Reimbursement Components Deducted Proportionately If Salary Is Deducted - CiteHR
Umakanthan53
Labour Law & Hr Consultant
Madhu.T.K
Industrial Relations And Labour Laws
Adoni Suguresh
Sr.executive (per & Adm)
Pon1965
Construction
+4 Others

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My question is this , if an employee has a reimbursement as part of salary like medical reimbursement of Rs1250 per month and fuel reimbursement of Rs7500 per month and if the salary is paid for less days i.e. salary is deducted and paid for say 20 days , so will both medical and fuel reimbursement be deducted proportionately as in they will be paid for 20 days or will they be paid in full, say even if an employee comes for just 2 days in a month and 2 days salary is paid, so will the employee get fuel and medical reimbursement for 2 days only??
Please answer this query, as i have searched and found no answer for the same.
Since it is part of salary but put as reimbursements for tax purpose, the same shall be deducted proportionately to the number of days worked, if theere is leaves without pay. In case of leaves with pay, obviously, full pay will be paid and the reimbursement will also be paid in full. At the same time, in the olden salary scale set up (not the present CTC style) these are not salary part but are purely employee benefits and therefore they will become payable for the full month.
Madhu.T.K

Mr.Madhu's comparison of the conventional scale based salary and the present CTC based salary compels me to adopt a different perspective to answer the question. As rightly pointed out by Madhu, certain allowances like medical reimbursement,Leave Travel Concession,Educational Fee Reimbursement of children etc., are granted to employees as welfare measures. If we conceptually analyse these welfare benefits and their periodicity of payment, we can find them to be only ocassional payments that too for some definite purposes. Of course it is not wrong to include them notionally for the purpose of determining C.T.C. So, my personal view also is that such ocassional payments connected to welfare need not be deducted for absence on pro rata basis. At the same time certain allowances partaking the nature of compensating some special expenses incurred by the employee in connection with the performance of his job can well be related to attendance.
Some components are split to arrive CTC. For the people who are in CTC, these components will be deducted on pro-rata basis. Pon
As Madhu explained, Any component as part of salary will be pro-rated.
If any payment is made as reimbursement against bills that need not be deducted according to attendance. Varghese Mathew
Hi....

I fully agree with Mr.Umakanthan for his valuable guidance. Mr.Madhu is also explained his views suitably and thanks for both writers.
Adoni Suguresh
Sr.Executive (Pers, Admin & Ind.Rels) Rtd
Labour Laws Consultant

Remuneration is the result of an employee- employer relationship. Total remuneration will be split into certain components like basic salary, dearness allowance, house rent allowance, conveyance allowance, telephone allowance, education allowance, medical allowance and so on. Sometimes, certain elements of salary will be paid as reimbursements, like, instead of conveyance allowance fuel reimbursement, for telephone allowance there will be telephone reimbursement, for medical allowance we can pay medical reimbursement etc on production of bills in original. This arrangement is available so long as the above said employee employer relationship exists. That is why the reimbursements are taken prorate for the month in which the employee joined and for the month in which he leaves, or simply it is available in full for the days for which there existed employee employer relationship.

If we analyse the purpose for which each component of salary is paid, we will find that each is related to employment. For example, if conveyance allowance which is an allowance forming part of salary, is paid to the employee to meet his travelling expenses from his residence to office and back, should we pay it if he has not come to office? If telephone allowance is paid to recoup the expenses he incurs by making official calls from his personal telephone should it be paid he has not made any official calls during a month or part of the month? If medical allowance is paid as part of salary it is paid to care of himself being employed and will it be paid when he has not worked? We will not pay it because these are allowances forming part of salary. But when it comes to reimbursements, it is not actually limited to travel to office or making official calls but you are getting it for your personal travel (fuel reimbursement) , personal calls or medical care of family and all these are available so long as the employee- employer relationship exists.

But the main problem comes when the employee is absent or on leave without pay for the entire or substantial period of the month. In such a scenario, claiming the reimbursement alone will not hold good just like claiming salary for the off days and holidays intervening a whole range of leave without pay. If we view in that direction, why canít we say that reimbursements should also be paid prorate if there is no pay days? This is an outcome of the thought that on days without pay there exists no employee employer relationship!! It is just a thought, please share your views.

Madhu.T.K

Madhu has advanced really very nice arguments for his view-points on the matter and all the more they are easily comprehensible and highly practical as well. Hence my present response is not counter-argumentative but complementary to fill the void that can emerge with reference to the nature and purpose of certain allowances the grant of which is not merely to increase the employee's real or money wages but to keep him as a dignified member of the society. Considering industrial employment as it is obtaining now, it is a sustained relationship between the parties to the contract of employment. Based on its perpetuality which is though limited subject to the conditions agreed in the contract, the practice of paying monthly remuneration, not as a mere mode or periodicity of payment, came to be widely recognized as a system of compensation for the service rendered by employees as per the contract. In this context, compensation for employment can not be similar to that of payment for casual nature of works.If that is the case no necessity to pay for leave of absence but for the statutory compulsion. Here, the readers should kindly understand that I am not arguing for habitual or wanton absenteeism. Take the case of an employee who has availed of all the leave at his credit, but goes on leave on L.O.P either for his own treatment or his wife's, will it be fair to effect a pro-rata cut of the medical bills actually paid by him? Can we also refuse proportionate amount of educational allowance to his children? C.T.C is an accounting concept to evaluate the total cost incurred by the management in respect of each employee. Take the case of employees in managerial or gold-collar jobs and in essential services. Will their C.T.C be proportionate to the actual value, time and energy they spend on their jobs? I don't mean to say that such benefits should be free-bies.Every benefit should be given measured. But that measure should not be a stingy one like pro-rata basis. Even for certain statutory social security benefits, minimum length of service is prescribed for eligibility and entitlement. So, no harm in prescribing broader normS rather than pro-rate basis with reference to C.T.C.

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