Conveyance Allowance and ESI Calculation
Whether conveyance allowance should not be included in wages for ESI calculation in view of the recent judgment in the case of In re Cosmopolitan Club, dated 30.6.2011, decided by the Division Bench of the Madras High Court. PLEASE READ THE ARTICLE JUDGEMENT.
Regards,
PBS KUMAR
From India, Kakinada
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592Whether conveyance allowance should not be included in wages for ESI calculation in view of the recent judgment in the case of In re Cosmopolitan Club, dated 30.6.2011, decided by the Division Bench of the Madras High Court. PLEASE READ THE ARTICLE JUDGEMENT.
Regards,
PBS KUMAR
From India, Kakinada
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Sub-Conveyance Allowance as Part of Wages Under ESI Act
Thank you, Mr. Kumar, for sharing important information. My view on this subject for academic discussion is as follows:
The definition of wages under Sec. 2(22) of the Act starts with the words "wages mean all remuneration paid or payable to an employee, if the terms of the contract of employment, express or implied, were fulfilled." Since the definition does not specify what remunerations or payments fall under this ambit, it has attracted a lot of controversy and became a subject of intense court battles. However, over time, the courts have expanded the ambit of the definition of wages, considering the welfare nature of the legislation, to include various allowances like subsistence allowance, house rent allowance, overtime allowance, night shift allowance, and food allowance, etc.
While the legislature has left the scope of the inclusive part of the definition of wages wide by not clearly spelling out what allowances can be construed as wages, probably to allow the maximum benefit of contribution to employees, it has clearly specified what allowances can be excluded. One of them is traveling allowance or the value of any traveling concession. In my view, if any allowance falls under the exclusive part of the definition, it shall be excluded as the legislative intent is clear. Where the legislative intent is clear, there is no room for interpretation. Therefore, in my view, any allowance that partakes the character of a traveling allowance or traveling concession, irrespective of the name it is given, whether conveyance allowance or any other name, it shall be excluded.
Regards,
B. Saikumar
HR & Labour Law Consultant
Chipinbiz Consultancy Pvt. Ltd
Mumbai
Tel: [Phone Number Removed For Privacy Reasons]
From India, Mumbai
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Thank you, Mr. Kumar, for sharing important information. My view on this subject for academic discussion is as follows:
The definition of wages under Sec. 2(22) of the Act starts with the words "wages mean all remuneration paid or payable to an employee, if the terms of the contract of employment, express or implied, were fulfilled." Since the definition does not specify what remunerations or payments fall under this ambit, it has attracted a lot of controversy and became a subject of intense court battles. However, over time, the courts have expanded the ambit of the definition of wages, considering the welfare nature of the legislation, to include various allowances like subsistence allowance, house rent allowance, overtime allowance, night shift allowance, and food allowance, etc.
While the legislature has left the scope of the inclusive part of the definition of wages wide by not clearly spelling out what allowances can be construed as wages, probably to allow the maximum benefit of contribution to employees, it has clearly specified what allowances can be excluded. One of them is traveling allowance or the value of any traveling concession. In my view, if any allowance falls under the exclusive part of the definition, it shall be excluded as the legislative intent is clear. Where the legislative intent is clear, there is no room for interpretation. Therefore, in my view, any allowance that partakes the character of a traveling allowance or traveling concession, irrespective of the name it is given, whether conveyance allowance or any other name, it shall be excluded.
Regards,
B. Saikumar
HR & Labour Law Consultant
Chipinbiz Consultancy Pvt. Ltd
Mumbai
Tel: [Phone Number Removed For Privacy Reasons]
From India, Mumbai
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