In the new Code on wages, the definition of wages has been given in section 2 (y) which reads as under -
"2(y) "wages" means all remuneration whether by way of salaries, allowances or otherwise, expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment, and includes,-
(i) basic pay;
(ii) dearness allowance; and
(iii) retaining allowance, if any,
but does not include-
(a) any bonus payable under any law for the time being in force, which does not form part of the remuneration payable under the terms of employment;
(b) the value of any house-accommodation, or of the supply of light, water, medical attendance or other amenity or of any service excluded from the computation of wages by a general or special order of the appropriate Government;
(c) any contribution paid by the employer to any pension or provident fund, and the interest which may have accrued thereon;
(d) any conveyance allowance or the value of any travelling concession;
(e) any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment;
(f) house rent allowance;
(g) remuneration payable under any award or settlement between the parties or order of a court or Tribunal;
(h) any overtime allowance;
(i) any commission payable to the employee;
(j) any gratuity payable on the termination of employment;
(k) any retrenchment compensation or other retirement benefit payable to the employee or any ex gratia payment made to him on the termination of employment:
Provided that, for calculating the wages under this clause, if payments made by the employer to the employee under clauses (a) to (i) exceeds one-half, or such other per cent as may be notified by the Central Government, of the all remuneration calculated under this clause, the amount which exceeds such one-half, or the per cent, so notified, shall be deemed as remuneration and shall be accordingly added in wages under this clause:
Provided further that for the purpose of equal wages to all genders and for the purpose of payment of wages, the emoluments specified in clauses (d), (f), (g) and (h) shall be taken for computation of wage.
Explanation.- Where an employee is given in lieu of the whole or part of the wages payable to him, any remuneration in kind by his employer, the value of such remuneration in kind which does not exceed fifteen per cent. Of the total wages payable to him, shall be deemed to form part of the wages of such employee;"
The new definition clearly underlines the emoluments which will form part of wages and which will not form part of wages. Thus, here three components which clearly form part of wages are, (i) basic pay; (ii) dearness allowance; and (iii) retaining allowance, if any. Some components of wages have also been listed which will not form part of wages. Seen thus the Code explicitly states the HRA to be not a part of wages and also puts restriction on the non-inclusive components to be 50% and even if it exceeds so it will not have any effect on the employee rights is concerned.
The matter regarding coverage of Special allowance for EPF purpose came up for consideration before the Supreme Court recently in The Regional Provident Fund Commissioner vs Vivekananda Vidyamandir (decided on 28 February, 2019 Author: N Sinha) it held that merely by giving a nomenclature the PF coverage shall not cease and the nature of payment has to be examined. For example if it is a uniform payment made to all employees then the same would fall within the definition of wages irrespective of the name attached to it. There has been a lot of instances where to avoid PF liability, various surreal names were given.