Dear Bijumithu,
I think that Mr.VARGHESE has already clearly explained the source of authority providing for suspension of an employee under certain circumstances, how the power of placing an employee under suspension could be exercised by the employer and the compensation payable during the entire period of suspension in lieu of wages.
" Suspension " of an employee does not end his contract of employment with his employer but only precludes him from attending his duties or office as before. Therefore, suspension is a temporary ban on the employee's right to work and to earn wage or salary as per the terms of the contract of employment and to that extent the employment contract remains in suspended animation.
Again, suspension is of two types viz., punitive suspension and suspension pending enquiry on certain disciplinary charges either already initiated or likely to be initiated.
" Punitive Suspension", as the very name would suggest, is a punishment awarded as per the Rules of discipline. Therefore, it has all the stigma or negative impact attached to any other punishment in respect of employment prospects like periodical increment, promotion apart from disentitlement to wages for the actual period and continuity of service. Therefore, ultimately it is subject to Judicial Scrutiny if appealed by the affected employee.
But the other type of suspension viz., suspension pending enquiry, per se, can not be successfully agitated if it is ordered, continued and revoked by the employer strictly in accordance with the relevant Rules or the terms of the contract of employment. Here, by revocation of suspension what I mean is that regularisation of the entire period of suspension as duty if the disciplinary proceedings end up in some other punishment. Similarly, non-payment of subsistence allowance or payment at a rate lesser than what is prescribed would vitiate the entire disciplinary proceeding on Judicial Scrutiny. The purpose of payment of subsistence allowance at progressive rates up to a certain period is not only to enable the employee to get compensated for the loss of earnings as well as to effectively defend his case but also to persuade the employer to dispose of the disciplinary proceedings within a reasonable period of time. Therefore, keeping an employee under suspension for long by lingering the process of domestic enquiry or delaying the final orders unnecessarily would be viewed as an unfair labor practice on the part of the employer.
If the contract of employment is silent either about suspension or subsistence allowance payable accordingly, as rightly stated by Varghese, the employer has to pay the actual wages for the entire period of suspension. However, such a situation does not curtail the employer's power to suspend an employee on the proper reason of alleged misconduct and pending disciplinary action in this regard for the reason that the inherent power of the employer to initiate disciplinary action carries within its fold the power to suspend also.