Is It Fair for New Employees to Receive Less Dearness Allowance in Private Schools?

Dear Sir, I am regularly following the various issues discussed in this forum. I am grateful for the many voluntary bits of help supplied by the experts.

Query on Dearness Allowance in Private Unaided Schools

I have the following query for which I seek an expert opinion: In many private unaided schools, the staff is given the Dearness Allowance. Is it mandatory that all employees in the same institution must get the same percentage of DA?

I found that in some such institutions, it is practiced to keep an employee with consolidated pay under probation for two years, during which no DA is paid. In the third year, the employee becomes a regular employee, and at that time, they are given the same percentage of DA enjoyed by all other employees. Is it sufficient that the newly regularized employee be given a smaller percentage of DA, and not the same percentage as that of the already regularized employees who have been working in the institution for many years?

Thank you in advance.

Regards, Xavier

In principle, a senior should be paid higher emoluments compared to a junior, reflecting a fair differential commensurate with seniority and performance. Your query about the percentage of D.A. is unclear. Please clarify if this percentage of DA is linked to the Basic salary. Advice will be provided upon receipt of clarification.

Regards, Vinayak Nagarkar
HR and Employee Relations Consultant

Clarification of the query

DA is calculated as a certain fixed percentage of the sum total of the Basic pay, Grade pay, annual increment, and any other benefits enjoyed by the employee. Annually, there will be an increase in the percentage of DA. Therefore, although the percentage of the DA is the same for all employees, the amount will naturally be more for an employee with many years of service.

The bone of contention is with regard to the percentage for the employee whose service is confirmed recently. There will certainly be a difference in the total salary of the seniors and the one who is confirmed recently, even if the same DA is given to that employee. Should there be a variation in the percentage between the junior who joined after two years of probation and the seniors is the question?

A related question

Is it mandatory that all the employees of the same category (Teaching Staff, Office staff, auxiliary staff, etc.) in an institution should be paid the same percentage of DA? Can there be a difference in the percentage of DA for a single employee in the same category for the reason that the said employee is recently confirmed in service?

I hope my inquiry is clearer now.

With seniority, the basic pay increases, and DA is just a component added to the basic salary. DA stands for Dearness Allowance and is typically notified by the affiliated board once or twice a year. The institution must adhere to the board circulars. The salary scale may vary by increasing or freezing the basic pay, but other variable components' percentages are as per the board and state government circulars. These components cannot be modified on a person-to-person basis, regardless of the individual's experience tenure. Seniority is reflected in the basic pay scale and other perks offered to the individual by the institute.

Understanding Dearness Allowance (DA) in Wage Structure

There is no legal mandate necessitating the payment of DA as a fixed percentage across different cadres. Indeed, there is no legal provision to the contrary either. The Minimum Wages Act of 1948 stipulates the payment of a 'cost of living allowance' linked with the Consumer Price Index as one of the minimum wage components. The respective State Governments notify the minimum wages, including the periodical revision of DA for the various categories of employment mentioned therein. As long as the total salary paid is equal to or more than the sum total of the prescribed minimum wages, the quantum of the DA component wouldn't matter much.

From the description given, the salary administration done is proper and justified. Though DA as a percentage remains fixed across different cadres, the amount would progressively decrease along with seniority. This is the pattern in most government organizations and PSUs and is widely accepted.

Considerations for Different DA Percentages

Keeping different percentages is an option you have, but it will complicate the wage fixation and could add to the frustration of those employees who feel shortchanged in the process. Perhaps there may not be any litigation in the matter, yet the question remains, is it really worth it?

"Education is an industry, whereas a teacher employed therein is not a workman" is the general principle enunciated by the Apex Court. If I remember correctly, the EPF Act, 1952, and the PG Act, 1972 are the only labor laws applicable to teachers in private schools and colleges. However, the non-teaching staff come under the purview of labor laws, including the IDA, 1947, subject to the conditions of applicability. Therefore, regarding the disparity in the salary of the teaching faculty without any valid reason, it can only be agitated under the provisions of any State Law governing the conditions of service of teachers in private educational institutions. Please check with your State School Education Department.

As far as non-teaching members of staff are concerned, you can make use of the provisions mentioned above or collectively raise an industrial dispute under the IDA, 1947 before the area conciliation officer.

You should remember that the Supreme Court held in Airfreight's case that salary is to be construed as a single package for comparison purposes. However, if two sets of rules of service conditions are applied by the employer for the same class of employees without any valid reason, it's untenable.