Software Engineer and Getting Paid below 17,742/- per month? Well, something’s wrong! Let’s look at the Minimum Wages!

I am sure your you were curious as to why the number 17,742/- for a Software Engineer when you clicked on the link to land this article. Let’s see in detail. By the way, if you are a software engineer in Kerala getting paid below this figure, it’s probably the time to send this article […]

I am sure your you were curious as to why the number 17,742/- for a Software Engineer when you clicked on the link to land this article. Let’s see in detail. By the way, if you are a software engineer in Kerala getting paid below this figure, it’s probably the time to send this article to your HR Manager 😉

Context

Recently, on Dec 24, 2020 to be exact, Government of Kerala announced the revised Minimum Wages for the Software industry in the state, after long 10 years of the earlier revision. Numbers have soared up. This article discusses the concept of minimum wages, with examples pertaining to Kerala state; however, the concept should be the same throughout the country.

What’s this “minimum wages”?

As the name implies, the minimum wages is the minimum wage per month to be given to an employee of a particular sector in a state. There is a national minimum wage declared by the central government, and various state-level minimum wages. The idea is to keep the state-level minimum wages equal to or above the national minimum wages. The concept of minimum wages will ensure access to equitable and justifiable pay, thereby eliminating the chances of exploitation by the management.

When is it decided?

Minimum wages are revised periodically. Minimum wages are defined for each sector separately. For example, the minimum wages for Software sector differs from that for the Oil Mills sector. There are roughly 80 such sectors identified for the State of Kerala; and similar numbers for other states as well. Governments revises the minimum wages when it deems that there is, inter alia, a significant increase in the cost of living over a period of time which is not manageable by a mere increase in Dearness Allowance (DA).

How is minimum wages calculated?

Minimum wage calculation for a role is easy. For example, look at the latest Software industry minimum wages notification for the State of Kerala available here.

If you look at the notification, in the Software sector, roles of jobs are categorised into different grades. For instance, an HR Executive is a Group F employee in the industry, while a Software Engineer is a Group E employee. An organisation needs to categorise all their employees into one of these grades (and, if not already done by any means whatsoever before, it would be advisable to communicate the same through an HR letter/notice, through internal HR portals, payslips, etc. to the employee so that they are aware of the same) Let’s take the example of Group E: Software Engineer for illustration purpose.

Demystifying the Minimum Wages Calculation: An Example

If you look at the Group E: Software Engineer, 16520-250-17770-300-19270 is the salary range shown for this role. What does that mean, let’s have a look!

The minimum wage for an employee who is a Software Engineer in an organisation is Rs. 16520. This amount is exclusive of another factor called Dearness Allowance (DA), which we will see about later.

Now, look at the number 250 in the wage structure. What does it signify? The notification says:
For every five years of completed or to be completed service in an establishment or under an employer, an annual increment at the rate next to the pay scale fixed in the new scale of pay shall be paid as service weightage to the employee concerned.
So, if an employee continues to be a Software Engineer under the same organisation/employer, then for every such service year, a minimum pay hike of Rs. 250/-pm should be paid as service weightage. That is, for someone with salary 16520/- as per month salary, and completed one year of service, s/he should get a minimum wage of Rs. 16520 + Rs. 250 = Rs. 16770/- pm during the second year of service. Every year, this figure per month will increase by Rs. 250/- for the first five years. Hence, s/he will have a wage of Rs. 17770/- pm during the fifth year of service. That’s the third number appearing in the pay structure.

Now, one can see a 300 next to 17770 in the pay structure. That means, we’re now done with the first five years and reached Rs. 17770/- pm as minimum wage for this employee. Hence for the next set of 5 years, the minimum wages should be increased for every service year by, not the old 250 but, Rs. 300/-. Hence, on the sixth year of service, the employee should have a minimum wage of Rs. 17770 + Rs. 300 = Rs. 18070/-. This will continue for the second block of 5 years. Hence, at the end of the 10th year (i.e. the fifth year of the second block), the employee should be getting a minimum of Rs. 19270/- pm as the salary. After the 10th year, the mandatory pay hike stops. If the employee gets promoted to a higher Grade, that’s a different story, in which case the minimum wages for that role will be applicable.

