As per code of wages 2019: Covers all salary components expressed in terms of money or capable of being so expressed and includes:
- Basic pay.
- Dearness allowance.
- Retaining allowance.
- Bonus payable under any law
- Conveyance allowance
- House rent allowance
- Overtime allowance
- Light, water, medical attendance
- Value of travel concession
- Amenity / service excluded by general or special order of Appropriate Government
- Sum paid to defray special expenses.
- Provident fund / pension contribution.
- Remuneration payable under any award or settlement.
- Retrenchment compensation.
Limit on exclusions: 50% of total remuneration (except gratuity and retrenchment compensation).
Monthly salary of employee in INR as follows:
Basic salary: 20,000
House rent allowance: 10,000
Conveyance allowance: 8,000
Special allowance: 12,000
Total remuneration: 50,000
Applying the definition of wages:
Step 1: Cover all salary components: 50,000
Step 2: Total exclusions House rent allowance + Conveyance allowance: 18,000
Step 3: Total permissible exclusions:
50% of total remuneration : 25,000 or Step 2 : 18,000
whichever is lower: 18,000
‘Wages’ of employee for the purposes of labour codes will be INR 32,000 (50,000 less 18,000).