How Much Will The Minimum And Guaranteed Wage Rise in 2019

There is a substantial increase not only in the minimum but also in the guaranteed wage. How much do employees get better and which additional data on raising the minimum wage will affect?

The government has approved an increase in the minimum wage. Draft amendment to the Government Order on Minimum and Guaranteed Wages with number 567/2006 Coll. is based on the current and future anticipated favorable development of the Indian economy, which is positively reflected by the growth of gross domestic product, employment growth and falling unemployment.

As explained in the explanatory memorandum, the minimum wage has two basic functions in relation to both employees and employers.

  • Social protection function  – it should protect employees from poverty and allow them to live at the level of modest material consumption and social contacts. Employers should ensure a level playing field for wage competition (to prevent wage undermining of domestic and foreign labor).
  • Economic Criteria  – creates prerequisites for income motivation of citizens to seek, receive and perform work, i.e by means of working income to favor employees against persons with only social income. For employers, it represents the lowest level of wage costs for their employees.

1. Minimum wage

The minimum wage is the lowest allowable amount of the remuneration the employer is obliged to provide for the employee in the employment relationship and in the legal relations established by the agreements on work done outside the employment relationship ( work agreement and work agreement).

In the case of agreements, however, only the minimum hourly wage is mentioned, not the monthly wage.

For the year 2019 an initial increase of inr 1500 was proposed. The minimum wage will eventually rise from the current 12,200 inr to 13,350 inr and the hourly rate of 73.20 crowns to 79.80 inr.

2. Guaranteed wage

Employees whose wages are not covered by a collective agreement are protected from providing too low wages with a guaranteed salary. The work done is graded according to its complexity, responsibility and severity into eight individual groups, each with an undefillable (lowest) level of guaranteed salary. Therefore, only a minimum wage is not binding on employers, but must be rewarded at least at the level of the respective wage groups. And it grows with every wage increase minimal.

Similarly to the minimum wage, the guaranteed wage is set both hourly and monthly and, similarly to a wage lower than the minimum wage , the wage lower than that guaranteed must be paid. Wage or salary does not include wages or salaries for overtime work, holiday pay, night work, hard work, and work on Saturdays and Sundays. Guaranteed wage does not currently apply to non-employment agreements.

3. Surcharge for work in a difficult work environment

The wage supplement for work in a difficult working environment is determined by the percentage of the basic minimum wage rate. From January 2019, at least 10% of the minimum wage will be 13 350 INR, i.e at least 1335 INR. The hourly rate of the bonus is then set at a minimum of  INR 7.98.

4. Impacts on Health Insurance and the Income Tax Act

Increasing the minimum wage will also have an impact on other laws.

  • There will be an increase in the minimum assessment base for health insurance (INR 13,350). Increase in premiums will also have to be paid to insured persons registered in the category of persons without taxable income.
  • The tax discount for the child’s placement, the so-called kindergarten, will increase to INR 13,350 in 2019 .
  • The income thresholds that must be reached for entitlement to the payment of a child tax bonus, ie six times the minimum wage (next year , respectively, INR 80,100 ), respectively, will be increased . monthly half of the minimum wage (the next year is INR 6675 ) for a monthly tax bonus at the employer.
  • The limit for exempting regularly paid pensions (annual amount up to 36 times the minimum wage) is increased to INR 480,600 (only for extra-ordinary pensions – the monthly pension would have to exceed INR 40,050).

5. Minimum wage according to the Labor Code

However, from 2020 onwards, there could be a further rise in the minimum wage, this time much more dramatic. According to the most recent amendment to the Labor Code, the minimum wage should be increased to 54.8% of the average wage from January. It is still a draft amendment to the Labor Code. It is at the beginning of the legislative process. Efficiency is planned from mid-2019, but more realistic is 2020.

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