Image Courtesy: Investopedia

What if one gets more salary hike?

Good for them. The minimum wages talks about the minimum wages to be given, and the minimum pay hike to be given for every service years. If your pay is already above this level, then the employer is NOT obliged to give you the 250 or 300 pay hike.

Now, tell me about DA calculation?

Dearness Allowance is calculated based on an index called Consumer Price Index (CPI). I will skip the economy part and would encapsulate that it is a statistical number published by Dept of Economics and Statistics for various cities in the state, and it depicts the fluctuating cost of living. They publish it here.

DA is a mechanism provided to adjust the salaries for change in CPIs. If you look at the Minimum Wages notification, it says:
In addition to the basic rate of wages, all the employees shall be eligible for Dearness Allowance calculated on the basis of the Consumer Price Index published for the concerned District Head Quarters of the Department of Economics and Statistics at the rate of ₹ 26 (Rupees Twenty Six only) for monthly waged employees and ₹1 (Rupee One only) for daily waged employees respectively, for every point in excess of 300 points of the latest Consumer Price Index Number in the series 1998-99=100.
There are five parts to it:

  1. DA varies for each city (read district HQ)
  2. The rate of DA is Rs. 26/- for monthly waged employees
  3. DA is calculated for every point in excess of 300 points
  4. CPI is published periodically
  5. DA for this sector is calculated basis the CPI in the Series: 1998-99=100.

With these reading in mind, let’s calculate the DA for an employee posted in Trivandrum. Look at the CPI page on the EcoStat website and choose the latest month for which CPI is available. As I write this, it is Nov 2020. If you look at the Trivandrum’s CPI value under the column Estimated Indices for Base : 2011-12 = 100 Base : 1998-99 = 100 for Nov 2020, it is 369. That’s our little guy.

Now, we need to find out the DA from this 369. As per the #3 above, DA is calculated on the CPI-300 value. Here, it is 369-300 = 69.

We need to pay Rs. 26/- per month for every point in this 69. That means, the DA per month for an employee posted in Trivandrum is Rs. 26 * 69 = Rs. 1794/-

DA is paid over and top of the above minimum wage. DA may change when CPI changes.

Tip: An organisation need NOT provide DA as a pay structure component. They can subsume DA component in the gross pay and make sure that the gross pay is above the (minimum wages + DA) figure. But it would sound problematic for organisations who use the Wage Protection System, which mandates the DA component as such, in which case one may decide to keep that little guy in the pay structure.

Are we talking about Gross Salary or Basic+DA?

With the introduction of Code on Wages, 2019 (to be in force from Apr 1, 2021), all confusions with respect to the definition of wage will vanish. You may consider the Basic + DA + Other ordinarily paid allowances (other than OT, commissions, performance-based incentive, etc.) as the wage for this purpose, meaning we’re talking about the Gross Pay. Confused about Gross Pay, CTC, etc.? I’ll write about it in my next article 😉
Compliance is a Culture.

When is this to be effective from?

This notification is to be effective from Dec 18, 2020. Even if December 2020 and/or January 2021 salaries are already paid out by the employer, they are to abide by these changes. If there are revisions to be made as per this notification, then employers have to comply and give arrears wef Dec 18, 2020.

For the existing employees, if the salaries are to be revised to comply with this notification, then the employer must take care of the service weightage as well.

Where can I see minimum wages for other sectors?

Govt of Kerala published minimum wages notifications on this page. This is the old notification for the Software Industry.

An exercise

Well, now find out the minimum wages to be paid to a Senior Software Engineer with 3.2 years of experience in the current organisation in that grade, and posted at Calicut. Post your answers in the comment box and let’s see how many of you get it right 😉

This article is originally published on PeopleFirst blog, LinkedIn and Medium.

Content retrieved from: https://peoplefirst.in/software-engineer-and-getting-paid-below-17742-per-month-well-somethings-wrong-look-at-the-minimum-wages/.

#MeToo? Better Late than Never!

