Labour Law & Hr Consultant
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Nagarkar Vinayak L
Hr And Employee Relations Consultant
Bhartiya Akhil

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Hi I would like to know the difference between Dearness allowance and Special Allowance? Both are same or different?
From India, Mumbai
Dear Kavita Dhage,
You are from Mumbai, it seems.
In Maharashtra, Special Allowance denotes Dearness Allowance. Both are same.
In other States, Special Allowance is not a Dearness Allowance.
Dearness Allowance (or Special Allowance in Maharashtra) is paid to mitigate the impact of inflation or cost of living.

From India, Mumbai
Dear Kavita,
I have no idea about the practice in Maharashtra as referred to by Akhil.
Special allowance, if paid in addition to basic and other allowances, by the very name, is an allowance payable in respect of certain peculiar nature in the performance of the job and as such it is different from dearness allowance the purpose of which is to neutralize the effect periodical rise in the general price level. In the absence of any factual reason for the inclusion of special allowance as a component in the wage structure, it has to be considered as part of the basic wages.

From India, Salem
Dear Umakanthan Sir,
I would like to draw your kind attention to the section 4 (1) (i) which is given verbatim as under:
"4. (1) Any minimum rate of wages fixed or revised by the appropriate government in respect of scheduled employments under section 3 may consist of –
(i) a basic rate of wages and a special allowance at a rate to be adjusted at such intervals and in such manner as the appropriate government may direct to accord as nearly as practicable with the variation in the cost of living index number applicable to such workers (hereinafter referred to as the "cost of living allowance");"
I am also attaching herewith one latest notification by GOM revising minimum rates of wages of one of the schedule industries. In this notification you will find in Appendix thereto written Special Allowance (hereinafter referred to as "the cost of living allowance"). It there in every such notification.
Hope this will suffice what I said in my post #2 above.

From India, Mumbai

Attached Files
File Type: pdf BASIC RATE REVISION_LOCAL AUTHORITY_AUG20.pdf (3.23 MB, 31 views)

Dear madam,
Under the Minimum Wages Act/Rules in Maharashtra, Special Allowance is same as Dearness Allowance.
Dearness Allowance , either statutorily given or voluntarily paid by the employers through wage agreements, has come to be paid to neutralize erosion of basic wages ( purchasing power) caused by rise in the cost of living.
When by all means it is dearness allowance, it is ununderstandable why Government of Maharashtra, has chosen to call it by the nomenclature of Special Allowance which is a misfit and misleading.
Vinayak Nagarkar
HR and Employee Relations Consultant

From India, Mumbai
Perhaps Sec. 4(1) of the MWA,1948 as cited by Akhil uses the term " special allowance" only in order to describe the otherwise commonly called dearness allowance in contra distinction with other allowances which may be included in the wage structure. The Maharashtra Govt simply adopted the terminology of the section - that's all.
Kavita's question also springs up from the Maharashtra Govt's usage only. Therefore, going by the standard use of the term "special allowance" elsewhere, ordinarily special allowance is different from dearness allowance and one cannot be substituted for the other particularly in respect of calculations like gratuity, lay-off compensation etc.

From India, Salem
Continuing what has been described by learned member Mr.Umakanthan some more aspects also distinguish Dearness Allowance (generally followed in govt. & quasi govt establishments, industrial/mining sectors) from Special Allw. For instance, shall take note of the recent judgment of the SC on treatment of Special Allowance while calculating EPF deduction. Sure it's part of basic wages.
Like wise most of the industrial undertakings/banks etc adopt the system of Fixed DA + Variable DA which are periodically revised directly linking with CPI/WPI. And the FDA getting subsumed either partly or fully when wage settlement agreements are drawn. I'm not sure whether while Maharashtra mechanism undergoes such an exercise.
Whereas there are some practices to pay Special Allw to employees posted in remote areas, projects, off shore posts, airways, on special assignments of rescue operations during calamities, operating below ground, on difficult terrains etc.
These are not payable to all across the board and used to be irregular, specific for such duties/days.

From India, Bangalore
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