Leave Without Pay: Are Allowances Still Payable When Basic Pay Isn't?

Dear Friends,

If an employee remains on leave without pay with prior information, then they are not entitled to any pay - basic plus all other allowances.

Is there any case law on this issue which states that only basic pay will not be given, but all other allowances are admissible as they are part of CTC? One of the service industries claims it is case law.

Please shed some light on this.

Regards,
Y.R. Shirke

No law regulates CTC; it is simply a contract guided by the Indian Contract Act. Therefore, the contract's definition of your payment will be the guiding principle. Generally, an employee gets paid because they are working. If they are not working, no emolument can be awarded in that proportion. For more information, refer to [Things To Remember While Drafting A Valid Employment Contract](http://www.shramsamadhan.com/p/blog-page_16.html).

Dear Shirke,

It is not legitimate to expect to be paid when one is on LWP on the basis of 'No work-No pay'. During LWP, the employer-employee relationship continues, the lien on the job is unaffected except that one is not paid anything - basic or CTC.

Regards,
V.L. Nagarkar
HR Consultant

Case Law and Allowances

I have not yet come across any case law as you want. However, I know a couple of cases where there is logic. In one company, HRA was not related to attendance. As such, even when an employee was absent throughout the month, they would not receive any wages but would still get HRA. The reasoning was that they had to pay house rent even when absent.

History of Wages

If we look at the history of wages before the 1st World War, i.e., 100 years ago, there was only basic pay. There were no allowances. Later, as prices started rising and workers began demanding higher wages, instead of increasing the basic pay, allowances were introduced. If we consider the price rise in terms of percentage, if it was only basic pay, the wage would have been manifold what it is now. This means that the workers are receiving lower wages. Then why not pay when a worker is absent on sanctioned leave without pay? There are many cases where an employee becomes indispensable for the employer, and even when the employee is absent, the employer pays the worker as retainer charges.

Conclusion

Remuneration in whatever form when on sanctioned leave without pay is not of dustbin value.

Regards, Vibhakar Ramtirthkar

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I go with Mr. Vibhakar Ramtirthkar's point. As a matter of fact, in one of my employments, when an employee was ill, his HRA was paid as a matter of gesture. Any employee who goes on LOP wages or paid leave has to get HRA as the employee remains in the house, and the house owner will allow or say it is okay to pay for the next month. Let it be a new and good beginning for all employed personnel. HRMs can look into this aspect.

V. Murali