How To calculate Minimum Wages in India.
How to Calculate Minimum Wages in Maharashtra: A Step-by-Step Guide
Understanding your payroll is essential, whether you are an employer ensuring compliance or an employee checking your pay slip. In India, specifically in Maharashtra, the minimum wage isn't just a single number—it is a calculation derived from two specific components.
This guide will walk you through exactly how to calculate the minimum wage using the Minimum Wages Act, 1948.
How to Calculate Minimum Wages in Maharashtra: A Step-by-Step Guide
Understanding your payroll is essential, whether you are an employer ensuring compliance or an employee checking your pay slip. In India, specifically in Maharashtra, the minimum wage isn't just a single number—it is a calculation derived from two specific components.
This guide will walk you through exactly how to calculate the minimum wage using the Minimum Wages Act, 1948.
The Formula
At its core, the calculation is simple. The minimum wage is the sum of the Basic Pay and the Special Allowance (often called Dearness Allowance or DA).
Minimum Wage = Basic Pay + Special Allowance
At its core, the calculation is simple. The minimum wage is the sum of the Basic Pay and the Special Allowance (often called Dearness Allowance or DA).
Minimum Wage = Basic Pay + Special Allowance
The Documents You Need
To calculate the exact figure, you need to consult two specific government documents.
1. The Maharashtra Government Gazette (For Basic Pay)
This document lists the Basic Wage Rate for various industries (Scheduled Employments).
What it tells you: The fixed base salary for your specific industry.
Frequency: This rate is revised via new notifications, typically every five years.
2. Notice of Special Allowance (For DA)
Under the Minimum Wages Act, 1948, the competent authority declares a Special Allowance to offset inflation.
What it tells you: The additional allowance amount added to the basic pay.
Frequency: This is revised every six months (usually in January and July).
To calculate the exact figure, you need to consult two specific government documents.
1. The Maharashtra Government Gazette (For Basic Pay)
This document lists the Basic Wage Rate for various industries (Scheduled Employments).
What it tells you: The fixed base salary for your specific industry.
Frequency: This rate is revised via new notifications, typically every five years.
2. Notice of Special Allowance (For DA)
Under the Minimum Wages Act, 1948, the competent authority declares a Special Allowance to offset inflation.
What it tells you: The additional allowance amount added to the basic pay.
Frequency: This is revised every six months (usually in January and July).
Step-by-Step Calculation Example
Let’s look at a practical example to see how this works.
Scenario:
Role: Unskilled Worker
Industry: Drugs and Pharmaceutical Factory
Location: Zone 2 (e.g., Specific semi-urban areas in Maharashtra)
Period: July 2019 – December 2019
Step 1: Find the Basic Pay
First, we look at the Maharashtra Government Gazette for the Drugs and Pharmaceutical industry.
[Insert Image of Gazette Notification here]
Finding: For an Unskilled worker in Zone 2, the basic rate is ₹6,200 per month.
Step 2: Find the Special Allowance
Next, we look at the Notice of Declaration of Special Allowance for the relevant period (July 2019 to Dec 2019).
[Insert Image of Special Allowance Notice here]
Finding: The special allowance for this industry is listed as ₹4,144 per month.
Step 3: Calculate the Total
Now, we simply apply the formula:
Minimum Wage = Basic Pay + Special Allowance
Minimum Wage = ₹6,200 + ₹4,144
Total Minimum Wage = ₹10,344 per month
Let’s look at a practical example to see how this works.
Scenario:
Role: Unskilled Worker
Industry: Drugs and Pharmaceutical Factory
Location: Zone 2 (e.g., Specific semi-urban areas in Maharashtra)
Period: July 2019 – December 2019
Step 1: Find the Basic Pay
First, we look at the Maharashtra Government Gazette for the Drugs and Pharmaceutical industry.
[Insert Image of Gazette Notification here]
Finding: For an Unskilled worker in Zone 2, the basic rate is ₹6,200 per month.
Step 2: Find the Special Allowance
Next, we look at the Notice of Declaration of Special Allowance for the relevant period (July 2019 to Dec 2019).
[Insert Image of Special Allowance Notice here]
Finding: The special allowance for this industry is listed as ₹4,144 per month.
Step 3: Calculate the Total
Now, we simply apply the formula:
Minimum Wage = Basic Pay + Special Allowance
Minimum Wage = ₹6,200 + ₹4,144
Total Minimum Wage = ₹10,344 per month
Important Note: House Rent Allowance (HRA)
There is one additional rule for larger companies in Maharashtra.
If an establishment employs 50 or more workers, they are legally required to pay House Rent Allowance (HRA) over and above the minimum wage calculated above.
The Rate: 5% of the Total Minimum Wage (Basic + Special Allowance).
The Calculation: 5% of ₹10,344 = ₹517.20
Grand Total: ₹10,344 + ₹517.20 = ₹10,861.20
There is one additional rule for larger companies in Maharashtra.
