In a Circular dated 21st July, 2020 the Karnataka Employer’s Association has informed that the Department of Labour, Government of Karnataka in its order dated 20th July, 2020 has permitted postponement of payment of Variable Dearness Allowance (“VDA”) payable under various Minimum Wages Notifications by employers for the period from 01.04.2020 to 31.03.2021.
The said deferment is done 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.
Implications:
1. The 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.
2. The employers will be liable to pay the deferred VDA after 31.03.2021 to their workmen in addition to the VDA as applicable from 01.04.2021 onwards.
3. If employers choose not to pay any VDA, they will not be liable to pay Employees’ State Insurance (“ESI”) and Provident Fund (“PF”) also on the deferred VD.
However, ESI and PF will become payable when the deferred VDA is paid after 31.03.2021.
4. When the deferred VDA is paid, the employers will be liable to pay difference in bonus and also difference in leave with wages as well as difference in overtime payment.
5. These options are available for VDA payable to Contract Labourers also.
Key Takeaways:
1. Employers can 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.
2. If the employers have already paid the VDA for the months of April to June 2020, they may avail deferment of VDA facility from July 2020 onwards.
Source: Karnataka Employer’s Association
