Dear All,
Please go through the follwing instruction/circular issued by the ESIC headquaters on travel/conveyance allowance to be/not be considered as wages under ESIC act.
I hope this circular will clear all your doubts on the topic.
regards,
Kamal
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No.T-11/13/53/08/2001-Ins.IV Dated:21/11/2001
Instruction No. 10/2001
To
The Regional Director/Joint Director I/c,
ESI Corporation,
Regional Office/Sub-Regional Office,
Sub: Treating Conveyance Allowance as wages for the purpose of Section 2(9) & Section 2(22) of the ESI Act, 1948.
Sir,
I am to invite your attention to this office Instruction No. 2/97 issued vide letter No.P-11/13/97-Ins.IV dated 27.1.1997 and Item No. 12 of Memorandum No.P-11/13/97-Ins.IV dated 6th Nov., 2000, wherein it was instructed that the traveling allowance for value of any traveling concession, if paid to the employees in the nature of conveyance allowance, the same is neither wages for the purpose of coverage of employees under Section 2(9) nor it is to be treated as wages under Section 2(22) of the ESI Act for the purpose of payment of contribution.
In the meanwhile conflicting judgments by some High Courts have been received, necessitating the review of the Instruction No. 2/97 dated 27.1.1997, and Memo dated 6th Nov.2000. The Madras High Court in its judgment dated 14.11.2000 in LPA No.50/98 (2001 LLR 489 ) has held that the conveyance allowance paid by the employer to the employees for commuting between residence and place of work should not be taken as wages as the same is nothing but traveling allowance for the purpose of Section 2(22)(b) of the ESI Act.
In another case where transport allowance was paid to the employees by the employer as per a settlement signed by the Employees� Union and the Management, the High Court of Karnataka has held in its Judgment dated 16th March, 2001 (MFA No. 2827/1999) that the transport allowance should be treated as wages as it flows out of a wage settlement thereby it has come within the first part of the definition of wages under Section 2(22) of ESI Act. There is a small difference in perspective. Whereas the Madras High Court has taken conveyance allowance per se, the High Court of Karnataka has specifically dealt with a case of transport allowance/conveyance allowance payable under a wage settlement. However two different interpretations can not be made by us for same nature of payment allowed under identical circumstances. Therefore, it has been decided to accept the rationale behind the decision of the Karnataka High Court and accordingly it is advised that fixed conveyance allowance flowing out of a wage settlement should be treated as wages for all purposes.
However the following should not be treated as wages under Section 2(22) of ESI Act and also for the purpose of deciding coverage of an employee under Section 2(9) of ESI Act.
1. Amount towards conveyance paid or reimbursed to any employee for incurring expenses for specific duty related journey.
2. Reimbursement of actual cost of conveyance for coming to work and going from work on production of ticket or season ticket and subject to proof of actual expenditure.
3. Payment of certain amount for maintenance of vehicle depending upon Cadre of the official and category of vehicle and subject to production of records for actually maintaining the vehicles.
4. Fixed conveyance allowance paid at an interval exceeding 2 months, unless such payment is made as per contract or agreement .
The Instruction No. 2/97 dated 27.1.1997 and item No. 12 of Memorandum dated 6th Nov. 2000 stand modified accordingly.
This issues with the approval of the Insurance Commissioner.
Please acknowledge the receipt.
Yours faithfully,
(O. ABDUL HAMEED )
ADDL. COMMISSIONER(REV.)
Copy to:
1. Joint Director(Fin.)/Dy. Director(Fin.), R.O./SRO ____________________.
2. Joint Director (Vigilance)____________________________Zone.
3. All Officers at Hqrs. Office.
4. All Branches, Hqrs. Office,
5. Guard File.
JOINT DIRECTOR (REVENUE )
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