My question is this: if an employee has a reimbursement as part of salary, such as medical reimbursement of Rs1250 per month and fuel reimbursement of Rs7500 per month, and if the salary is paid for fewer days (e.g., salary is deducted and paid for 20 days), will both medical and fuel reimbursements be deducted proportionately? In other words, will they be paid for 20 days only, or will they be paid in full? For instance, even if an employee works for only 2 days in a month and receives a salary for 2 days, will the employee get fuel and medical reimbursement for those 2 days only?
From India
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From India
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Please answer this query, as i have searched and found no answer for the same.
From India
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From India
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Since it is part of the salary but listed as reimbursements for tax purposes, the same shall be deducted proportionately based on the number of days worked if there are leaves without pay. In the case of leaves with pay, obviously, full pay will be given, and the reimbursement will also be paid in full. At the same time, in the old salary scale setup (not the present CTC style), these are not part of the salary but are purely employee benefits; therefore, they will be payable for the full month.
Madhu.T.K
From India, Kannur
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4768Madhu.T.K
From India, Kannur
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Mr. Madhu's comparison of the conventional scale-based salary and the present CTC-based salary compels me to adopt a different perspective to answer the question. As rightly pointed out by Madhu, certain allowances like medical reimbursement, Leave Travel Concession, Educational Fee Reimbursement for children, etc., are granted to employees as welfare measures. If we conceptually analyze these welfare benefits and their periodicity of payment, we can find them to be only occasional payments, that too for some definite purposes. Of course, it is not wrong to include them notionally for the purpose of determining CTC. So, my personal view also is that such occasional payments connected to welfare need not be deducted for absence on a pro-rata basis. At the same time, certain allowances partaking the nature of compensating some special expenses incurred by the employee in connection with the performance of his job can well be related to attendance.
From India, Salem
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From India, Salem
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Some components are split to arrive CTC. For the people who are in CTC, these components will be deducted on pro-rata basis. Pon
From India, Lucknow
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From India, Lucknow
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As Madhu explained, Any component as part of salary will be pro-rated.
From United States, Ogden
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From United States, Ogden
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If any payment is made as reimbursement against bills that need not be deducted according to attendance. Varghese Mathew
From India, Thiruvananthapuram
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From India, Thiruvananthapuram
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Hi,
I fully agree with Mr. Umakanthan for his valuable guidance. Mr. Madhu has also explained his views suitably, and thanks to both writers.
Adoni Suguresh Sr. Executive (Personnel, Administration & Industrial Relations) Retired Labour Laws Consultant
From India, Bidar
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I fully agree with Mr. Umakanthan for his valuable guidance. Mr. Madhu has also explained his views suitably, and thanks to both writers.
Adoni Suguresh Sr. Executive (Personnel, Administration & Industrial Relations) Retired Labour Laws Consultant
From India, Bidar
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Remuneration is the result of an employee- employer relationship. Total remuneration will be split into certain components like basic salary, dearness allowance, house rent allowance, conveyance allowance, telephone allowance, education allowance, medical allowance and so on. Sometimes, certain elements of salary will be paid as reimbursements, like, instead of conveyance allowance fuel reimbursement, for telephone allowance there will be telephone reimbursement, for medical allowance we can pay medical reimbursement etc on production of bills in original. This arrangement is available so long as the above said employee employer relationship exists. That is why the reimbursements are taken prorate for the month in which the employee joined and for the month in which he leaves, or simply it is available in full for the days for which there existed employee employer relationship.
If we analyse the purpose for which each component of salary is paid, we will find that each is related to employment. For example, if conveyance allowance which is an allowance forming part of salary, is paid to the employee to meet his travelling expenses from his residence to office and back, should we pay it if he has not come to office? If telephone allowance is paid to recoup the expenses he incurs by making official calls from his personal telephone should it be paid he has not made any official calls during a month or part of the month? If medical allowance is paid as part of salary it is paid to care of himself being employed and will it be paid when he has not worked? We will not pay it because these are allowances forming part of salary. But when it comes to reimbursements, it is not actually limited to travel to office or making official calls but you are getting it for your personal travel (fuel reimbursement) , personal calls or medical care of family and all these are available so long as the employee- employer relationship exists.
