Is It Fair to Include Special Allowance in Basic Salary and Deny It Above ₹6500? What Are Our Options?

Special Allowance Meeting with MD

I am working in a Ltd Company (Unsystematic). Yesterday, we had a meeting with our MD regarding the Special Allowance for January 2013. However, our MD is not willing to give the SP allowance to everyone. Instead, he suggested including the previous SP allowance into the basic salary. If someone's basic salary crosses ₹6500/-, then they will not receive the SP allowance.

Is this right? What should we do? Is there any legal issue?

Regards,
Pravin K.

I am working in a Ltd Company (Unsystematic). Yesterday, we had a meeting with our MD regarding the Special Allowance for January 2013. However, our MD is not willing to give the Special Allowance to everyone. Instead, he suggested including the previous Special Allowance into the basic salary. For those whose basic salary crosses ₹6500/-, the Special Allowance will not be given. Is this right? What should we do? Is there any legal issue?

Regards,
Pravin K.

I understand your predicament, but unfortunately, there is little you can do. The Managing Director representing the company is trying to avoid further statutory compliances to save on CPF outgo. Try educating the management on the broader goals of employee welfare and harmonious relations with employees and its positive impact on enhanced productivity. Such companies will hamper your growth, so look out for better opportunities.

Warm regards.

Thank you for your valuable reply. Today afternoon, we had a discussion with our MD and ED, but no one is ready to listen to anything from our side. They think we were wasting money on DA twice a year. So, if we follow the instructions and make changes in the salary breakup:

1. Will there be any legal issues in the future if we make these changes?
2. Is there any law regarding the applicability of Dearness Allowance?

Regards

Unfairness in DA Payment Policy

Not paying DA to those whose salary exceeds Rs. 6500 is unfair. If you have a pattern of salary with DA as a component, it should be applicable to all, irrespective of salary. Moreover, I cannot understand the significance of 6500 in this context.

There can be different types of DA for various categories of people; for example, Variable DA for workers and fixed DA for officers. However, imposing a salary cap for the payment of DA is not fair.

Regards,
Madhu.T.K