‘WAGE FIXATION GUIDELINES’ IN LINE WITH MINIMUM WAGES NOTIFICATION FOR ENGINEERING INDUSTRY DATED DECEMBER 30, 2017

Dear Sir / Madam,
 
These guidelines are prepared based upon the Minimum Wages notification of Department of Karnataka reference number ‘LD 18 LMW 2017’ dated December 30, 2017 related to Engineering Industry.
 
In the guidelines for the purpose of illustrations, the Zone 4 has been considered.
 
Based upon these guidelines, you can prepare the ‘Wage Fixation Guidelines’ for your industry. In case if you found any discrepancy, suggested to approach your legal advisor for further clarifications.
 
Request you to send your feedback / comments to [email protected].
 
Be Great,
 
Shekhar GN.
MSW, Dip. LD, LLB
Dy. General Manager – HR & Admin
Biesse Manufacturing Co. Pvt. Ltd.,
Nagarur & Nelamangala, Bengaluru
Mobile No. 91:96327 11228
 
The great man is not the one who makes others feel small, but is the one who makes others feel great.

1. PURPOSE: 
These guidelines are set to ensure the Wage Fixation in line with Minimum Wages Notification with respect to the Engineering Industry with effect from Decembers 30, 2017. 

2. BASE:
Notification of Department of Karnataka reference number ‘LD 18 LMW 2017,’ dated December 30, 2017 of ‘Engineering Industry.’
 
3. APPLICABILITY:
These guidelines are applicable for the following categories:
 
3.1 Company Employees.

3.2 Employees engaged on the basis of Contractual Employment.

3.3 Trainees engaged as per the Certified Standing Orders of the Company.

3.4 Trainees engaged as per the ‘All India Council for Technical Education [National Employability Enhancement Mission (NEEM)] Regulations, 2017.’

3.5 Apprentice Trainees engaged as per the ‘Apprenticeship Act, 1961.’

3.6 Other trainees, i.e., not covered under clause numbers 3.3, 3.4 & 3.5.

3.7 To govern the wages of Contract Labour.

4. EFFECTIVE DATE:
These guidelines are effective from January 1st, 2018.
 
5. INTERPRETATION:  
For the purpose of these guidelines, the following definitions to be considered:
 
5.1 Company Employees:
Engaged through Direct Contract with the Company in the grades applicable to Workmen & Executives.

5.2 Company Trainees: 
Engaged for the period of 2 years as per the provisions of ‘Certified Standing Orders’ of the Company.

5.3 Contractual Employment:
Directly employed by the Company for the predefined ‘fixed period’.

5.4 NEEM Trainees:
Engaged as per the provisions of the ‘All India Council for Technical Education [National Employability Enhancement Mission (NEEM)] Regulations, 2017’ through NEEM facilitator only.

5.5 Apprentice:
Engaged as per the provisions of the ‘Apprentice Act, 1961’, and applicable rules.
 
5.6 Other Trainees:
Those, who are not covered in the categories of Company Trainees, NEEMS Trainees, AND Apprentice Trainees. Example:

5.7 Contract Employees:
The employees engaged through Contractors as per the provisions of the Contract Labour (Regulation and Abolition) Act, 1970.

5.8 Basic:
One of the components of Wage Structure. The same will be the basis for calculation of PF, Gratuity, and Bonus as applicable. For the purpose of these guidelines, the ‘Basic’ will be treated as ‘Minimum Wages.’ and the same must be equal or above the minimum wages prescribed by the government by time-to-time. Basic includes VDA, and SSA applicable.

5.9 VDA:
VDA means ‘Variable Dearness Allowance’, and the same will be as per the yearly Minimum Wages Notification of Karnataka. 

5.10 SSA:
SSA means ‘Service Seniority Allowance’ given to the employees, who have completed more than 10 years of service without a break with the Company. SSA will be paid at the rate of 1% of amount of ‘total monthly minimum basic pay’ for every completed year of service for the service above 10 years subject to the maximum limit of 10%. Those, who have completed 20 years of service, they will be paid one-time service seniority allowance subject to a maximum of 10% of ‘total monthly minimum pay’ prescribed for the respective category. 
 
5.11 PF:
PF means Provident Fund Contribution of Employers as per the provisions of Employees' Provident Funds&Miscellaneous Provisions Act, 1952, and applicable ruels.

5.12 ESI:
ESI means, Employees' State Insurance Contribution of Employer as per the provisions of Employees’ Sate Insurance Act, 1948.

5.13 Gratuity:
Gratuity means, contribution towards Gratuity payable to employee as per the Payment Of Gratuity Act, 1972.

5.14 Bonus (Statutory Bonus):
Payable for the eligible employees as per the provisions of the Payment of Bonus Act, 1965. For the purpose of Calculation, 20% of Bonus is considered for Company Employees, and 8.33% for Contract Employees. 

5.15 OT Rate:
Means ‘Over Time Rate’ per hour for the employees work beyond the prescribed working hours, i.e., more than 8 hours in a day, and more than 48 hours in a week. The Over Time Rate as per the section 14 of the Minimum Wages Act, 1948 / section 59 of the Factories Act, 1948.

