Your questions answered by the people shaping Absolute’s vision, values, and future.
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
Absolute Services is a trusted security and facility management company in Delhi NCR, offering professional guarding, housekeeping, and maintenance solutions for corporates, institutions, residential societies, and industrial premises.
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