Dearness Allowance and VDA to Management Staff? Is it only in the Public sector or is it also in the Private sector?

I require some inputs on the subject of DA and VDA being part of the Salary structure for Management Staff. Is it only in the Public sector or is it also in the Private sector? What category of Employees are eligible for Dearness Allowance?

Dear Kenneth,

In the realm of employment, conditions of employment are determined in the contract of employment from which only the mutual rights and obligations of the employer and employee arise. Such terms and conditions of employment are discussed and decided through the bargaining between the parties any time during the phase of pre-employment and post employment as well. As such this is not a one-time affair but continues as long as the contract of employment subsists. The scope and method of this bargaining differs in the case of workmen category employees and managerial cadre of employees in as much as the former being plural and mostly organized through unionisation and the latter is few in numbers. However this bargaining takes place in the case of former in the form of collective bargaining and in the case of latter at individual level. Salary/wages is the most important among all the conditions of employment which tends get affected by the passage of time and external factor like hike in the cost of living. If you have the time and patience to trace the history of dearness allowance, you will go back to the times of World Wars I and II and the real wages of the working classes got suddenly impacted by the war time and the emergence of the concept of D,A to offshoot the impact of the inflationary trend on wages.

This long introduction is only to make you aware of the fact that the managerial cadre employees are not exempt from the impact of constant price rise and they also need a sort of relief in the form of D.A in a uniform method of implementation and calculation as well.

But, you should remember that there is no legal compulsion to pay dearness allowance to managerial cadre or gold collar employees. It all depends on the industry practice and individual effort of the employee concerned pertaining to salary fixation and revision.

Dear colleague,

Managerial class of employees in private sector being a distinct lot, are generally highly qualified / professionals. Their remuneration practices vary widely from industry to industry and takes care of range and veriety of individual/ family needs and aspirations. In private sector, D A as a distinct component of managerial remuneration is a few and far between. To attract, motivate and retain managerial employees, organisation have been inventing newer ways to remunerate and dearness allowance which is only linked to cost of living and not to productivity, is not material component in managerial remuneration structure and in practices across all industries in private sector . But in Government and public sector , DA is well entrenched and is regarded quite inevitable element forming part of the salary structure.

Regards,

Vinayak Nagarkar
HR and Employee Relations Consultant