The topic was “Sexual Harassment & Consent”.
The recent happenings made it more feminine. Hence the female lot majored the show. But there were a few men who considered it as Unisex. Hats off to you MEN.
Now, what’s sexual harassment? To give more clarity, we were given an activity.
Need to close our eyes & think of the happiest moment (sexual in nature) in one’s life. Now find a buddy seated next to you & share that experience. I had a glance at my peers & could see serious discussions with a psychotic smile on their faces. My buddy was my good friend Ms. Sreelekha of Amphenol FCI. We were chatting instead. Now you need to share how you felt while sharing that beautiful experience.
Then on one corner, a male participant complained, “I discussed everything with him but he never shared anything with me.” Hearing that all had face aches.
NIPM Infopark Group and NASSCOM POSH Session 2018
Click to view in larger size
We got the real feel when they mentioned, “if you find it difficult in sharing your beautiful sexual experiences, how hard it will be to share your sexual experiences that haunt you.”
Even though this is a familiar term, we could feel the pain then on. Monolita & Saj gave an amazing start continued by Shyama explaining the legal side of it.
NIPM Infopark Group and NASSCOM POSH Session 2018
To cut the story short….major focus was given to sexual harassment at the workplace & the importance of having POSH policies, legislation & redress process pertaining to POSH. It was a really good learning experience. Moreover, simple acts we need to follow were given due attention in the session.
NIPM Infopark Group and NASSCOM POSH Session 2018
Packed with activities, sharing, fun & awareness, it was a 100% interactive session for which the speakers had to borrow some more time from the organizers to solve the participants’ queries.
Great job, ROV & thanks much to NASSCOM & NIPM Infopark group for the wonderful show.
NIPM Infopark Group and NASSCOM POSH Session 2018
The above article was written by Kshama Sandeep, Director-Recruitment, Glowmind Recruitment Consultants, who was an attendee in the POSH workshop organised by NIPM Infopark Group and NASSCOM Kochi. The accounts are on personal capacity.

Ordinance to make functioning easier: Kerala Shops and Commercial Establishments (Amendment) Ordinance, 2018

Kerala government recently published an ordinance amending certain provisions in the Kerala Shops and Commercial Establishments Act, 1960. There have been multiple amendment acts to the original said act, but this ordinance (which will hopefully be adopted as an amendment act by the next sitting of Kerala Legislative Assembly) comes with a purpose of easing […]

Kerala government recently published an ordinance amending certain provisions in the Kerala Shops and Commercial Establishments Act, 1960. There have been multiple amendment acts to the original said act, but this ordinance (which will hopefully be adopted as an amendment act by the next sitting of Kerala Legislative Assembly) comes with a purpose of easing the operations of Shops and Establishments while making it safer and humane for the employees. Let’s look at what are changing.

Definition of employee

The original act defines employee as ‘a person wholly or principally employed in, and in connection with, any establishment and includes an apprentices’. The new amendment extends this definition by suffixing ‘any class of persons as the Government may, by notification in the gazette, declare to be an employee for the purpose of this act.

Round the week functioning

The old act demanded that the shop/establishment should remain closed for at least one day per week, and such a day should be permanently displayed as a notice by the employer at a conspicuous location at the work place. Such a closed-day could not be altered by the employer for more than once in a period of three months, too.

With the amendment, the ‘shop/establishment must be closed for a day per week’ is removed, and it shrinks to allowing every employee to be entitled to one full day holiday per week, provided s/he has worked for at least 6 days in that week including all authorised leaves. This, in turn, allows the employer to function the shop/establishment round the week, with making the weekly holidays of employees rotate.

Curfew relaxed for women employees

The original acts mandated that no woman or any person who has not attained the age of seventeen shall be required or allowed to work whether as an employee or otherwise in any establishment before 6 A. M. or after 7 P. M.

The amendment relaxes the time limit from 7 PM to 9 PM. Here comes the historic change: the employer can now employ women employees between 9 PM and 6 AM (which was prohibited earlier) after getting the consent of such women employees. Further, such women employees must be working in a group of at least 5 employees wherein at least 2 are women.

