Subject - Re: Calcuting VDA(Variable Dearness Allowance)

Dear Friend,

Kindly click on the following link, it will give you some required information,

http://www.citehr.com/search_new.php...ness+Allowance

Pls let me know was this information useful,,

If not let me try out more & give information,,,,

In CiteHR you will get A to Z information on HR…..

Regards

M.Peer Mohamed Sardhar

093831 93832

MINIMUM WAGES ACT, 1948

Background

A tripartite Committee Viz.,"The Committee on Fair Wage" was set up in 1948 to provide guidelines for
wage structures in the country. The report of this Committee was a major landmark in the history of
formulation of wage policy in India. Its recommendations set out the key concepts of the `living wage',
"minimum wages" and "fair wage" besides setting out guidelines for wage fixation.

Article 39 states that the State shall, in particular, direct its policy towards
securing (a) that the citizen, men and women equally shall have the right to an adequate livelihood and
(b) that there is equal pay for equal work for both men and women.

Article 43 states that the State shall endeavour, by suitable legislation or

economic organisation or in any other way, to give all workers, agricultural, industrial or otherwise,
work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure,
and social and cultural opportunities.

Enactment of the Minimum Wages Act

Historical Backdrop
* The initiative started with the resolution placed by one Shri K.G.R.Choudhary in 1920 for setting up
Boards for determination of minimum wages in each industry.

* The International Labour Conference adopted in 1928 Convention No.26 and Recommendation No. 30
relating to wage fixing machinery in trades or parts of trades.

* On the recommendation of the Standing Labour Committee and Indian Labour Conference, a Labour
Investigation Committee was appointed in 1943 to investigate into the question of wages and other
matters like housing, social conditions and employment.

* A draft bill was considered by the Indian Labour Conference in 1945.

* The 8th meeting of the Standing Labour Committee recommended in 1946 to enact a separate
legislation for the unorganised sector including working hours, minimum wages and paid holidays.

* A Minimum Wages Bill was introduced in the Central Legislative Assembly on 11.4.46 to provide for
fixation of minimum wages in certain employments. It was passed in 1946 and came into force with
effect from 15.3.48.

Under the Act, Central and State Governments are appropriate Governments to
(a) notify scheduled employment
(b) fix/revise minimum wages

The Act contains list of all these employments for which minimum wages are to be fixed by the
appropriate Governments.
There are two parts of the Schedule. Part I has non-agricultural employments
whereas Part-II relates to employment in agriculture.
Criteria for notification of scheduled employment
The appropriate Government fixes the minimum wage in respect of only those scheduled employments
where the number of employees is 1000 or more.

Fixation/revision of minimum wages

Norms
The norms include those which were recommended by the Indian Labour
Conference in its session held in 1957.
(i) 3 consumption units for one earner.
(ii) Minimum food requirements of 2700 calories per average Indian adult.
(iii) Clothing requirements of 72 yards per annum per family.
(iv) Rent corresponding to the minimum area provided for under Government's Industrial Housing
Scheme.
(v) Fuel, lighting and other miscellaneous items of expenditure to constitute 20% of the total Minimum
Wages.
Other parameters
(i) "Children education, medical requirement, minimum recreation including festivals/ceremonies and
provision for old age, marriage etc. should further constitute 25% of the total minimum wage." This
judgment was delivered by the Supreme Court of India in 1991 in the case of Reptakos Brett and
Co.Vs.its workmen.
(ii) Local conditions and other factors influencing the wage rate.

Methods for fixation/revision of minimum wages

Fixation
Section 3 empowers appropriate Government to fix the minimum rates of wages in the scheduled
employments.
Revision
Revise the Minimum rates at an appropriate interval not exceeding five years.
Procedure for Fixation/Revision
In Section 5 of the Minimum Wages Act, 1948, two methods have been provided for fixation/revision of
minimum wages. They are Committee method and Notification method.

Committee Method
Under this method, committees and sub-committees are set up by the
appropriate Governments to hold enquiries and make recommendations with regard to fixation and
revision of minimum wages, as the case may be.

Notification method
In this method, Government proposals are published in the Official Gazette for information of the
persons likely to be affected thereby and specify a date not less than two months from the date of the
notification on which the proposals will be taken into consideration.
After considering advice of the Committees/Sub-committees and all the
representations received by the specified date in Notification method, the
appropriate Government shall, by notification in the Official Gazette, fix/revise the minimum wage in
respect of the concerned scheduled employment and it shall come into force on expiry of three months
from the date of its issue.

Variable Dearness Allowance (VDA)

It was recommended in the Labour Ministers' Conference held in 1988, to evolve a mechanism to
protect wages against inflation by linking it to rise in the Consumer Price Index. The Variable Dearness
Allowance came into being in the year 1991. The allowance is revised twice a year, once on 1st April and
then on 1st October. In the State Sphere, 26 States/Union Territories have provisions for Variable
Dearness Allowance, at present.

