An existing company has its own structure of wages for various levels such as Basic as per the scale of pay, Variable and Fixed Dearness Allowance, HRA calculated as a percentage of Basic pay, Conveyance, Special Allowance, Medical Allowance, Washing Allowance, Shift Allowance, LTA, etc., apart from paying yearly Bonus and Production Incentive as per the 12(3) Agreement entered with their Unions once every four years.
The monthly Gross wages (exclusive of yearly payments like Bonus and Incentive) for all levels of employees being paid are more than the stipulation as per the minimum wages Act. However, the minimum wages Act only includes two elements, such as Basic wage and DA.
The Basic wages being paid by the company are less than the minimum wages Act, whereas the DA being paid is much higher than the Act. For PF and ESI purposes, the company considers Basic wages, VDA & FDA, and Special pay elements.
For example, in our existing wage structure for a bottom-level employee, the Basic pay is Rs. 1000/-, HRA - Rs. 400/-, VDA & FDA - Rs. 16100, Conveyance - Rs. 300, Special Allowance - Rs. 900/-, and other allowances altogether Rs. 700/-. Thus, the Gross wage amounts to Rs. 19400/-. Whereas, as per the minimum wages act for this level, it has been stipulated as the Basic pay of Rs. 8050/- and DA of Rs. 7850/-. In that scenario, the Gross wages are only Rs 15900/-.
My query is whether we have to restructure the monthly wages with only two parts as per the Minimum wages Act, namely Basic wages and DA.
I request an expert's opinion on this issue, please.
From India, New Delhi
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The monthly Gross wages (exclusive of yearly payments like Bonus and Incentive) for all levels of employees being paid are more than the stipulation as per the minimum wages Act. However, the minimum wages Act only includes two elements, such as Basic wage and DA.
The Basic wages being paid by the company are less than the minimum wages Act, whereas the DA being paid is much higher than the Act. For PF and ESI purposes, the company considers Basic wages, VDA & FDA, and Special pay elements.
For example, in our existing wage structure for a bottom-level employee, the Basic pay is Rs. 1000/-, HRA - Rs. 400/-, VDA & FDA - Rs. 16100, Conveyance - Rs. 300, Special Allowance - Rs. 900/-, and other allowances altogether Rs. 700/-. Thus, the Gross wage amounts to Rs. 19400/-. Whereas, as per the minimum wages act for this level, it has been stipulated as the Basic pay of Rs. 8050/- and DA of Rs. 7850/-. In that scenario, the Gross wages are only Rs 15900/-.
My query is whether we have to restructure the monthly wages with only two parts as per the Minimum wages Act, namely Basic wages and DA.
I request an expert's opinion on this issue, please.
From India, New Delhi
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Compliance with Legal Requirements
As long as your gross salary is above the basic and DA as per the minimum wages notified, you are said to comply with the legal requirements. When you calculate the bonus or gratuity payable, you will also exceed the requirements. Therefore, the present salary structure is okay.
Adjustments in Salary Structure
If required, in the next settlement, you can take a portion of the DA and merge it with the basic salary. This way, the basic will increase, and DA will come down.
From India, Kannur
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4669As long as your gross salary is above the basic and DA as per the minimum wages notified, you are said to comply with the legal requirements. When you calculate the bonus or gratuity payable, you will also exceed the requirements. Therefore, the present salary structure is okay.
Adjustments in Salary Structure
If required, in the next settlement, you can take a portion of the DA and merge it with the basic salary. This way, the basic will increase, and DA will come down.
From India, Kannur
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Minimum Wages Act & Rules Wage Slip Form No.XI-Rule (26(2.) .pdf
SELF-CERTIFICAT E PROFORMA UNNDER THE MINIMUM WAGES ACT, 1948.doc