Leave salary under Minimum Wage Act

This query is : Resolved

A K SARMA (Querist)
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03 February 2023 One of our Manpower supply contractors has claimed a leave salary component @4.81% of the Wages(BP+DA)of the deployed worker. The base amount is consisting of the actual Wage of the month + Extra Duties + Overtime. (here, the Actual number of days worked is 26 Days, and Extra Duties for GH, etc, 4 and Overtime 1 day) total he is claiming 28 days. it is requested kindly advise whether the Leave wage is applicable only on actual Wage excluding the Extra Duties and Overtime on all the components.
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Asha Kanta Sharma online

Asha Kanta Sharma

(Expert)
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09 July 2024 In the context of calculating leave salary for a worker supplied by a manpower contractor, the method can vary based on company policies and labor regulations. Here are some general guidelines that may apply:

1. **Base for Leave Salary Calculation:**
- **Basic Pay (BP) + Dearness Allowance (DA)**: Typically, leave salary is calculated based on the basic pay and dearness allowance of the worker.
- **Exclusion of Extra Duties and Overtime**: In many cases, extra duties and overtime pay may not be included in the calculation of leave salary unless specified otherwise by applicable labor laws or contractual agreements.
- **Actual Days Worked**: Leave salary calculations usually consider the actual days worked by the employee. If the employee worked 26 days in the month, leave salary is typically calculated based on these 26 days.

2. **Applicability of Leave Salary Calculation**:
- Leave salary is often a percentage of the actual wages (BP + DA) earned by the worker during the month.
- The percentage used for leave salary calculation can vary and may be stipulated by company policy or contract with the manpower contractor.

3. **Contractual Agreement**:
- Review the specific terms of the contract between your company and the manpower supply contractor. It should outline how leave salary is calculated, including whether it includes additional components like extra duties and overtime.
- Ensure compliance with local labor laws and regulations that govern leave salary calculations to avoid any discrepancies or legal issues.

4. **Consultation with HR and Legal Experts**:
- If there are uncertainties or discrepancies in the calculation method or applicability of leave salary, it is advisable to consult with your company's HR department and legal advisors.
- They can provide specific guidance based on the contract terms, applicable laws, and industry standards to ensure accurate and compliant handling of leave salary for workers.

Given these points, ensure that the calculation of leave salary aligns with the terms of your contract and complies with relevant labor regulations. Consulting with professionals can help in ensuring clarity and correctness in the approach taken.