Clarification on Accounting for Personal Driver's Salary
Please provide your clarification on the following issue:
One of our Regional Sales Managers has appointed a personal driver to drive his car for fieldwork, and the driver has been paid a salary/wage by this RSM. In turn, the RSM will claim reimbursement in his second fortnightly expenses bill under the head 'business development expenses.' My question is: how can this salary paid to the personal driver by the Regional Sales Manager be accounted for by the company? Alternatively, under what head of account should this Regional Sales Manager pay the salary/wages to his personal driver?
Classification of the Driver as a Company Employee
Furthermore, is there any chance for this driver to be classified as an employee under the company's payroll if he continues to work as a personal driver?
From India, Bangalore
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1Please provide your clarification on the following issue:
One of our Regional Sales Managers has appointed a personal driver to drive his car for fieldwork, and the driver has been paid a salary/wage by this RSM. In turn, the RSM will claim reimbursement in his second fortnightly expenses bill under the head 'business development expenses.' My question is: how can this salary paid to the personal driver by the Regional Sales Manager be accounted for by the company? Alternatively, under what head of account should this Regional Sales Manager pay the salary/wages to his personal driver?
Classification of the Driver as a Company Employee
Furthermore, is there any chance for this driver to be classified as an employee under the company's payroll if he continues to work as a personal driver?
From India, Bangalore
Acknowledge(0)Amend(0)
Reimbursement of Personal Driver's Wages
The Regional Sales Manager can claim reimbursement for his personal driver's wages. However, this cannot be accounted for under business promotion expenses, as it is not an allowed expense nowadays. Instead, it will form part of his perks as a Manager and is taxable.
Engagement of a Driver for a Manager's Car
The engagement of a driver for a Manager's car should be personal, and there should be no connection between the company and the driver. I had a challenging experience with one of my Managers who hired a driver and paid his monthly wages personally. The driver used to send the company car for fuel filling and take a photocopy of the bill in the company's name. Similarly, when the car was sent for servicing, he would sign the bill or out gate pass and keep that copy.
Dismissal and Legal Implications
One morning, after five years of service, the Manager fired the driver for misconduct. The driver then filed an application before the Labour Officer for reinstatement with back wages, claiming he was working directly for the company. However, his claim was eventually dismissed with difficulty. It is advisable to allow him inside the factory only as a third-party driver or visitor.
From India, Madras
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The Regional Sales Manager can claim reimbursement for his personal driver's wages. However, this cannot be accounted for under business promotion expenses, as it is not an allowed expense nowadays. Instead, it will form part of his perks as a Manager and is taxable.
Engagement of a Driver for a Manager's Car
The engagement of a driver for a Manager's car should be personal, and there should be no connection between the company and the driver. I had a challenging experience with one of my Managers who hired a driver and paid his monthly wages personally. The driver used to send the company car for fuel filling and take a photocopy of the bill in the company's name. Similarly, when the car was sent for servicing, he would sign the bill or out gate pass and keep that copy.
Dismissal and Legal Implications
One morning, after five years of service, the Manager fired the driver for misconduct. The driver then filed an application before the Labour Officer for reinstatement with back wages, claiming he was working directly for the company. However, his claim was eventually dismissed with difficulty. It is advisable to allow him inside the factory only as a third-party driver or visitor.
From India, Madras
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