Understanding Wage Calculation and Legal Compliance
I am working as an HR executive in a garment manufacturing company. We have around 300 workers on a daily wage basis, and the company pays them once every fifteen days. However, in payslips, they show the 15-day wages as follows: the company has fixed the monthly basic at 6600/-.
For example, if an employee earns 4120, they break this amount down as follows:
- Days: 13
- OT Hrs: 8
- Earning basic: 3300
- OT amount: 508
- Gross: 3808
- Conv allowance: 68
- Total gross: 3876
- Deduction ESI: 68
- Bonus advance: 146
- Leave encashment: 165
- Total: 4119.00
Queries on Wage Calculation and Legal Compliance
1. Can we show the daily wages employee like this?
2. The company is not paying anything as a bonus or leave encashment; they are just manipulating the figures. Is it legal?
3. Are they doing the same for the piece-rated workers?
4. Can we pay the bonus on a monthly basis as they are showing? Because as far as I know, the bonus is calculated on allocable surplus with the company at the end of the financial year after adjusting set on and set-off amounts.
Please help me with the proper way of calculating the amount for ESI and PF for the daily wages and piece-rated workers.
Regards,
Anish
From India, Delhi
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I am working as an HR executive in a garment manufacturing company. We have around 300 workers on a daily wage basis, and the company pays them once every fifteen days. However, in payslips, they show the 15-day wages as follows: the company has fixed the monthly basic at 6600/-.
For example, if an employee earns 4120, they break this amount down as follows:
- Days: 13
- OT Hrs: 8
- Earning basic: 3300
- OT amount: 508
- Gross: 3808
- Conv allowance: 68
- Total gross: 3876
- Deduction ESI: 68
- Bonus advance: 146
- Leave encashment: 165
- Total: 4119.00
Queries on Wage Calculation and Legal Compliance
1. Can we show the daily wages employee like this?
2. The company is not paying anything as a bonus or leave encashment; they are just manipulating the figures. Is it legal?
3. Are they doing the same for the piece-rated workers?
4. Can we pay the bonus on a monthly basis as they are showing? Because as far as I know, the bonus is calculated on allocable surplus with the company at the end of the financial year after adjusting set on and set-off amounts.
Please help me with the proper way of calculating the amount for ESI and PF for the daily wages and piece-rated workers.
Regards,
Anish
From India, Delhi
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Few garment industries are still following the daily wages concept because of fewer orders. Garment industries are divided into two categories: compliance factories and non-compliance factories. Compliance factories have all proper documents and systems in place to secure orders, while non-compliance factories lack proper documentation and often function as sub-contracting factories for Tier 1 vendors or suppliers.
Regarding Your Questions:
1. Yes, you can show for 15 days, but you need to have a monthly consolidated report for reference.
2. It is illegal if you do not provide a bonus or earned leave encashment. For the bonus, your understanding is correct. Earned leave encashment applies when there are more than 30 days of leave balance.
3. The same clause applies to piecework employees.
4. You are correct about the bonus.
5. For PF & ESI: ESI is calculated on all earnings except for bonus and leave encashment, while PF is based on your salary breakdown (Basic + DA + allowances + OT), excluding 20% of the HRA.
I hope this clarifies the information for you.
Regards
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187Regarding Your Questions:
1. Yes, you can show for 15 days, but you need to have a monthly consolidated report for reference.
2. It is illegal if you do not provide a bonus or earned leave encashment. For the bonus, your understanding is correct. Earned leave encashment applies when there are more than 30 days of leave balance.
3. The same clause applies to piecework employees.
4. You are correct about the bonus.
5. For PF & ESI: ESI is calculated on all earnings except for bonus and leave encashment, while PF is based on your salary breakdown (Basic + DA + allowances + OT), excluding 20% of the HRA.
I hope this clarifies the information for you.
Regards
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Dear sir, Thanks for your valuable reply. our factory is a compliance factory. i am still not clear about the bonus. Can we pay bonus on monthly basis.
From India, Delhi
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From India, Delhi
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The law states, "The bonus should be paid in cash within 8 months from the close of the accounting year or within one month from the date of enforcement of the award or coming into operation of a settlement following an industrial dispute regarding payment of the bonus. However, if there is sufficient cause, an extension may be applied for."
According to this act, the bonus cannot be paid on a monthly basis. However, other bonuses such as attendance bonuses can be paid on a monthly basis.
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According to this act, the bonus cannot be paid on a monthly basis. However, other bonuses such as attendance bonuses can be paid on a monthly basis.
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