Are Managers Entitled to Subsistence Allowance During Suspension? Let's Discuss

Dear all,

There are clear-cut guidelines about the payment of subsistence allowance to workmen who are serving suspension. Kindly let me know the laws that are applicable when it comes to the suspension of a person holding a managerial position. Is he entitled to a subsistence allowance?

Regards,
S. Raghuram

There is no such law like the Standing Orders Act governing employees in managerial positions. Their service conditions, such as salary, probation, confirmation, suspension, or termination, are governed by the Service Rules of the organization in which they are employed or by the terms of the contract of service, like a letter of appointment. For example, officers in public sector banks are governed by the officers' conduct and discipline rules. Therefore, you need to look for specific rules or terms of the contract of service applicable to the manager in question, which shall specify the quantum of subsistence allowance payable to a suspended manager or officer.

Regards,
B. Saikumar
HR & Labour Relations Advisor

The rules/laws you are applying for suspending an employee of managerial level must contain provisions for suspension/subsistence allowance. This allowance is given to an employee for livelihood for him and his family and to defend himself during suspension and domestic enquiry. Please note that the enquiry stands vitiated if the subsistence allowance is not paid regularly until the decision of suspension/enquiry. All your efforts regarding suspension/domestic enquiry will be in vain if the subsistence allowance is not provided consistently.

Thank you,

V K Gupta

Dear all,

Thank you for your valuable comments. I was prompted to consider this issue due to the fact that The Karnataka Payment of Subsistence Allowance Act, 1988 clearly excludes individuals in managerial positions from its scope. I have attached the act for the reference of users.

Regards,
S. Raghuram

Dear Mr. Raghuram,

After going through this Act, my views are as follows:

1. This Act is mainly to substitute for the Payment of Subsistence Allowance in those establishments which either have no provision in their Certified Standing Orders or where Model Standing Orders are not applicable. This is as per the ID Act and, as such, it is applicable to workmen (employees as defined under the Act).

2. This Act does not debar you from payment to managerial level staff. However, this Act empowers workers to claim Subsistence Allowance.

3. In my experience, subsistence allowance is not a claim but an obligation on the part of the employer.

4. If I accept your contentions, then this would be a novel method to send a manager out. Place him under suspension and forget & leave him & his family to ...............

Any undue encroachment is regretted.

Thanks,

V K Gupta

The Karnataka Act on subsistence allowance clearly excludes employees in managerial positions from the purview of the said Act. I understand that there is a similar legislation in Tamil Nadu as well. Even if the contract of service is silent on suspension and subsistence allowance, and the employer suspends the manager, in my view, they have to pay him subsistence allowance for the period of suspension as per the principles of natural justice.

B. Saikumar HR & Labour Law Consultant