Wages refer to all monetary payments in the form of salaries, allowances, etc. that an employer pays to a person for their work or employment, including:
- Basic Pay
- Dearness Allowance
- Retaining Allowance (if any)
There are some monetary payments that are not included in wages:
- Any legally required bonus not included under the employment agreement. For example, the annual bonus an employer is required to give employees in addition to wages.
- Amenities like house accommodation, electricity, water, medical attendance, etc. which the Government has excluded from wages
- Employer’s contributions paid to pension or provident fund, and the resulting interest
- Conveyance allowance or travelling concession
- House rent allowance
- Overtime allowance
- Payment for special expenses depending upon the nature of the employment. For example, if a glassworker requires a specific tool to carry out their work, this could be a special expense paid for by the employer.
- Gratuity, retrenchment compensation, or other retirement benefits.
Payment of a legal award or settlement made between parties by the order of the court1.
- Section 2(y), Code on Wages, 2019.