, check whether your industry is a scheduled industry under the Minimum Wages Act of 1948.
If they do not fall under the Minimum Wages Act, then you can have your own pay structure and nothing to do with minimum wages.
From India, Nagpur
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18If they do not fall under the Minimum Wages Act, then you can have your own pay structure and nothing to do with minimum wages.
From India, Nagpur
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Dear Kiranikumari,
If the gross salary an employer pays to the employee does not fall below the 'Minimum Wages' notified by the Government from time to time, there is no violation of the Minimum Wages Act. There is a Supreme Court decision to this effect.
Best regards, Jaikrishnan Company Secretary Thiruvananthapuram
From India
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If the gross salary an employer pays to the employee does not fall below the 'Minimum Wages' notified by the Government from time to time, there is no violation of the Minimum Wages Act. There is a Supreme Court decision to this effect.
Best regards, Jaikrishnan Company Secretary Thiruvananthapuram
From India
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Dear Kiranikumari,
If the gross salary an employer pays to the employee does not fall below the 'Minimum Wages' notified by the Government from time to time, there is no violation of the Minimum Wages Act. There is a Supreme Court decision to this effect.
Best regards,
Jaikrishnan Company Secretary Thiruvananthapuram
From India
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If the gross salary an employer pays to the employee does not fall below the 'Minimum Wages' notified by the Government from time to time, there is no violation of the Minimum Wages Act. There is a Supreme Court decision to this effect.
Best regards,
Jaikrishnan Company Secretary Thiruvananthapuram
From India
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Dear All,
As per the above discussion and concerns raised by Kiranakumari regarding fixing wages according to the company structure, it is acceptable for higher-salary employees, but we must ensure that basic wages align with their respective categories. The gross salary should be equal to or higher than the minimum wage to comply with the decision made by the High Courts of Haryana and Punjab. An organization cannot separate minimum wages into other categories as all benefits, such as EPF, bonuses, and gratuity, are calculated based on the basic salary.
Thank you.
From India, New Delhi
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As per the above discussion and concerns raised by Kiranakumari regarding fixing wages according to the company structure, it is acceptable for higher-salary employees, but we must ensure that basic wages align with their respective categories. The gross salary should be equal to or higher than the minimum wage to comply with the decision made by the High Courts of Haryana and Punjab. An organization cannot separate minimum wages into other categories as all benefits, such as EPF, bonuses, and gratuity, are calculated based on the basic salary.
Thank you.
From India, New Delhi
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Dear All, Gross Salary/wages should not be less than minimum wages*26 days. Minimum wages applicable if business comes under scheduled declared by central or state governements. rgds
From United States
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From United States
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Dear all,
What Mr. Neeraj Yadav said sounds right. If you are bifurcating the gross salary and the basic falls below the minimum wage, all your contributions, mainly that of PF, will be below what you are supposed to pay by the minimum wage. Thus, noncompliance exists in this case.
For example, let's say the minimum wage is 6000, and the employer's PF contribution is 720 rupees. When you have a gross pay of 7000, bifurcated into 4000 basic and 3000 allowance, the employer's PF contribution is only 480. Therefore, you are not meeting the standards. However, for employees with higher salaries, this is not the case as Mr. Neeraj mentioned.
From India, Madras
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What Mr. Neeraj Yadav said sounds right. If you are bifurcating the gross salary and the basic falls below the minimum wage, all your contributions, mainly that of PF, will be below what you are supposed to pay by the minimum wage. Thus, noncompliance exists in this case.
For example, let's say the minimum wage is 6000, and the employer's PF contribution is 720 rupees. When you have a gross pay of 7000, bifurcated into 4000 basic and 3000 allowance, the employer's PF contribution is only 480. Therefore, you are not meeting the standards. However, for employees with higher salaries, this is not the case as Mr. Neeraj mentioned.
From India, Madras
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Dear All,
Please go through the following; you will get the answer to all your questions.
PF CONTRIBUTIONS NOT ATTRACTED ON ALLOWANCES EVEN WHEN PART OF MINIMUM WAGES: P&H - HIGH COURT
In a writ petition No. 15443/2009 between APFC vs. G4 Security, the Punjab & Haryana High Court has held on 1st February 2011 that the minimum wages can be bifurcated into allowances and the Provident Fund contributions will not be attracted on allowances. The judgment will be published in the next issue of the Labour Law Reporter.
