The Government of Kerala had published notification G. O. (P) No. 95/2020/LBR (hereinafter “Notification”) on 18^thDecember, 2020 revising the minimum rate of wages/monthly basic wages applicable to the employees employed in the computer software companies in Kerala. The effective date of notification shall be 18^th December, 2020 and the notification was issued in exercise of the powers conferred to Kerala Government under the Minimum Wages Act, 1948. Hence,  the companies in the IT industry are legally bound to implement the changes with effect from 18^thDecember, 2020.

Schedule

By this Notification, the Government of Kerala had divided the categories of designation/post into  9 Groups (A to I) and provided the corresponding monthly basic wages applicable to each category in its schedule (Schedule). For the purpose of the calculation of basic wages, the term “wages” has to be read with the definition of wages  as per the Minimum Wages Act:

“ Wages means all remuneration, capable of being expressed in terms of money, which would, if the terms of the contract of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment and includes house rent allowance, but does not include the value of:

• any contribution paid by the employer to any Pension Fund or Provident Fund or under any scheme of social insurance;
• any travelling allowance or the value of any travelling concession;
• any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or
• any gratuity payable on discharge;
• any house accommodation, supply of light, water, medical attendance, or
• any other amenity or any service excluded by general or special order of the appropriate Government”

As per the above, the ‘wage’ for the purpose of minimum wage calculation is based on the basic minimum wages excluding the above components. In addition to the basic wages, the employees shall be eligible for Dearness Allowance calculated on the basis of the Consumer Price Index published for the concerned District Head Quarters of the Department of Economics and Statistics. In short, the  monthly “minimum wage” entitled to a particular employee is the “monthly basic wage” shown against the relevant category in addition to Dearness Allowance as mentioned above.

Increment

The Notification clearly states that “For every five years of completed or to be completed service in an establishment or under an employer, an annual increment at the rate next to the pay scale fixed in the new scale of pay shall be paid as service weightage to the employee concerned. 

If an employee reaches the maximum of the eligible scale of pay, such employee shall be paid an annual increment prescribed for the higher time scale in the scale of pay assigned to the corresponding category for every subsequent years”.

To clarify, for e.g., in case of Manager in Group A having 5 years of experience, his minimum monthly basic wages shall be INR 23,580 (the second figure in the Schedule) inclusive of increment mentioned in the scale instead of INR 21,330 (the first figure in the schedule). And further, if an employee reaches the maximum of wages prescribed in the Schedule, then he/she should be given the last increment mentioned in the scale for every subsequent years as the increment. Hence, years of experience shall be a point of consideration.

Higher Wages

In case the employees of any Establishment/Industry are at present getting higher wages than the minimum wages fixed as per this Notification, they shall continue to be entitled to get such higher rates.

Equivalent Category

If any category of employees are not included in the post/category shown in the Groups, they shall be eligible for the basic wages prescribed for the employees of the equivalent post/category.

Daily Wages

In case of daily wage earners, the minimum basic wages has to be calculated by dividing the monthly basic wages for the corresponding post/category by twenty six (26).

Conclusion

The Notification shall prevail till the notification of Code on Wages by the central government and corresponding rules and notifications by the state government in that respect.