Uttar Pradesh Government Issues Notification on Variable Dearness Allowance

On May 16, 2024, the Government of Uttar Pradesh released an important notification regarding the Variable Dearness Allowance (VDA) payable to employees in 74 scheduled employments under the Minimum Wages Act, 1948. This move aims to ensure fair wages for workers, reflecting changes in the cost of living.

Key Highlights of the Notification

1. Basic Wage and VDA Calculation: The notification stipulates that:

• The basic wage and VDA combined shall not be less than 1/26 of the monthly wage.
• The hourly wage rate should not be less than 1/6 of the daily wage rate.

2. Adjustment Based on Consumer Price Index: The All-India Consumer Price Index (AICPI) plays a crucial role in determining the VDA. According to the latest notification:

• The AICPI for the specified employments has shifted from an average of 400 points (base year: July 2012 to December 2012) to an average of 386 points for the period from April 1, 2024, to September 30, 2024.

3. VDA Period:

• The new VDA rates are applicable for the period from July 2023 to December 2023.

Understanding Variable Dearness Allowance (VDA)

Variable Dearness Allowance is an essential component of a worker’s salary, designed to offset inflation and changes in the cost of living. It ensures that the purchasing power of workers remains relatively stable, even when prices of goods and services increase.

Impact on Workers and Employers

For Workers:

• This notification brings a positive change for workers, ensuring their wages keep pace with inflation.
• By linking wages to the Consumer Price Index, workers’ real income remains protected against rising prices.

For Employers:

• Employers need to adjust their payroll systems to accommodate the new VDA rates.
• This change might impact the overall wage bill, especially for businesses employing a large number of workers in the specified categories.

Conclusion

The Uttar Pradesh government’s decision to revise the VDA is a significant step towards ensuring fair wages and protecting workers’ living standards amidst changing economic conditions. Both employers and employees must stay informed about these changes to ensure compliance and benefit from the new wage structure.

For a detailed understanding and specific rates, please refer to the official notification issued by the Government of Uttar Pradesh.

Stay tuned for more updates on labor laws and regulations.