Further, adequate security measures to ensure safety, honour, dignity, and protection from Sexual Harassment of women employees working during these hours should be ensured by the employer. Moreover, transportation from the workplace to the residence of such women employees should be arranged for by the employer (though the amendment does not provide that a security personnel accompany the women employees during this travel, it is implicit since the act talks about ‘safety’ measures—hence it would be wise to have the security measures as well taken care of during this travel).

Kerala’s IT Policy, earlier, gave relaxations to the above effects, but the amendment now extends this to all the sections of Shops and Establishments.

Scroll down to the bottom of this page for full version of the ordinanceHumane changes

Humane treatments

There have been a lot of protests, especially from the textiles industry, regarding inhumane treatments by employers, where employees were not allowed to sit during work hours. Kerala Human Rights Commission had intervened in the issue long ago, and Kerala Government sympathised with the employees thus treated. With an insertion of a provision in the original act, 21B, the amendment officially and legally puts an end to such inhumane treatments

The amendment says that all the shops/establishments must provide suitable seating arrangements for their workers to avoid on-the-toe situations throughout the duty time. This will call for a drastic change in many of the industries coming under the definition of Shops/Commercial Establishments.

Fines gets finer!

The violation of various provisions in the act may now attract a fine of Rs. 1 lakh and 2 lakh respectively, which was as mere as Rs. 5000/- and Rs. 10000/- earlier. There are some changes to the calculation of such fine and fine for wilful obstruction of inspectors/labour/govt officers from carrying out their official duties, which are available in the PDF below.

Last but not the least – electronic age!

Earlier, employers needed to take special permission from the labour authorities before keeping employee data (muster rolls, payrolls, etc.) in digital format. This has been a point of debate by many, and the government is now forced to accept that things have really changed and people have started to migrate to the digital world, the condition of prior approval has been lifted in the amendment. Employers can now keep the data in digital formats as well, without any sort of permission/approvals.

Let me know your thoughts in comments! Here is the Amendment Ordinance. You can find the original act here.

 

Regards,
Arunanand T A

Originally posted on Arunanand’s blog: PeopleFirst

Content retrieved from: https://peoplefirst.in/ordinance-to-make-operations-easier-kerala-shops-and-commercial-establishments-amendment-ordinance-2018/.

Welcome to NIPM Kerala

The Kerala Chapter of NIPM, with more than 1200 Individual Members and 47 Institutional Members on rolls is one of the most vibrant Chapters of the www.nipm.in – NIPM Kerala Chapter has been regularly organising Workshops & Learning Programs as part of its core objectives towards enhancing capabilities of the HR fraternity.

Following are some of the popular activities:

  1. HR Con Kerala – a biennial HR Conclave 
  2. Annual Legal Update – Flagship annual workshop providing relevant employment law related updates.
  3. Chapter Level Business Quiz for Management students
  4. HRM Skills Workshops for practicing professionals – HR & Non HR
  5. Labour Law skills workshops for practicing professionals – HR & Non HR
  6. Enhanced Employability Certification programs for job seekers and for final year Students at various B-Schools – on periodic as well as upon request by institutes.
  7. Young Managers’ Contest on “Innovative Employee Engagement Practices” for Practicing HR professionals etc.
  8. Quarterly Magazine – Kerala Personnel to share knowledge snippets relevant to members.
  9. Annual gathering of members and family – which occurs after the Annual General meeting.

The chapter had initiated blogging some time back and the Old blog posts can be found on www.nipmkerala.wordpress.com.

The chapter is glad to present this platform to promote unique thoughts and approaches from HR practitioners and business professionals.

Professionals desiring to be featured on this blog may send in their requests via EC members to kc@nipmkerala.org

The chapter can be reached on the internet from the following Social channels:

Facebook – https://www.facebook.com/nipmkerala/ 

Twitter – https://twitter.com/nipmkerala 

Linkedin – https://www.linkedin.com/company/nipmkeralachapter/

Instagram – https://www.instagram.com/nipmkerala

Website – www.nipmkerala.org