Dearness Allowance Hikes: Should Suspended Employees See an Increase Too?

Dearness Allowance and Subsistence Allowance for Suspended Employees

Whether the Dearness Allowance (D.A.) should be increased in the subsistence allowance of a suspended employee whenever the D.A. is hiked by the Government of India, i.e., on the 1st of January and the 1st of July every year.

Considering the intent and purpose of subsistence allowance granted to an employee placed under suspension, I am of the opinion that D.A. need not be paid at the enhanced rate after his suspension. This is because the subsistence allowance is calculated and paid only based on his last-drawn wages/salary before the date of suspension.

Dear Umakanthan Ji,

Nice to see you back. I fully endorse your view. There is no ambiguity in Section 10A of the Industrial Employment (Standing Orders) Act, 1946. This section clearly states that the subsistence allowance is payable on wages to which the workman was entitled immediately preceding the date of such suspension.

However, I would like to draw your kind attention to Clause 4(b) under the Standing Orders of Industrial Employment (Standing Orders) Central Rules, 1946, as applicable to industrial establishments in coal mines. This clause states that the subsistence allowance is payable on wages to which the workman would have been entitled if he were on leave with wages.

I would also like to draw your kind attention to the judgment of the Supreme Court in UOI vs. RK Chopra in Civil Appeal No. 1096 of 2010 (SLP (CIVIL) No. 9071 of 2009). The respondent in this case is a government servant. The Supreme Court stated in this judgment that the Central Administrative Tribunal (Principal Bench), New Delhi, as well as the Delhi High Court, have committed an error in holding that the respondent is entitled to the benefit of revised pay based on the 5th Pay Commission.

Regards

Dear Yusuf114 & Umakanthan ji, the aforementioned judgment is attached herewith for your benefit as well as for the readers. Please let me know if you need any further information. Thank you.

Regards

Thank you so much, Mr. Korgaonkar, for your apt explanation and attachments, which are highly enlightening on the subject matter.

Concept of Suspension in Disciplinary Context

The concept of "suspension" in a disciplinary context in the realm of employment presupposes the probability of wanton influence to his favor by the delinquent employee on others connected with the disciplinary proceeding by virtue of his unhindered continuation in the job. Hence, it is invoked as a measure of temporary debarment of the delinquent from his normal duties with the twin purpose of keeping his employment intact and ensuring the simultaneous and expeditious disposal of the disciplinary proceeding initiated.

Purpose of Subsistence Allowance

Since the basic purpose of employment is earning one's means of livelihood, and the basic tenet of disciplinary action is the grant of reasonable opportunity to the accused, the delinquent should be compensated for the loss of earnings during the entire period of his suspension to some extent, of course, subject to some reasonable restrictions. Thus emerged the concept of "subsistence allowance" based on the normal earnings of the delinquent immediately preceding his date of suspension. This arrangement acts as a catalytic deterrent on both the delinquent under suspension and the employer, for the former loses his normal earnings, and the latter pays without work.

Here, normal earning or wages or salary refers only to the basic components of earnings due to the job, excluding the special allowances peculiar to its performance. Since during the leave of absence, no work is performed, the leave with wages implies the normal wages minus the special allowances for performing the job. Hence, such a specific clause in the Mines' Standing Orders, I suppose.

Notional Calculation of Last-Drawn Wages

Coming to the other point highlighted in the judgment regarding the notional calculation of the last-drawn normal wages in the event of a hike after suspension, as I understand, its effective date as well as the fate of the disciplinary proceeding are the determinant factors. During the course of suspension, if the hike announced after the date of suspension has a retrospective effect, the suspended employee stands to stake his claim for an enhanced subsistence allowance at the revised rate. But if it is only prospective, the employee's entitlement to the revised scale of pay is consequent on the final outcome of the disciplinary proceeding, i.e., it should be total exoneration or some punishment other than dismissal.

Therefore, the ratio decidendi of the judgment cited is that a dismissed employee cannot stake his claim for an enhanced subsistence allowance just because there happens to be an upward revision in the scale of his pay with prospective effect during the period of his suspension.