Hi, Please guide me on DA to be paid for an employee as per min wage act of Kerala. Is it mandatory for private company employees?
From India, Kochi
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From India, Kochi
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Understanding DA and Minimum Wages
If the total amount paid is not less than the sum of the basic wages and dearness allowance (DA) fixed by the government as the minimum wages, there is no need to give DA. However, for all purposes including calculating bonuses, leave encashment, and even gratuity, the total wages should be considered.
Reasons for Salary Increases
You should remember that an employee is given a salary increase for two basic reasons: to reward performance and to compensate for the increasing cost of living. The former is identified by an increase in the basic salary, and the latter by an increase in DA. There are companies that give a salary increase every year, but it is not reflected either in the basic salary or in DA. In many establishments, DA is not a component of salary but is put under a separate head, maybe "special allowance" or even "other allowance."
Understanding Special and Other Allowances
Special allowance is paid only to some employees considering the special skills they bring to the task. If it is a component of the salary payable to all employees, it will be deemed part of basic wages only. Again, there is no allowance called 'other allowance'! There can be traveling or conveyance allowance, house rent allowance, night shift allowance, hill allowance, winter allowance, and many other allowances, but what is "other allowance"? Therefore, ensure some basic things about compensation management before fixing the right salary.
From India, Kannur
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4526If the total amount paid is not less than the sum of the basic wages and dearness allowance (DA) fixed by the government as the minimum wages, there is no need to give DA. However, for all purposes including calculating bonuses, leave encashment, and even gratuity, the total wages should be considered.
Reasons for Salary Increases
You should remember that an employee is given a salary increase for two basic reasons: to reward performance and to compensate for the increasing cost of living. The former is identified by an increase in the basic salary, and the latter by an increase in DA. There are companies that give a salary increase every year, but it is not reflected either in the basic salary or in DA. In many establishments, DA is not a component of salary but is put under a separate head, maybe "special allowance" or even "other allowance."
Understanding Special and Other Allowances
Special allowance is paid only to some employees considering the special skills they bring to the task. If it is a component of the salary payable to all employees, it will be deemed part of basic wages only. Again, there is no allowance called 'other allowance'! There can be traveling or conveyance allowance, house rent allowance, night shift allowance, hill allowance, winter allowance, and many other allowances, but what is "other allowance"? Therefore, ensure some basic things about compensation management before fixing the right salary.
From India, Kannur
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There are different wages for different scheduled industries. You can easily get the updated minimum wages from the official website of the labour department. Please follow the link below.
https://lc.kerala.gov.in/en/minimum-wage-notifications
If your industry does not fall under any of the scheduled industries mentioned there, you can pay wages that are almost similar to the one notified.
For each scheduled industry, there will be a dearness allowance that is to be calculated based on the consumer price index. The CPI of various districts/places is published by the Department of Economics and Statistics. Please follow the link to get the latest CPIs.
http://www.old.ecostat.kerala.gov.in...index2011-2012
How the DA is arrived at will be mentioned in the minimum wages notification itself.
From India, Kannur
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https://lc.kerala.gov.in/en/minimum-wage-notifications
If your industry does not fall under any of the scheduled industries mentioned there, you can pay wages that are almost similar to the one notified.
For each scheduled industry, there will be a dearness allowance that is to be calculated based on the consumer price index. The CPI of various districts/places is published by the Department of Economics and Statistics. Please follow the link to get the latest CPIs.
http://www.old.ecostat.kerala.gov.in...index2011-2012
How the DA is arrived at will be mentioned in the minimum wages notification itself.
From India, Kannur
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Special Allowance under Minimum Wages Act-1.1.2016 - 30.6.2016.pdf