Dear Team,
Minimum Wage Structure Proposal
Keeping in view the recent Supreme Court decision on various writ files to include various components of wages as basic wages and the upcoming new wages code wage definition, can we create the following structure for the minimum wage for fresh workmen?
For example, let the minimum wage be 10,000/-:
Basic: 6,000
HRA: 2,400
Con: 1,600
As HRA is not a part of wages, and there is no case law or guidance prohibiting the splitting of minimum wages. Even in the Air Freight case, it was established that all components of wages constitute minimum wages, and there is no requirement to pay VDA if the wages exceed the minimum wage. In one decision, the Haryana Court also supported the splitting of the minimum wage.
Considering the above, as per PF wages, we can deduct contributions on Basic + Con, and for ESI contributions, on Basic + HRA.
I request your valuable guidance. Please help me cite a case law in support of my response.
From India, Delhi
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Minimum Wage Structure Proposal
Keeping in view the recent Supreme Court decision on various writ files to include various components of wages as basic wages and the upcoming new wages code wage definition, can we create the following structure for the minimum wage for fresh workmen?
For example, let the minimum wage be 10,000/-:
Basic: 6,000
HRA: 2,400
Con: 1,600
As HRA is not a part of wages, and there is no case law or guidance prohibiting the splitting of minimum wages. Even in the Air Freight case, it was established that all components of wages constitute minimum wages, and there is no requirement to pay VDA if the wages exceed the minimum wage. In one decision, the Haryana Court also supported the splitting of the minimum wage.
Considering the above, as per PF wages, we can deduct contributions on Basic + Con, and for ESI contributions, on Basic + HRA.
I request your valuable guidance. Please help me cite a case law in support of my response.
From India, Delhi
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Dear Community Member,
I understand your query regarding the wage structure in light of the recent Supreme Court decision and the upcoming wage code. The wage division you have proposed seems to be in line with the guidelines, but there are some points that need to be considered:
1. 👩‍⚖️ The Supreme Court, in the case of 'Regional Provident Fund Commissioner (II) West Bengal vs Vivekananda Vidyamandir and Others', clarified that all allowances which are ordinarily, necessarily, and uniformly paid to the employees are to be included in the basic wages. So, it's essential to ensure that the allowances you mentioned are not categorized as such.
2. 👩‍⚖️ When it comes to the Employees' State Insurance (ESI) Act, as per the definition of 'wages' under Section 2(22), it includes any payment to an employee, excluding the contributions to PF, travel allowance, gratuity, etc. Therefore, your proposed structure for ESI contribution seems acceptable.
3. 👩‍⚖️ It's also crucial to remember that as per the new wage code, the sum of the basic pay, dearness allowance, and retaining allowance (if any) should be at least 50% of the total remuneration. Therefore, you need to ensure that this is being maintained.
4. 👩‍⚖️ As for the splitting of minimum wages, there isn't a clear-cut, universally applicable rule. Some states allow it, while others don't. Since you mentioned you are from Delhi, it's worth noting that the Delhi High Court in the case of 'Surya Roshni Ltd vs Deputy Labour Commissioner and Others' held that the minimum wage cannot be split into components.
Please consider these points and review your wage structure accordingly. Consult with a legal adviser if necessary to ensure full compliance with the laws.
Remember, wage structuring is a sensitive and critical aspect of HR that requires a thorough understanding of legal implications. It's always advisable to stay updated with the latest laws and court rulings to ensure the organization's practices are in line with them.
I hope this helps! 🎌 If you have any more doubts or need further clarification, feel free to ask.
From India, Gurugram
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58I understand your query regarding the wage structure in light of the recent Supreme Court decision and the upcoming wage code. The wage division you have proposed seems to be in line with the guidelines, but there are some points that need to be considered:
1. 👩‍⚖️ The Supreme Court, in the case of 'Regional Provident Fund Commissioner (II) West Bengal vs Vivekananda Vidyamandir and Others', clarified that all allowances which are ordinarily, necessarily, and uniformly paid to the employees are to be included in the basic wages. So, it's essential to ensure that the allowances you mentioned are not categorized as such.
2. 👩‍⚖️ When it comes to the Employees' State Insurance (ESI) Act, as per the definition of 'wages' under Section 2(22), it includes any payment to an employee, excluding the contributions to PF, travel allowance, gratuity, etc. Therefore, your proposed structure for ESI contribution seems acceptable.
3. 👩‍⚖️ It's also crucial to remember that as per the new wage code, the sum of the basic pay, dearness allowance, and retaining allowance (if any) should be at least 50% of the total remuneration. Therefore, you need to ensure that this is being maintained.
4. 👩‍⚖️ As for the splitting of minimum wages, there isn't a clear-cut, universally applicable rule. Some states allow it, while others don't. Since you mentioned you are from Delhi, it's worth noting that the Delhi High Court in the case of 'Surya Roshni Ltd vs Deputy Labour Commissioner and Others' held that the minimum wage cannot be split into components.
Please consider these points and review your wage structure accordingly. Consult with a legal adviser if necessary to ensure full compliance with the laws.
Remember, wage structuring is a sensitive and critical aspect of HR that requires a thorough understanding of legal implications. It's always advisable to stay updated with the latest laws and court rulings to ensure the organization's practices are in line with them.
I hope this helps! 🎌 If you have any more doubts or need further clarification, feel free to ask.
From India, Gurugram
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Recent Judgment of Honble Supreme Court on Wage eligible for contribution.pp tx
PF Wages-Court decision - Wage for Contribution.pd f