CODE OF WAGFES 2019 - the Basic salary (Basic+DA+RA) should be 50% of Gross Salary or 50% of CTC?

Please clarify whether, as per the Code of Wages 2019, the Basic salary (Basic+DA+RA) should be 50% of Gross Salary or 50% of CTC?

Is this salary structure correct according to the Code of Wages 2019? If not, please restructure it as per COW 19.

BASIC + DA = 40060, HRA = 12024, CA = 6012, MED AL = 4006, LTA = 8012, SA = 10,006, GROSS = 80,120, EPF = 4807, Gra = 1927, CTC = 86855

There is no reference to CTC in the Code on Wages, but it refers to Gross wages. The data looks alright.

There is no reference to CTC or monthly gross wages under the definition of wages as per the wage code. The reference is 50% of all the remuneration calculated under this clause. In (a) to (i) under the exclusion clause, EPF Contribution has to be considered for fulfilling the 50% condition.

Therefore, in my opinion, it should be 80120 + 4807 = 84927 approximately 85,000/- and 50% of that, i.e., 42500/-, should be Basic + DA.

Due to the above change of Basic & DA, PF contribution will change and the 50% condition will be disturbed. You may adjust that from another payment pocket.

SK Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions +91 98310 81531

Dear Gopalnanda,

Your CTC may include many perks peculiar to your organization and the job position as well. But what is important is the gross salary payable at the end of the wage period and its structural components as agreed in the contract of employment. Perks, whether statutory or otherwise, are determined only on the basis of the sum of the included components in the wage or salary structure. If all annual payouts are taken into consideration, the salary structure has to be altered every now and then, and it would be like trimming the foot to fit the shoe. The definition of the term 'wages' u/s 2(y) of the CoW, 2019 has been carefully drafted in such a manner to remedy the possible mischief done under the concept of CTC though with no reference to such terms as "gross salary" or "CTC".

Thank you, SK Sir. I could not understand the process.

As per your advice, if we set B+DA at 42,500/-, all other salary components will remain the same and the gross salary will be 82,560/-. Then there will be a change in PF contribution, and it will be Rs. 5,100.

Under this situation, why is the PF amount of Rs. 5,100/- not added again to the gross salary and change the B+DA again when we can close it?

Can you clarify my points, Sir?

Dear Gopal Krishna,

I have posted several answers explaining the process of fitment. You may go through the same. However, for your better understanding, I am once again explaining the method. As per the definition of Wages under the wage code, the existing remuneration structure has to be overall restructured, and it will vary from organization to organization based on the existing structure. For example, in the case of your organization, you are paying PF contribution on the entire Basic and DA, whereas there are other organizations where the PF contribution is restricted up to ₹15,000 only – the fitment will be changed.

You cannot keep all other salary components the same to fulfill the 50% condition. If you finalize Basic and DA as ₹42,500 per month, then your other side considering PF contribution ₹5,100 per month should also be ₹42,500 per month to fulfill the 50% condition. Adjust it by minimizing any other monthly component as per your suitability to maintain other allowances with PF contribution of ₹42,500, i.e., the 50% condition.

Till date, there has been a lot of confusion about the determination of Basic & DA as per the definition of Wages under the Wage code. In my opinion, it is 50% of total remuneration calculated and which is payable to the employee with exceptions - Value of House accommodation, Electricity, Medical, etc., though those are not payable but have to be considered while calculating. Gratuity, which is payable but excluded from the calculation as per definition.

Thanks & Regards,

S K Bandyopadhyay (WB, Howrah)
CEO-USD HR Solutions

What are the guidelines/regulations as per the New Wage Code?

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The guidelines and regulations pertaining to the New Wage Code encompass various aspects of wage structuring, payment timelines, compliance requirements, and other related provisions. Employers are expected to adhere to these regulations to ensure fair and lawful compensation practices within their organizations. Understanding and implementing the stipulations outlined in the New Wage Code is crucial for organizations to maintain compliance and uphold ethical standards in their employment practices. Compliance with the New Wage Code not only fosters a positive work environment but also demonstrates a commitment to upholding labor laws and promoting employee welfare.

Request: Please share notification or any gazette copy for Code of Wages 2019. The basic salary (Basic + DA + RA) should be 50% of Gross Salary or 50% of CTC?

Regards,
Rajkumar Chandanshive
HR Manager

Please read the definition of "Wage" which is the same in all labor codes, and you will get your reply. There is no other notification stating how to calculate basic & DA. In this particular discussion series, I have explained the definition of Wage. Please go through the same. It is neither on a monthly gross nor on CTC. It is 50% of all payable amounts except the points (j) & (k) of the exclusion list. Components like Housing facility, Electricity, Hospitalization, etc., though not payable, should be considered for the purpose of calculation.

S K Bandyopadhyay (WB, Howrah) CEO-USD HR Solutions +91 98310 81531 [Login to view] USD HR Solutions – To Strive towards excellence with effort and integrity