Help me bifurcate the salary as per the minimum wages act, suppose if an employee is withdrawing Rs. 70200 p.m

Hi sir/madam, Please help me bifurcate the salary as per the minimum wages act, suppose if an employee is withdrawing Rs. 70200 p.m.. what should be its Basic, Da, HRA & conveyance and other components if any. Please guide me.

Dear Colleague,

50% of total components as Basic and DA:

Keeping in view of the proposed changes in the Code on Wages, the suggestion is to keep the Basic and DA at 50% of the total components.

Remaining 50% may be HRA and other allowances :

-The HRA may be 30% to 50% depending on the City ( Workmen: in Maharashtra there is specific provision is there as a separate Act on HRA in case of workmen and you need to take care for your academic interest)

- Then your allowances to be accommodated within the rest of HRA part % out of the 50% as per organization's guidelines or compensation policy

As per present situation and based on Apex Court latest Verdict on PF Contribution, other than HRA (as per present definition of Basic Salary) what ever will be paid in monthly gross salary except few exceptional ( Productivity link payment etc.) , PF contribution will be required to pay on entire amount. Therefore, one can set any distribution - 40%, 50%, 60% etc. as Basic and DA of the monthly gross and rest in other allowances - HRA, CCA etc.

As per Wage Code( yet to implement) it is different. There are three parts in the definition of wages. First part explained Wages means all remuneration Payable to a person and includes Basic Pay, DA and Retaining allowance if any.

In the second part there is one big exclusion list (a) to (k) where monthly component like HRA , Statutory component like contribution to pension or PF and yearly component like Bonus, LTC/LTA, as per clause (e) for some employee may be entitled for yearly furnishing allowance for nature of employment etc. are included .

In part three it is mentioned if payment made under sub-clause (a) to (i) which includes yearly component Bonus, LTC/LTA, Statutory component Employer PF contribution etc. exceeds 50% of all remuneration calculated under the clause , shall be deemed as remuneration and shall be accordingly added in wages under this clause.

Therefore, for calculating wages ( Basic & DA) as per Wage Code, it is essential to start with summation of all payable component in the remuneration structure which should includes monthly component, yearly component and any other component payable during the year , employer contribution to PF, Statutory Bonus etc. etc. and 50% of that will be Wages (Basic & DA). This calculation will vary from organization to organization as different organization has different remuneration structure.

S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
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Whatever be the bifurcation and whatever be the definition of basic wages under the new code, one should understand that if you have agreed to give Rs 70000 as salary, that should be his basic salary. If, over and above the salary, if he is offered a rent free accommodation, the rental value of that accommodation is the HRA which is not part of salary (though you can use it for constructing your CTC!)

very simple, the amount of salary deducted when you absent without pay is the salary. Obviously, it is not from the 40% or 50% of Rs 70000 (Gross salary) that you deduct the days' salary for LOP but it is from the whole salary that LOP is deducted proportionately. Therefore, end of the day, the salary means the actual salary as per agreement and not the one as per the structure of salary on which various contributions are made.

Salary does not mean only the Basic Salary. It is monthly gross salary. It may includes Basic, DA, HRA, CCA etc.etc.

As rightly told by Madhu T.K., in case of LOP the deduction is made proportionately from all the components of Monthly Salary not only from Basic & DA.

Even in Govt. Sector ( Bank) the monthly salary structure is consisting of Basic, DA, HRA, CCA, etc. and in the recent two days all India Bank strike ( 16th & 17th Dec,2021) there will be LOP for two days proportionately for all components like several occasions in past.

In the original post monthly gross salary is 70200/- where Basic may be 30,000/- per month and rest amount will be distributed between HRA,DA, Conveyance etc. pocket.

S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
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www.usdhrs.in

But the officers who receive house rent allowance get full HRA even if the employee is absent for two days due to strike. This is because rent paid by the bank or the amount of rent reimbursed by the bank is not part of basic salary but it is allowance. It is only in private establishments that the total salary means the entire sum including allowances.

My wife is a nationalized rural bank employee for about 33 years of which 15 years as officer. HRA is part of the monthly remuneration. In past for any strike and even in Dec,21 strike, salary will be proportionately deducted as LOP including HRA.

If any Sr. Manager stays at Bank lease apartment and the rent is paid by the Bank, then no deduction is made as it is an agreement between landlord and the bank. For those level chances of LOP is very less.

But in general whether Govt. or Private, LOP is made proportionately in all components of salary. This is reality.

S K Bandyopadhyay ( WB, Howrah)
CEO-USD HR Solutions
+91 98310 81531
[Login to view]
www.usdhrs.in

Please correct me if I am wrong.

In the case of HRA being a certain percentage of basic Pay, the loss of pay will naturally be reflected in the HRA also. But House Rent Allowance as reimbursement or paid directly by the employer, is not part of salary and hence it will be paid in full even if the employee is absent without leave for a couple of days. Actually, this is what is called House Rent Allowance, ie, an allowance paid to an employee to get accommodated somewhere near the office for office purpose. That is why distances are drawn in the service rules to make an employee eligible for HRA.