Is It Legal to Offer a Travel Allowance Without Raising the Basic Salary?

Dear all,

Can I have a travel policy and give it to them without increasing the basic? Like, on 2000, I give them 200 conveyance in hand without making the salary 2200. Is it possible and legal?

Hi,

You can't add conveyance to the basic pay under any circumstances. When you are determining compensation, you can use an example like this: if the labor pay is $2000 per month, then the basic pay could be $1000, and an additional amount for conveyance could range between $300 to $500, or similar. However, do not label it as conveyance when including it in the basic pay.

Cheers,
Padma

Hi,

I hope you understand that the basic pay is different from the conveyance allowance, which should not be added to the basic pay. You can explore compensation and pay slip structures online and consider remodeling the pay slip structure in your organization in the future.

Wishing you the best of luck.

Take care,
Cheers,
Padma

But also, one more query: Ours is a contractual staff, so they receive a lump sum instead of a divided salary. If 2000 is consolidated, will 200 in-hand be a taxable or legal issue?

Hey, that depends on the agreement that you made or signed in the papers. If you have signed and worked with them for more than 8 months, then you have to consider them as your permanent employees according to labor laws. It's better to change contract employees every 6 months so that you don't have to provide them with the same allowances as your regular employees.

Hi,

You have many things in compensation. The main aim of this act is to ensure that the employee does not get demotivated by their work and receives sufficient and maximum benefits from the employer. However, the employer often prioritizes saving money over providing benefits to them. Hopefully, you will keep the employees happy by offering better pay without increasing expenses.

Regards, Padma