Many years ago, in my company an officer did some excellent work and solved the much troublesome problem. Management was happy and wanted to reward that officer. Managing Director asked that officer what he would like as his reward? The officer replied that he would like a trip to Hawaii. Managing Director said, go ahead, enjoy and come back fresh. This is LTA.
When it comes for all employees there are rules as to amount, duration, frequency etc. One more aspect is it does not attract income tax in certain cases. One other aspect is that the remuneration is divided in two parts, direct and indirect. Indirect did not attract ESI, PF, Bonus and Gratuity. LTA is indirect. Where to increase the rise in remuneration? In some cases to accomodate increase in remuneration Honeymoon allowance was introduced.
In India the unions have failed in securing benefits for working class. They went on accepting allowances for benefits. Result is working class is without homes but they have house rent allowance, they are not educated but they have education allowance, they do not travel and become wise but they have LTA,
15th March 2013 From India, Pune