Director's Desk

Is the salary break up of your employees, labour-law complaint?

Dear Reader,

 

Over the years one of the most common questions, I have been asked is

What is the “correct” salary break-up of guards or out-sourced employees covered under minimum wages act?

In this letter, I would be attempting to “de-mystify” all the heads that are applicable to guards / outsourced employees covered under minimum wages act.

I claim to be no expert in this area but by virtue of heading a manpower intensive business and having gone through various inspections do have a fair idea about it. The break-up is supposed to be compliant with ESI, PF, Bonus, Minimum wages amongst other acts.

Let me explain with an example of an ideal break-up of Security Guard doing 8 hours of work.

S No. Head Amount Remarks
1 Basic – Minimum Wages 15,000 Assumed Minimum wages for Unskilled (non-matriculate)
2 Relieving Charges @ 16.67 % (for 7th Day of working) 2,501 N.A. for where staff works for 6 days.
3 Total Minimum Wages (MW) 17,501
4 Leave @ 6.73 % of Total MW 1,178 Total of 37 days leave (CL-12, EL-15, Festivals & national holidays -10)
5 PF @ 13 % of 60% of Total MW (Basic) 1,495 Our view is you can deduct PF by bifurcating minimum wages into Basic plus other heads as long as Basic is reasonable, say 60% of minimum wages. However, service provider cannot claim full PF from client and deposit only on bifurcated amount.
6 ESI @ 3.25 % of Total MW 569
7 Bonus @ 8.33 % of Total MW 1,458 Minimum bonus payable is 8.33% of minimum wages though terms and conditions apply.
8 Uniform Allowance 200 Mandatorily to be given to service providers as they are not supposed to charge the employee for it.
9 Total 22,401
10 Service Charges @ 10 % of above 2,240 N.A. for non-service providers and cannot be an unreasonable figure like 2% so as seeming to encourage service provider to cheat.
11 Gross Total 24,641

The majority of heads remain common whether a person is an outsourced or a direct guard.
By the way, I do not charge this much ???? as most of you guys would not pay.
I hope it helps. Feel free to connect with me if you need any help including how to handle these issues “creatively”? I and/or HOD – Personnel Department will be happy to engage with you / your employee.

Regards,

Ravi Kapur

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