As per the definition under Minimum wages Act - 1948, - Wages means all remuneration capable of being expressed in terms of money, which would be payable to a person employed in respect of his employment or work done in his employment and includes HRA but does not include - Gratuity, PF/ESI contribution, travelling allowance or concession, value of any facility or service extended to the employee.
Relation between minimum wage and gross salary
Is Minimum wage only Basic+DA or can it be basic +HRA as well Since the amount being paid in money is the gross salary only. I need this clarification from an expert.
Asked 5 years ago in Labour
12 Answers
(h) "wages" means all remuneration, capable of being
expressed in terms of money, which would, if the terms
of the contract of employment, express or implied, were
fulfilled, be payable to a person employed in respect
of his employment or of work done in such employment,
1*[and includes house rent allowance], but does not
include--
(i) the value of--
(a) any house-accommodation, supply of light,
water, medical attendance, or
(b) any other amenity or any service excluded
by general or special order of the appropriate
Government;
(ii) any contribution paid by the employer to any
Pension Fund or Provident Fund or under any scheme of
social insurance;
(iii) any travelling allowance or the value of any
travelling concession;
(iv) any sum paid to the person employed to defray
special expenses entailed on him by the nature of his
employment; or
(v) any gratuity payable on discharge;
The wage shall include the HRA as well.
1) It's totally depends upon the HR of particular company and what is company's output product or the company is service industry etc.
2) As per Industrial Disputes Act and the Minimum Wages Act it is calculated.
In some company its Basic+DRA+Traveling and in some company its Basic + HRA
We are in Service Industry. And as per the experts answer I understood that Min Wage includes Basic and HRA. Accordingly will this Salary Breakup correct in respect of Both PF Compliance and Labour Law Compliance. Gross = Basic + HRA , where 13500(Gross) = 9000(Basic) + 4500(HRA). (I want to be sure that this breakup does not get questioned under PF Law as here Basic is less than Min wages)
Asked 5 years ago
yes, its correct that you have kept 35% of HRA of basic salary.
In case of minimum wages ,the PF has to be deducted on the unskilled minimum wages at least which means that unskilled mimium wage will be the basic salary in all three cases(unskilled, semi-skilled, skilled) to avoid any problems during Pf inspection.
The breakup is right minimum wages include the basic plus other allowance so it won't be questioned even basic is lower then the minimum wages.
The MWA does not contain a separate definition of basic wages. Infact, while the definition of wages under the MWA includes House Rent Allowance (“HRA”),
in the case of Assistant Provident Fund Commissioner, Gurgaon vs. G4S Security Services (India) Ltd & Anr. (2011 LLR 316 (P&H HC) has permitted the employer to split the minimum wages for the purposes of PF contributions
It includes HRA and DA as per minimum wages Act. It doesn't include any reimbursements.
PF compulsory deductible where basis is less than 15000. HRA dose not include in basic.
Sir ji Sir ji don't try to be over smart so read the terms in single way, for the PF purpose gross salary including the allowances paid regularly combines the salary for the purpose of PF contributions.
- As per the information mentioned in the present query, makes it clear that you have pretty good knowledge about the above raised question.
- The break up which you have explained in the subsequent query, is perfectly/ absolutely right.
- And let me tell you sir that PF is a separate amount which is deducted from the salary, here also you will have to mention about the deduction in the basic only, but not HRA.
Components of the minimum wage
The statutory minimum wage is based on the gross wage payable for a normal working week, i.e. before overtime payments. Gross wage can consist of:
- the basic wage agreed in your contract;
- performance-related payments and allowances for shift work, irregular hours, etc.;
- weekly or monthly fixed payments for the turnover you generate;
- work-related payments by third parties, e.g. tips or payments agreed between you and your employer;
- the total of these amounts may not be lower than the minimum wage.
Consolidated pay or salary a person is offered is the amount a person gets for the work done, on monthly/weekly/ basis. It consists of all the entitlements joined together, without specifically stating any breakups. It can be stated as consolidated gross and any statutory deductions will be on the consolidated amount.
In case of employees whose monthly wages are minimum wages, it would be advisable to bifurcate the minimum wage as basic wages and house rent allowance only. ... The cost to the company per annum would be Rs. 1, 43, 272/- which includes statutory minimum bonus of 8.33%, 12% of PF and 4.75% of ESI contributions.
The minimum mandatory PF contribution (and deduction) shall be Rs 1,800 per month (12% of Rs 15,000). b. If the PF wage of an employee is less than Rs 15,000 per month: The minimum mandatory PF contribution (and deduction) shall be 12% of the actual PF wage