Base wage rate

Meaning & Definition

Base Wage Rate refers to a minimum fixed amount paid to an employee for performing his/her job duties only. Base wage rate excludes all other forms of compensation, e.g., bonuses, allowances, etc. In human resources or payroll management, base wage rates are used as the basis for calculating statutory benefits, authorised overtime pay, and paying employees in accordance with wage compliance laws.

Wage Structure & Compliance Highlights

The employee wage structure consists of the following:

• Overtime and statutory benefits are calculated from this wage structure.
• Compliance with minimum wage laws is maintained by using this wage structure.
• Payroll processing will be accurate with this wage structure.
• An HRMS payroll system manages this wage structure.

Legal Compliance / Policies / Regulations (India) 

All employers are required to pay their employees a base wage at least in accordance with legal standards established by:

• The Code on Wages, 2019
• The Minimum Wages Act of 1948 (now superseded by the Code on Wages)
• The Payment of Wages Act of 1936
• State Minimum Wage Notifications

In addition to compliance with state-specific minimum wages, employers must provide at least the minimum wage as established under the above Acts.