If an establishment employs 50 or more workers, they are legally required to pay House Rent Allowance (HRA) over and above the minimum wage calculated above.
The Rate: 5% of the Total Minimum Wage (Basic + Special Allowance).
The Calculation: 5% of ₹10,344 = ₹517.20
Grand Total: ₹10,344 + ₹517.20 = ₹10,861.20
Summary
To ensure you are paying or receiving the correct amount:
- Check the Basic Rate in the Gazette for your specific Industry and Zone.
- Add the current Special Allowance (updated every 6 months).
- Add 5% HRA if the company size is 50+ employees
To ensure you are paying or receiving the correct amount:
- Check the Basic Rate in the Gazette for your specific Industry and Zone.
- Add the current Special Allowance (updated every 6 months).
- Add 5% HRA if the company size is 50+ employees
The notice of declaration of special allowance:-
Under the Minimum Wages Act, 1949, a competent authority issues a notice announcing the amount of special allowance
every six months. Revised Special Allowance rates for the six months from 1.1.2020
to 30.6.2020 are provided in the following notice.
Minimum wage = Basic pay + Special allowance
The minimum wage is the sum of base salary and special
allowance. Establishments employing 50 or more workers have to pay minimum house
rent allowance of 5% (minimum wage = basic salary + special allowance) over and
above the minimum wages in Maharashtra.
The notice of declaration of special allowance:-
The names of the industries/employment in which the minimum wage is applied to the workers will also be mentioned in document no.1
Notice of special allowance
Under the minimum wages Act, 1948, the competent authority releases the notice of declaration of special allowance every six months. the copy of DA blow displays the special allowances for the industries named in column number 2, the adjacent column shows the special allowance amount in rupees per month.
What to do when wages are not Paid for the work done?
Effect lockdown
"The lockdown has turned hundreds of semi-skilled and skilled migrant employees from northeast jobless and left them stranded to face the rough end of city life in Gujarat like many others other states. Chhetri’s employer had not paid her salary since January. Sophia from Imphal, her colleague in the Ahmedabad resort where she worked had the same experience as did many other migrant workers from the northeast as the first batch of trains left Gujarat on Friday." This is the news "Wages not paid, Northeast workers board train from Gujarat"in economic times click here to read the news
- HOW THE COURT HELPED WORKERS/EMPLOYEES EARLIER?
- the supreme court/high court has taken suo moto cognizance of cases in rare situations where there are rampant violations of human rights and fundamental rights and club such cases into one. The supreme court in many of its judgments equated payment of minimum wages to Art 21, right to life.
- Health emergency is one of the rarest situations where the rights of the workers are just crushed due to the circumstances created in an emergency. The industrialists who are stakeholders went to the court and stayed the order of Ministry of Home Affairs order dated 29 March 2020 to pay to the workers during the lockdown. Now the courts should also come to the rescue of the workers especially the migrant workers who are not paid salaries for the work they have already done and returned back to their native state in health emergency without reporting the breach of their legal right to wages at such time when they need their hard-earned money.
- WHAT CAN THE EMPLOYEES/WORKERS DO NOW?
- The workers/employees can complain in any Indian language or in English online to PM/CM/Labour minister/Commissioner of labour, as it is their right to have minimum wages equated as the right to life for the work they have done in the time of emergency, where they are facing never seen hardships.
- The employees should complain to the Labour Department of the State or the Centre as to which they belong about nonpayment of wages or delayed payment or less payment as the case may be and claim minimum wages and compensation under various acts under the guidance of the officers of the labour department.
- The fine for paying less than minimum wages can be 10 times the amount of difference between the minimum rate of wages to be according to the law and the wage actually paid. Employees to whom wages are not paid or less paid or made delayed payment should refer to e.g. Minimum wages Act 1948, Payment of Wages Act 1936 and The Contract Labour Act 1970. Under the Contract Labour Act when a contractor does not pay the wages or salary the principal employer has to pay the salary to the contract labour working in his company/factory/establishment.
- payment of minimum wages is always regarded as the right to life by the supreme court.
Under The Minimum Wages Act, 1948 following are the contraventions mentioned check it with reference to your case.
- If the workers are being paid wages after the expiry of the statutory time limit. It is the breach of Rules 21(1)(a)
- If the exact wages for overtime work at double the normal rate of wages are not being paid to the workers. It is a breach of Sec. 25(1)
- If the workers were paid their wages at a rate less than the minimum rate of wages fixed for their respective categories. It is a breach of Sec 12(1)
- please to check your statutory payment under the act in Gujarat visit the site.
Similarly, check for other acts too if you are eligible under the various act below. The same site of Gujarat govt. provides for other acts too, you can check for the breaches in the following act-
Payment of
The payment of Gratuity Act, 1972.
The Equal remuneration Act, 1976.
The Contract Labour (R&A) Act,1970 & Gujarat Rules, 1972.
The Inter-State Migrant Workmen (RE & CS) Act, 1979 & Gujarat rules, 1981
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