5.16 Stipend:
Payable to all kinds of trainees. For Company Trainees, the same is the base for PF, ESI & Gratuity calculations. 
 
5.17 LWW:
LWW means ‘Leave with Wages’ payable as per the provisions of Factories Act, 1948.

5.18 Unskilled (SK4):
The category of employees working in the shop-floor, and decided based upon the nature of work of the employees. An unskilled employee is one who does operations that involve the performance of simple duties, which require the experience of little or no independent judgment or previous experience although familiarity with the occupational environment is necessary. His work may thus require in addition to physical exertion familiarity with variety of articles or goods.

5.19 Semi-skilled (SK3):
The category of employees working in the shop-floor, and decided based upon the nature of work of the employees. A semiskilled worker is one who does work generally of defined routine nature wherein the major requirement is not so much of the judgment, skill and but for proper discharge of duties assigned to him or relatively simple job and where important decisions made by others. His work is thus limited to the performance of routine operations of limited scope.

5.20 Skilled (SK2):
The category of employees working in the shop-floor, and decided based upon the nature of work of the employees.A skilled employee is one who is capable of working efficiently of exercising considerable independent judgement and of discharging his duties with responsibility. He must possess a thorough and comprehensive knowledge of the trade, craft or industry in which he is employed.

5.21 Highly Skilled (SK1):
The category of employees working in the shop-floor, and decided based upon the nature of work of the employees. A highly skilled worker is one who is capable of working efficiently and supervises efficiently the work of skilled employees.

5.22 Office Staff 1 (OS 1):
The category of employees working in the office (mainly white collar). The positions in this category are senior management.

5.23 Office Staff 2 (OS 2):
The category of employees working in the office (mainly white collar). The positions in this category are middle management.

5.24 Office Staff 3 (OS 3):
The category of employees working in the office (mainly white collar). The positions in this category executive, i.e., below middle management.

5.25 Office Staff 4 (OS 4):
The category of employees working in the office (mainly white collar). The positions in this category of non-executive staff. 

5.26 Office Staff 5 (OS 5):
The category of employees working in the office (mainly white collar). The positions in this category of assistants to non-executive staff, i.e., office boy, attender, helper, and so on.

5.27 Driver 1 (DR 1):
The category of employees working as drivers for heavy vehicles.  

5.28 Driver 2 (DR 2):
The category of employees working as drivers for car / jeep, and similar vehicles.   

5.29 Driver 3 (DR 3):
The category of employees working as drivers for below car / jeep, and similar vehicles. Example: 3 Wheeler Driver.     

5.30 Zone 1:
One of the zones considered by Government to notify the minimum wages. Zone 1 means all Notified areas under the jurisdiction of Bruhat Bengaluru Mahanagara Palike (BBMP)

5.31 Zone 2:
One of the zones considered by Government to notify the minimum wages. Zone 2 means all areas notified under the jurisdiction of all the city municipalities in the State excluding Zone-1.

5.32 Zone 3:
One of the zones considered by Government to notify the minimum wages. Zone 3 means all the district headquarters in the state excluding the areas under Zone -1 and Zone – 2.

5.33 Zone 4:
One of the zones considered by Government to notify the minimum wages. Zone 4 means all other areas in the state excluding the areas notified under Zone -1, Zone-2 and Zone – 3. Village Panchayatjurisdiction.

6. ALIGNMENT OF ‘INTERNAL GRADES’ WITH ‘MINIMUM WAGES CLASSIFICATION OF EMPLOYEES’: 

7. STANDARD WAGES AS PER MINIMUM WAGES:    
​
7.1 The wages for employees of the Company to be fixed above the minimum wages applicable to Zone 4 asgiven below.  

7.2 The minimum wages applicable for different categories are as below, and the same must be used as reference, while fixing / monitoring the wages.

7.3 In the below tables, the Basic is including VDA.

a) For Company Employees: 

b) For Company Drivers: 

​c) For Company Trainees:  ​

d) For Other Trainees: 

e) For NEEM Trainees:  

f) For Apprentice:  
The wages for Apprentice to be paid as per the provisions contained in the Apprentices Act, 1961. However, based upon the internal policy of the company, the minimum wages applicable for these trainees as below: 

g) For Contract Employees:  

8. STANDARD WAGE STRUCTURE:  
​
8.1 The Standard Wage Structure is applicable for the Company Employees. 

8.2 The distribution for various components will be decided based upon the CTC. 

8.3 The Standard Wage Structure consists of 4 parts, and sum of all parts are called as ‘Cost-to-Company (CTC): 

• Part 1: Monthly Payables
• Part 2: Retirement / Social Security Contributions
• Part 3: Annual Payables
• Part 4: Long-term Benefits   

8.4 The Sample Standard Wage Structure is as below: 

9. SUPERSEDE:
This policy supersedes all other policies, procedures and practices prevalent on this subject to date.
 
10. AUTHORITY:
​HR department shall be responsible for the administration of these guidelines, and interpretation of its provisions.
 
The Company reserves the right to modify, amend, abrogate or rescind the whole or part of this policy at any time deemed fit. 

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