Bihar Government Introduces Variable Dearness Allowance Formula for Minimum Wages

The Governor of Bihar issued Notification S.O. 167 on September 24, 2025, formally introducing a formula for Variable Dearness Allowance (VDA) to be applied to the minimum rates of wages for various categories of employees across numerous scheduled employments within the state. This significant delegated legislation was enacted in exercise of powers conferred by Section 3, read with Clause (B) of Sub-section (1) of Section 5, of the Minimum Wages Act, 1948. The notification specifies the revised minimum wage rates, inclusive of the VDA, which became effective from October 1, 2025. The measure aims to provide a dynamic adjustment mechanism for wages, ensuring that the real earnings of workers are protected against inflationary pressures.

The notification details the application of the VDA formula to minimum wages fixed or revised for different categories of employees, including unskilled, semi-skilled, skilled, and highly skilled workers, as well as those engaged in piece-rate work across a comprehensive list of 89 non-agricultural scheduled employments. These employments span diverse sectors such as Co-operative, Aluminum, Chemical and Pharmaceutical, Paper, Textile (Hosieries, Handloom, Power loom, Silk), Manufacturing (Sindur & Rang, Leather goods, Biscuit, Bidi Making, Brick Manufactory), Services (Laundries & washing, Religious & Social Institution, Private Hospitals, Nursing Homes and Clinics, Hair Cutting Saloon, Currier Services, Private Security Agency, Domestic Workers), Construction (Dam Construction & Irrigation, Construction or Maintenance of Road or in Building Construction, Stone Breaking and Stone Crushing Operation, Earth Cutting Operation), and others like Fisheries, Tea Plantation, and Information Technology. For domestic employments, the notification clarifies that the minimum wage rate for one hour of work is calculated by dividing the daily rate by eight, and the monthly rate by multiplying the daily rate by twenty-six.

The legislative intent behind this notification is to establish a transparent and responsive system for minimum wage adjustments. The earlier legal framework under the Minimum Wages Act, 1948, provided for the fixation and revision of minimum wages, but the introduction of a VDA formula directly linked to the All India Consumer Price Index (AICPI) addresses the critical issue of maintaining the purchasing power of workers. This mechanism fills a statutory gap by ensuring that wage rates are not static but evolve with economic conditions. The legislation provided: “In accordance with any increase or decrease in the said index, the minimum wage rates shall be correspondingly increased or decreased from the rate specified in Column-4 of the above schedule, and such adjustment shall be deemed to constitute the component of Variable Dearness Allowance.” This ensures that minimum wages are automatically adjusted, preventing the erosion of real wages due to inflation. However, it also stipulates that if the index falls below the point at which minimum wage rates were initially determined or revised, no downward change shall be made. The VDA rates are based on the average point of the AICPI for the period of January to June 2025, with subsequent adjustments to be implemented three months after the end of each half-yearly period, based on the average AICPI for that respective six-month period. Furthermore, the notification mandates equal wage rates for male and female workers performing the same or similar type of work and specifies that for overtime work on weekly rest days or any other day, workers are entitled to twice the prescribed wages, as per Rule 25 of the Bihar Minimum Wages Rules, 1951. A note also states, "Decision of 15% less earth cutting for women worker, but will gate equal wage," indicating a specific consideration for women in earth cutting operations while ensuring wage parity.

Keywords: Minimum Wages, Variable Dearness Allowance, Bihar, Labour Law, AICPI, Scheduled Employment, Wage Revision, Notification

Geo Tags: India, Bihar District: Not Applicable