Sir, there is a correction in your views. Let me elucidate this.
1. There are certain forms of wages/emoluments of an employee that should not be considered for the calculation of Subsistence Allowance. The management must consider all remuneration except those specifically excluded in the statute for the calculation of Subsistence Allowance, such as Bonus, Gratuity, and employer contributions to Provident Fund, as per Sec. 2 of the respective Act.
2. When an employer suspends an employee pending investigation or inquiry into complaints or charges of misconduct, the contract of service is not rescinded, and the employer-employee relationship subsists. Thus, during suspension, the employee is entitled to receive subsistence allowance. In M/s. Kshetriya Sri Gandhi Ashram, Gorakhpur vs. Deputy Labour Commissioner/Prescribed Authority under Payment of Wages Act and Another, the Allahabad High Court explains subsistence allowance as a nickname for “reduced wages” or “reduced salary.” Such subsistence allowance should be paid at the rate of 50% of the wages which the workman was entitled to immediately preceding the date of such suspension for the first 90 days, and at the rate of 75% thereafter. If it prolongs beyond 6 months, then at 100% until the final decision. Labour Law Reporter, pg. no. 897, Allahabad High Court, August 2009.
3. In order to arrive at the one-day wage of a monthly paid employee, the dividing factor should be 26 days instead of 30 days. This is because a worker gets full month's wages not by remaining on duty for all 30 days within a month but by working for only 26 days, excluding Sundays which are paid holidays, besides other extra holidays that could also cause some marginal variation. This is confirmed by learned judges:
i. “Wages paid for the entire month should be taken as paid for all 30 days in the month in determining the rate of wages and not as paid for the actual number of working days. This contention runs counter to the well-accepted principle that wages payable to an employee for a month are wages paid for the actual number of days worked, which are taken as 26 days in a month after excluding Sundays, which are given as compulsory holidays for all establishments. The holiday on Sunday is earned by the employee by working on the remaining days of the month. The rate of wages has, therefore, to be arrived at by dividing the total amount of wages paid in a month by 26 days and not by 30 days. The argument to the contrary has been set at rest by the Supreme Court in D.W. Mills Ltd. v. M. P. Buch (1980, Labour & Industrial cases, 1052). The Supreme Court held that "the wages for 26 days are to be treated as monthly wages and not of days." (DBR Mills v. Appellate Authority. Division Bench Andhra High Court).
ii. Justice A.P. Sen, speaking for the Supreme Court, referred with approval to the judgment of the Gujarat High Court in Shri Digvijay Woollen Mills Ltd. v. Mahendra Prataprai Buch 1980 II LLJ 252 I (Gujarat), wherein the Gujarat High Court observed that a worker would get full month's wages not by remaining on duty for all 30 days within a month but by working for only 26 days. The other extra holidays might make some marginal variation in the 26 working days, but all Wage Boards and wage-fixing authorities or Tribunals in the country have always followed that pattern of fixation of wages by that method of 26 working days. The learned Judge also referred to the observation of the Gujarat High Court in Shri Digvijay Woollen Mills' case (supra) to the effect that ordinarily, of course, a month is understood to mean 30 days, but the manner of calculating gratuity payable under the Act to the employees who work for 26 days a month followed by the Gujarat High Court could not be called perverse, and that method was not anything unique or unknown. It may be pointed out that the explanation to sub-section (2) of Section 4 was added by Act 25 of 1984 subsequent to the said judgment of the Supreme Court. Therefore, it cannot be contended that the calculation of wages at 26 days a month under the Act is because of the explanation. The Supreme Court construed 15 days' wages to mean calculated on the basis of dividing the last drawn wages of a month by 26 and multiplying the same by 15. The mere fact that the agreement provides that the employee would be entitled to gratuity in addition to the compensation would make no difference for the calculation of the 15 days wages as mentioned above. In the instant case, the first respondent has followed the same method. In my view, wherever compensation or wages have to be calculated for 15 days, whether under the Payment of Gratuity Act or under settlement under Section 18 of the Industrial Disputes Act or any other agreement, unless otherwise expressly provided, it would only be on the basis of daily wage.
iii. It is to be kept in mind that the I.D. Act has been enacted for the benefit of the labour and therefore, even if two views were possible, the one which is favourable or more favourable to the workman should be accepted. The amount of compensation has thus to be worked out on the basis of entitlement of the workman for fifteen days and not half month's pay. A priori, it would follow that the entitlement cannot be worked out without calculating one day's wage or pay. For calculating one day's wage, a month has to be notionally treated as comprising 26 days and not 30 days as in a calendar month. Bennett Coleman And Co. Ltd. vs Presiding Officer, Labour Court: 2003 (2) BLJR 1379, (2003) IIILLJ 981 Patna High Court.
Regards,
Jagdish.K
Kochi