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Thursday, July 23, 2020

KARNATAKA DEFERS PAYMENT OF VDA PAYABLE UNDER MINIMUM WAGES BY ONE YEAR

KARNATAKA DEFERS PAYMENT OF VDA PAYABLE UNDER MINIMUM WAGES BY ONE YEAR

 1. The Department of Labour, Government of Karnataka vide its order No. KAE 72 LWA 2020 dated 20.07.2020 has permitted postponement of payment of VDA payable under various Minimum Wages Notifications by employers for the period from 01.04.2020 to 31.03.2021 to mitigate the hardship being faced by the employers who were directed by the Central Government to pay wages, including VDA to their employees for the lockdown period.

 

2. The implications of the order to defer VDA are:

· Employers can avail this facility and defer payment of VDA of Rs. 417.60 per month which has become payable from 01.04.2020 to 31.03.2021 under various Minimum Wage notifications.

· The employers will have to pay the deferred VDA after 31.03.2021 to their workmen in addition to the VDA as applicable from 01.04.2021 onwards.

· If employers choose not to pay VDA, they will not be liable to pay ESI and PF also on the deferred VDA.

·However, ESI and PF will become payable when the deferred VDA is paid after 31.03.2021

· When the deferred VDA is paid, the employers will also have to pay the difference in bonus and also a difference in leave with wages as well as the difference in overtime payment.

· These options are available for VDA payable to Contract Labourers also

 

3. Employers may choose to pay the VDA of Rs. 417.60 per month without availing the deferment facility if they feel it is burdensome to pay the deferred VDA after 31.03.2021.

4. If employers have already paid VDA for the months of April to June 2020, they may avail deferment of VDA facility from July 2020 onwards.

5. Employers are advised to choose the best option from the above keeping in mind their present financial condition as well as their future financial projections.

6. A copy of the Order No. KAE 72 LWA 2020 dated 20.07.2020 issued by the Department of Labour, Govt. of Karnataka is attached herewith.



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