Subsistence Allowance - deductions - pension fund.. CiteLegal

ganesanvenki Started The Discussion:

Dear Friends,
I have suspended, pending enquiry 2 employees for their prolonging habitual absenteeism.
In this connection i have the following doubts that can be clarified please.

1) Can the Subsistence allowance be treated as wages? if so is it be eligible for the deduction of PF,ESI?
2) From the payable subsistence allowance we can deduct the outstanding salary loan (EMI) given by the company to the suspended employee, LIC Premium under SSS Schme?
3) Will the employee be treated as continued employee during the suspension period?
4) Suspension Period, pending enquiry and subsistence allowance can be taken in to account for the calculation of Earned Leave wages, Gratuity, bonus?
5) For the 50% (during the 1st 90 days) Subsistence allowance calculation we should take only Basic+D.A or the full gross salary?


V Ganesan

srivastava.amardeep -  Member Since: Sep 2009
The answer to your queries point wise is as under -
1. Susbsistence allowance is to be treated as wages for the purpose of PF & ESIC.
2. Loan recovery cannot be done from the susistence allowance.
3. Query no.3 is not clear. It seems that the question is whether the period of suspension is to be treated as period spent on duty or not. If I have understood the question correctly, I would advise you to refer to your service rules in this regard. Generally, after the inquiry is over and if the employee is exonerated the suspension period is treated as period spent on duty. Otherwise it is not treated so unless the competent authority so directs.
4. Query no. 4 again is not clear. I don't think that the issues referred would arise during the suspension period.
5. For query no.5 you should examine your service rules. Generally for subsistence allowance 50% of the basic is taken plus DA thereon and compensatory allowances.

K C S Kutty -  Member Since: Nov 2008
If you are from Tamil Nadu, pl read the following. An employee under suspension shallbe paid subsistence Allowance as per the Tamil Nadu Payment of Subsistence Allowance Act 1981.

What constitutes Wages for payment of subsistence Allowance?

Employee is entitled to Subsistence Allowance on the Wages drawn by him immediately before the suspension. Now what are the components of wages? Wages is not directly defined in this Act and under Section 2 (h) a reference to the definition in the Industrial Disputes Act 1947 is made.

As per Section 2 (rr) of the Industrial Disputes Act 1947, "wages" means all remuneration capable of being expressed in terms of money, which would, if the terms of employment, express or implied, were fulfilled, be payable to a workman in respect of his employment or of work done in such employment, and includes -

(i) such allowance (including dearness allowance) as the workman is for the time being entitled to;
(ii) the value of any house accommodation, or of supply of light, water medical attendance or other amenity or of any service or of any concessional supply of foodgrains or other articles;
(iii) any travelling concession;
(iv) any commission payable on the promotion of sales or business or both
but does not include -
(a) any bonus;
(b) any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the workman under any law for the time being in force;
(c) any gratuity payable on the termination of his service.

It means that the employee is entitled to Subsistence Allowance based on the regular wages, which he was drawing immediately before the suspension.

Instead of thinking what to pay or what not to pay, conduct the domestic enquiry, and take appropriate action without wasting time.

Payment of ESI contribution is a must. If you do not deduct and pay ESI contribution now ( contribution period) and later if they were found not guilty of charges you have to taken to service. Since they wont make contribution during contribution period, they will not eligible for ESI benefits during the corresponding benefit period. If any unfortunate thing happens, who is responsible ?

Similarly, if LIC premium of SSS cannot be paid directly. If the policy lapses, and the employee dies in between, his family will be deprieved of the benefits of the policy.

Please think from the point of the Employee also and not law alone.

Best wishes,

KCS Kutty, Chennai

ganesanvenki -  Member Since: Sep 2009
Dear Mr.KCS,

The reply given by you is fantastic. I am very glad. I will concentrate on the enquiry. If you are in chennai why do not you introduce me some of your friends who are conducting enquiries.Pl contact me in my ID please. Once again thank you for your valued clarification
V Ganesan

ganesanvenki -  Member Since: Sep 2009
Dear Mr.Amardeep. Thank you very much for your kind clarification with regard to subsistence allowance. regards V Ganesan

K C S Kutty -  Member Since: Nov 2008
The misconduct is not a very complicated one. You can engage any one of your sub ordinates.
There will be no need of examination or cross examination. Records are the proof.
But before inflicting the punishment on the charge sheeted employees, call them, have a personal discussion with them, find out the reasons for their absenteesm. there can be some genuine reasons.
As HR Manager, perhaps, you may be able to set right things.

If you still wanted to conduct enquiry I can suggest some of my friends who have conducted more than 300 enquiries and given a correct report ( not report as wanted by the employer !!!!)

I am not a legal practitioner; head of a HRD Institution in Chennai.

ganesanvenki -  Member Since: Sep 2009
Dear Mr.KCS,

Since our company is a service industry, our management is rigid on this issue of absenteeism. Hence they are in the aim of conducting enquiry only. Pl suggest me some of the enquiry officers.


V Ganesan

K C S Kutty -  Member Since: Nov 2008
Sorry I could not get back to you as I was out of Chennai for last two days. I shall send the details after getting confirmation from a friend, who had conducted abour 250 enquiries.

K C S Kutty -  Member Since: Nov 2008

My friend who is an expert enquiry officer is contacted and he is now busy and cannot take up any assignment for next 3 months. You may engage a Lawyer from nearby area so that it can be quickly completed and report given.

But once again I request you kindly to talk to them and counsel them. conduct enquiry and based on the enquiry findings, give them minor punishment and instruct them to improve. Alternatively, you may convince them to give resignation (after enquiry) and based on the resignation, relieve them with benefits so that no legal complications will come up later. Dismissal/ discharge will invite litigations as it is an industrial dispute under Section 2-A of the ID Act. (And the employee dismissed for a misconduct of absenteeism will get an Award from Labour Court for Reinstatement, with back wages and continuity in service. Convince your Management. - Choose your way - Industrial peace or industrial unrest. There is no legal remedy for every problem.

Coimbatore Pricol incident should be eye opener to everyone who deal with I.R.

Best Wishes,

KCS Kutty

ganesanvenki -  Member Since: Sep 2009
Dear Mr.KCS, Thank you for your efforts that you have taken for me. I am also going parallel with your views. if possible , since i am also a chennai person, i want to meet you for a courtesy sake.


  • Do not post anything derogatory about any company or person.
  • Sharing articles from other websites should be done by posting a link to the original article.
  • To discuss sensitive issues create a pseudo/anonymous account.
  • Please avoid repeat posting your company profile - such accounts are removed automatically.

  • Found This Useful? +Vote Up This Via Google.  

    Why Vote? User validation is extremely important for good content to prosper.
    Disclaimer: This network and the advice provided in good faith by our members only facilitates as a direction towards the actions necessary. The advice should be validated by proper consultation with a certified professional. The network or the members providing advice cannot be held liable for any consequences, under any circumstances.

    Cite.Co helps people come together to solve each other's problems on all aspects of professional life.
    Share This Discussion:

    3M Users, 100K+ Documents & 450K+ Discussions

    About Us - Advertise - Contact Us - RSS   On Google+  
    All trademarks and copyrights held by respective owners. Member comments are owned by the poster.
    Privacy Policy | Disclaimer | Terms Of Service
    Facebook Page | Follow Us On Twitter | Linkedin Network