So, you can bifurcate the minimum wages into Basic and different allowances and can deduct PF on that Basic. However, I still have confusion about the calculation of Bonus.
Regards,
ALPESH THAKKAR
Asst. Manager - HR
Advanced Systek Pvt. Ltd.
From India, Ahmadabad
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Please go through the following; you will get the answer to all your questions.
PF CONTRIBUTIONS NOT ATTRACTED ON ALLOWANCES EVEN WHEN PART OF MINIMUM WAGES: P&H - HIGH COURT
In a writ petition No. 15443/2009 between APFC vs. G4 Security, the Punjab & Haryana High Court has held on 1st February 2011 that the minimum wages can be bifurcated into allowances and the Provident Fund contributions will not be attracted on allowances. The judgment will be published in the next issue of the Labour Law Reporter.
So, you can bifurcate the minimum wages into Basic and different allowances and can deduct PF on that Basic. However, I still have confusion about the calculation of Bonus.
Regards,
ALPESH THAKKAR
Asst. Manager - HR
Advanced Systek Pvt. Ltd.
From India, Ahmadabad
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HI what if the basic salary of salary break is less than minimum wages as per govt? As per above discussion only gross salary is taken in to consideration for min wage. Thanks
From India, Delhi
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From India, Delhi
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Dear neeraj, Actually it other way around. "decision regarding the same by the high court HARYANA & PUNJAB as a organization can bifurcate minimum wages in to other heads." regards Manish
From India, Mumbai
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From India, Mumbai
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Dear alpesh, i have one question: How much min % basic should be of Gross? in case Gross is min. Wage! regards Manish Gupta
From India, Mumbai
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From India, Mumbai
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Dear Alpesh Thakkar,
The judgment copy is enclosed here for your reference.
Dear Manish,
A minimum wage as gross wages is not fair, as you know. However, we can argue that fixing 60 to 70% of it as Basic would satisfy the PF authorities. Please add a few points on this idea!
S. Sethupathy
Excellent HR Services
Erode.
From India, Selam
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The judgment copy is enclosed here for your reference.
Dear Manish,
A minimum wage as gross wages is not fair, as you know. However, we can argue that fixing 60 to 70% of it as Basic would satisfy the PF authorities. Please add a few points on this idea!
S. Sethupathy
Excellent HR Services
Erode.
From India, Selam
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Dear All,
I have also gone through the judgement of Punjab & Haryana High Court in the petition, as mentioned by dear Mr. Thakkar, between APFC & G4S. But I expect it will be challenged in the Supreme Court. I personally also don't agree with the judgement since there is no criteria for bifurcating the minimum wages as to what should be the ratio of basic and other allowances. Let me tell you all that even G4S is going to consider minimum wages as basic wages for PF purposes.
C.B. Sehgal
From India
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I have also gone through the judgement of Punjab & Haryana High Court in the petition, as mentioned by dear Mr. Thakkar, between APFC & G4S. But I expect it will be challenged in the Supreme Court. I personally also don't agree with the judgement since there is no criteria for bifurcating the minimum wages as to what should be the ratio of basic and other allowances. Let me tell you all that even G4S is going to consider minimum wages as basic wages for PF purposes.
C.B. Sehgal
From India
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Hi Mr. Sethupathy,
At least, the basic should be 60% of the gross in the case of the minimum wage. In all other cases, the basic can be between 35-40% of the gross package (and in any case, it cannot be less than 60% of the minimum wage). This is a general rule that most factories follow, but I am looking for a judgment on which we can rely upon. Please add your comments on this issue!
Regards,
Manish Gupta
From India, Mumbai
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At least, the basic should be 60% of the gross in the case of the minimum wage. In all other cases, the basic can be between 35-40% of the gross package (and in any case, it cannot be less than 60% of the minimum wage). This is a general rule that most factories follow, but I am looking for a judgment on which we can rely upon. Please add your comments on this issue!
Regards,
Manish Gupta
From India, Mumbai
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Subject : Minimum Wages in Uttar Pradesh Pls tell what is the rule in UP. In UP Basic and VDA only considerared for Minimum wages or Gross Salary. i.e Basic, VDA, Allowance etc? regds
From India, Delhi
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From India, Delhi
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Dear All, Mr neeraj is right. because this attract the various social security Act and if not this will not compliances of related Act. Raghu
From India, Pune
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From India, Pune
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