Enforcement Machinery
The enforcement of the provisions of the Minimum Wages Act in the Central Sphere is secured through
the officers of Central Industrial Relations Machinery.
In so far as State Sphere is concerned, the enforcement is the responsibility of the respective State
Government/Union Territory.

Hence it started with the good intentions to provide for a decent wages for workers. Field staff who
come in the Management Cadre usually left out as they are comparatively well remunerated.

However as an functional head you must analyse whether it is relevant to your organization and
remember one thing - it is based on CPI 1991 series which is updated every month and usually doesn't
go down and has the potential to be a risk when it comes to maintaining the costs within the Budgets!.
In my analysis i found that it had increased by 92 % in a span of four years..therefore am in the process
of converting the same in Fixed D.A. which would be a herculean task!

Can you please guide me the method of calculating the same

Also Do I need to register my company for getting latest Consumer Index points.
If yes where should I register
I need to update the VDA every quarter

You would get the data from any union offices like Mumbai Labour Union or MCCI or B.M.C
as well.

Here the difference between the two reading is taken for calculation for instance with the
hypothetical example as below:

Sep'07 - 13200 points

Oct'07 - 13400 points

The difference 200 points in multiplied by the factor as decided between the parties ( company
and Union) to pay 2.5 per ten points hence it would be 200*2.5/10 = Rs 50 per day. If the
person has worked for 26 days - he would be paid VDA of Rs 50 * 26 = 1300 in the wages for
Oct'07.

Hope that clarifies some issues.

 Best Regards,

Rajat Joshi

Reshma Chakraborty
Subject - Re: Calcuting VDA(Variable Dearness Allowance)
Thanks rajat I got to know the basic but how will I come to the CPI points.
Which website should I log in or do I need to register any where
Also is different statewise or is it common at all India level.

Reshma Chakraborty
Subject - Re: Calcuting VDA(Variable Dearness Allowance)
Dear M.Peer Mohamed Sardhar,
It really not specific .
Anyways I really appreciate your prompt response and cooperation.
If possible please try for some more info.

Regards
RC

Subject - Re: Calcuting VDA(Variable Dearness Allowance)

Considering the living cost and all, Wage Revision is being done once in five years or ten years.
But inflation will go up day by day and subsequently the money value will come down. To
compensate this we have to wait till the next Wage Revision, which is not practical. That is why
the DA is introduced.

The devaluation of money can be assessed through Whole Sale Price Index, All India Cosumer
Price Index etc. The difference between these two is that, price variation of all commodities are
taken into account for Whole Sale Price Index. But the All India Consumer Price Index is based
on a particular cosumer viz. Industial Worker and that even, on some specified commodiies &
services called "Basket of goods".

Based on All India Consumer Price, Industrial DA being paid; variable in quarters commencing
from January, April, July & October. I.e. for January the AICPI will be the average of previous
September, October & November. Similarly for April it will be December, January & February,
for July it will be March, April & May and for October it will be June, July & August
respectively.

When the money devaluation is fully compensated it is called as full DA neutralisation. The
formula for full DA neutralisation = (Total points - Base points)/ Base points (in percentage).
The AICPI is introduced in India in 1960 and revised in 1982 & 2001. AICPI of 2001 x 4.63, we
get AICPI of 1982 and AICPI of 1982 x 4.93, we get AICPI of 1960. For DA calculation AICPI
of 1960 is accepted as the base.

Now in India mainly two term's wage settlements are in exist; Wage Settlements of 1.1.1997 &
1.1.2007. The base point in 1.1.1997 is 1708 & in 1.1.2007 is 2884.

I shall quote one example,i.e. calculation of AICPI for July '10. This is equalent to average of
previous March, April & May; which recorded as 170, 170 & 172 (Base year 2001). Multiply
with 4.63 and round, we get 787,787 & 796 (Base year 1982). Multiply with 4.93 and round, we
get 3880,3880 & 3924 (Base year 1960). Find average of these 3 and round, we get 3895.

DA for 1.1.97 scale. Total points - 3895, Base points - 1708, Total - Base = 2187. % is
2187/1708 x 100 = 128.0 ( Correct to one decimal).

DA for 1.1.2007 scale. Total points - 3895, Base points - 2884, Total - Base = 1011. % is
1011/2884 x 100 = 35.1 (Correct to one decimal).

I shall insert Excel sheet for IDA calculation w.e.f 1.10.2008. You may extent the rows further
(as necessary) and just enter the 3 indexes towards the year 2001 in green colour column. The
results will appear in yellow colour and red colour is used for static informations.

With regards

ABBAS.P.S,
Secretary,
ITI Employees' Association,
ITI Limited, PALAKKAD - 678 623,
KERALA, INDIA.
+91 9447 467 667

AICPI (base 2001) can be had from the following site.

Labour Statistics Page 2