Clarification On Labour Law - CiteHR
Umakanthan53
Labour Law & Hr Consultant
Madhu.T.K
Industrial Relations And Labour Laws
Nathrao
Insolvency N Gst Professional
Korgaonkar K A
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Kindly clarify the following sentence when it appears in a Labour Law used while defining wages. What does it exactly indicates.
"any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment"
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This is nothing but Special Allowance paid as a component of Salary. As per law special allowance (other than Dearness Allowance) is paid to such employees who take some additional responsibility, additional risk in carrying out his duties and is not paid at par with other employees. This is an amount which covers/ defray some additional expenses incurred by an employee to keep his knowledge updated or health in tact which may be affected due to the nature of the work. This is something additional that a particular category of employees get as part of their remuneration.

In the current scenario of private establishments, where there is no parameters for fixation of salary, we fix as per the market and in this process, we will first decide how much should be one's salary, then put a fraction of it as basic salary (probably, the least because there is a tradition that it is on the basic salary only that we need to pay PF, Bonus, Gratuity and other statutory benefits!!!) put one component as HRA, another as conveyance and a huge sum as Special Allowance. Surprisingly, this special allowance is paid to all, including clerks who work in the office and worker who enters into high temperature vessel as part of his ordinary work. In this fixation, the so called special allowance is not the one which is under discussion. The special allowances which are commonly paid to all employees irrespective of the fact whether they take any additional responsibility or is paid to defray any special expenses, are considered as part of Salary on which PF, Bonus, Gratuity etc should be paid. On the other hand, the special allowance which is mentioned above as some amount paid to cover special expenses which is paid only to those who take any special task, is not part of salary for the purpose of PF, bonus, gratuity and other payments.

Madhu.T.K
In addition to what Mr.Madhu has stated, I would like to share my views on the question. In general wages, salary, remuneration, pay etc are synonyms indicating the sum total of the payments made by the employer to the employee for the work done by him over a fixed point of period as agreed in the contract of employment. Its connotation may differ according to the status and mode of employment. However, when the employment becomes formal, regular and structured, in order to minimize certain indirect commitments of the employer towards fringe benefits like social security, bonus etc., as suggested by Madhu, the total sum payable is broken into different components such as basic, dearness allowance, HRA, conveyance allowance, medical allowance, travelling allowance and the like. How far an employer is progressive, generous and people-oriented can be deduced from the remuneration structure adopted by him. But unfortunately the contrary is the result based on the principle of Cost To the Company. When it is not possible to classify any portion of the payment, it is called as special allowance without any speciality either relatable to the employment or its payment as such. That's how it becomes to be treated as a component of effective remuneration for the purpose of the statutory financial commitments of the employer as indicated by Madhu. If I remember correct there is a Supreme Court judgment upholding any payment under the nomenclature of Special Allowance as an inseparble component of wages. Therefore, the phrase " any sum paid to the person employed to defray special expenses entailed on him by the nature of employment " indicates only the exact and the direct relation between the employee's performance of his duties and the expenses.
Respected Dear Madhu ji & Umakanthan ji,

With due respect to both of you Sirs, my submission to the query is as under:

The queriest is talking about SPECIAL EXPENSE entailed on him and not on SPECIAL ALLOWANCE.

Definition of wages as given in different enactments and considering general definition with broad analogy, wages does not includes any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment.

I feel the queriest wanted to know what are the special expenses entailed on him by nature of his employment.

If employer incurs or spends or pays any sum to / on employee because of his nature of employment, this sum should not be considered as wages. e.g. washing allowance paid to shop floor employees, certain allowances paid / expenses made only for doing particular kind of work such cashier allowance, expense on milk for doing night shift, certain allowances paid / expenses made for employment on hazardous process etc. Payment for jaggery in cement factories is of this kind.

Hope I am not wrong in reply.
Yes, Mr.Korgaonkar we also mean the same but with more emphasis and explanation on the head of allowances under which such expenses are compensated by the employer in practice.
Dear Rahul ji,

This forum is a knowledge sharing platform. You have an opportunity here to share your knowledge in labour law consultancy in which you are practicing and prove your worth to forum without advertising.

Still you wish to advertise your consultancy, the forum has provided options to you. You can choose any of the options in recruitment projects & consultants market, consultant & service provider listing, looking for consultant & service provider or in professionals looking for new opportunities in which you can make your advertisements in numbers daily .

Such kind of posts irrelevant to discussion in progress disturb the link of the discussion. I have noticed that all your posts since your membership from 13.06.2015 onwards are of this kind only.

Please pardon me for this post mine. I too, an ordinary member like you. With 16 number of posts you will also became a contributory member like me very soon. Still I felt to write it and that is why I am asking you to pardon me Sir.
"""any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment"
In my opinion this special expense like uniform allowance given to people who compulsorily have to wear an uniform for the purpose of cleaning,maintaining their uniform.
What Shri Korgaonkar has written is correct meaning of the sentence/term/
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