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FAQs

FAQ's

A curated and categorised database of common questions regarding the law.




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1 Must the employee be provided any minimum wage or benefit package? If so, what minimum wage or benefits must be provided?

The Minimum Wages Act 1948 lays down the procedure for stipulation by notification of a minimum wage for various categories of workmen. These minimum wages are declared on a regular basis by the concerned authority and differ from city to city.
2 Can salaries be raised based solely on the employees performance?

Unless the contract of employment provides for automatic pay increases, the employer is free to increase or not increase the employees pay on whatever basis they like as long as the employee is paid more than the minimum wage. In practice, this applies largely only to managerial level employees. In case of workmen, basing a large component of pay on performance could be violative of the ‘Equal Pay For Equal Work’ statute. Thus, for workmen staff, it is advisable to introduce performance related increases as only a small portion of his wages. If the employer recognizes trade unions, pay increases may be negotiated with the union and become incorporated in the individuals contract of employment. In India, performance based pay increases are only now becoming customary and in most companies, a large component of the employees pay increase is still automatic
3 Can bonuses or other special payments be paid, without affecting future salary increases?

Yes. The employer should however clearly state in writing the non-recurring nature of and the reason for the payment being made. It should be noted that employers are required to pay a statutory ‘bonus’ under the Payment of Bonus act and the term ‘bonus’ as a discretionary payment by the employer should not be confused with statutory bonus.
4 Can the employee be required to work overtime?

Yes, an employee can be required to work overtime if stipulated in the contract of employment as long as such overtime does not exceed certain stipulated limits
5 Are there any limitations on the amount of overtime that can be worked in a given period?

The Factories Act and Shops and Establishments Act restrict normal working hours to a maximum of 9 hours a day, 48 hours a week and 5 hours at a stretch without a break. The Factories Act further stipulates a maximum of 60 working hours in a week including overtime provided total overtime in a quarter does not exceed 50 hours. The Shops and Establishments Act stipulates a maximum of 54 working hours in a week including overtime provided total overtime in a year does not exceed 150 hours.
6 Are there any categories of employees exempt from mandatory overtime?

Whether overtime is mandatory depends on the individual contract of employment. There are no special categories of employees exempted from mandatory overtime.
7 What premium rate applies to overtime hours?

A standard overtime rate beyond 48 hours for all categories of workers is twice the normal wage. If normal working hours in an establishment are less than 48 hours, while there is no standard rate applying to overtime upto 48 hours a week, this rate is normally 1.5 times the normal wage.
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