If we want to introduce DA with other salary components, whether it is applicable for staff & workmen?

If we want to introduce DA with other salary components, is it applicable for both staff and workmen, or only for the workman?

Can we introduce both DA and VDA at the same time? If not, could you please elaborate on the reason?

Our esteemed colleagues are requested to educate us on the above.

Dearness Allowance as a component of salary can be given to all employees irrespective of grades. This is probably the only component that is paid commonly to all because it is based on the consumer price index. Obviously, the retail price is common for all.

DA shall be fixed DA or Variable DA. The latter is linked to CPI, whereas FDA is fixed as a percentage of Basic pay or a lump sum amount. Depending upon the policy of the company, you can choose to have DA and VDA. FDA will remain unchanged for a year or until the basic salary is changed, whereas the VDA will change whenever the CPI changes. Normally, the workers will get VDA, and others who are not under the minimum wages notifications get FDA.

Different states have different protocols regarding the fixing of VDA. It may be annually revised, or it can be revised half-yearly. It can also be revised quarterly. The details of VDA will be available on the official websites of the labor department. If you wish to revise it every month, you can do so by finding out the CPI from the Department of Economics and Statistics.

Thank you, Madhu Sir, for your prompt response. I have a few points below for your kind clarification:

As per the Lab Department of the Karnataka Government, there is a yearly one-time increase of ₹510.00 in VDA for 22-23 compared to the year 21-22, applicable from April 22. However, when we talk about the quarterly increase in VDA, as per your reply, is that the split of ₹510.00 in different quarters. So, the total increase in VDA in different quarters together amounts to ₹510.00.

Increase in VDA need not be quarterly. In Tamil Nadu, for example, it is revised once a year. In many other states, including Karnataka, I believe it is revised every six months. In Kerala, however, the revision is to be made by the respective establishments every month based on the CPI published by the Department of Economics and Statistics. Normally, the revision in CPI will take place every three months positively. Therefore, it is not necessary that you should make a revision every three months. Moreover, in your case, yours being a government department, I don't think that the dearness allowance calculation as per our private establishments will have any relevance.

So far my knowledge goes, except for Minimum Wages, there is no other act(s) where the payment of DA and VDA is a component of the remuneration package. In the Central Govt. and State Govt., VDA is a component of remuneration determined by the Pay Commission. In the Banking sector, VDA is also a part of the remuneration package decided during Bi-partite negotiation.

To my knowledge, most of the new private organizations are not paying any FDA or VDA. Even if there is anything, it may be for workers (rare cases). Old private organizations have VDA for unions. But there is no VDA for management staff in probably all old and new organizations.

Now, coming to the revision of VDA. We mostly consider the revision of VDA based on the Govt. of the State/Central, which is made for minimum wages. There are many old private organizations where union(s) have implemented VDA as a part of the remuneration with a different VDA scheme. CPI data is available against different base years on a monthly basis. The VDA scheme may be the neutralization of the increase index by a certain money value as agreed between Management and Union. It may be % wise neutralization. It may be monthly, quarterly, semi-annually, or yearly.

In WB, we have noticed it is a quarterly review. It is basically the difference in the average index for a quarter vs the average index of another quarter. For example:

INDEX QUARTER PAYABLE QUARTER
JAN, FEB, MAR JUNE, JULY, AUG
APR, MAY, JUNE SEPT, OCT, NOV
JULY, AUG, SEPT DEC, JAN, FEB
OCT, NOV, DEC MAR, APR, MAY

There is a gap of two months between the index quarter and the payable quarter because of non-availability of data on time. The base year in most organizations is 1960 = 100.

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

In AP & Telangana, the VDA revision takes place once every six months for MW Scheduled wages. However, some establishments implement VDA for their employees as per settlement or custom. The decision on whether to pay workers, staff, or both depends on company policies or established practices in private establishments. In some companies, staff are also included in wage settlements, and the same will be applicable as per the terms set forth.

Dear Gopalnanda,

'Staff' is a collective noun in employment parlance indicating the people engaged in administrative activities. This will include managerial and supervisory cadre, as well as clerical cadre employees falling under the definition of workmen such as clerks, cashiers, accountants, etc. If these employments are included in the Government Order fixing the minimum rates of wages, they should also be paid Dearness Allowance as stipulated therein.