But the main problem comes when the employee is absent or on leave without pay for the entire or substantial period of the month. In such a scenario, claiming the reimbursement alone will not hold good just like claiming salary for the off days and holidays intervening a whole range of leave without pay. If we view in that direction, why can’t we say that reimbursements should also be paid prorate if there is no pay days? This is an outcome of the thought that on days without pay there exists no employee employer relationship!! It is just a thought, please share your views.
Madhu.T.K
From India, Kannur
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If we analyse the purpose for which each component of salary is paid, we will find that each is related to employment. For example, if conveyance allowance which is an allowance forming part of salary, is paid to the employee to meet his travelling expenses from his residence to office and back, should we pay it if he has not come to office? If telephone allowance is paid to recoup the expenses he incurs by making official calls from his personal telephone should it be paid he has not made any official calls during a month or part of the month? If medical allowance is paid as part of salary it is paid to care of himself being employed and will it be paid when he has not worked? We will not pay it because these are allowances forming part of salary. But when it comes to reimbursements, it is not actually limited to travel to office or making official calls but you are getting it for your personal travel (fuel reimbursement) , personal calls or medical care of family and all these are available so long as the employee- employer relationship exists.
But the main problem comes when the employee is absent or on leave without pay for the entire or substantial period of the month. In such a scenario, claiming the reimbursement alone will not hold good just like claiming salary for the off days and holidays intervening a whole range of leave without pay. If we view in that direction, why can’t we say that reimbursements should also be paid prorate if there is no pay days? This is an outcome of the thought that on days without pay there exists no employee employer relationship!! It is just a thought, please share your views.
Madhu.T.K
From India, Kannur
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Madhu has advanced really nice arguments for his viewpoints on the matter, and all the more, they are easily comprehensible and highly practical as well. Hence, my present response is not counter-argumentative but complementary to fill the void that can emerge with reference to the nature and purpose of certain allowances. The grant of these allowances is not merely to increase the employee's real or monetary wages but to keep them as dignified members of society.
Considering industrial employment as it is currently, it is a sustained relationship between the parties to the contract of employment. Based on its perpetuity, which is limited subject to the agreed conditions in the contract, the practice of paying monthly remuneration, not just as a mode or periodicity of payment, came to be widely recognized as a system of compensation for the service rendered by employees as per the contract.
In this context, compensation for employment cannot be similar to payment for casual nature of work. If that is the case, there would be no necessity to pay for leave of absence except for statutory compulsion. Here, readers should kindly understand that I am not arguing for habitual or wanton absenteeism.
Take the case of an employee who has availed all the leave at their credit but goes on leave on Loss of Pay (LOP) either for their own treatment or their spouse's. Would it be fair to effect a pro-rata cut of the medical bills actually paid by them? Can we also refuse a proportionate amount of educational allowance for their children?
Cost to Company (CTC) is an accounting concept to evaluate the total cost incurred by management in respect of each employee. Take the case of employees in managerial or white-collar jobs and in essential services. Will their CTC be proportionate to the actual value, time, and energy they spend on their jobs? I don't mean to say that such benefits should be freebies. Every benefit should be given measuredly. But that measure should not be stingy like a pro-rata basis.
Even for certain statutory social security benefits, a minimum length of service is prescribed for eligibility and entitlement. So, there is no harm in prescribing broader norms rather than a pro-rata basis with reference to CTC.
From India, Salem
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Considering industrial employment as it is currently, it is a sustained relationship between the parties to the contract of employment. Based on its perpetuity, which is limited subject to the agreed conditions in the contract, the practice of paying monthly remuneration, not just as a mode or periodicity of payment, came to be widely recognized as a system of compensation for the service rendered by employees as per the contract.
In this context, compensation for employment cannot be similar to payment for casual nature of work. If that is the case, there would be no necessity to pay for leave of absence except for statutory compulsion. Here, readers should kindly understand that I am not arguing for habitual or wanton absenteeism.
Take the case of an employee who has availed all the leave at their credit but goes on leave on Loss of Pay (LOP) either for their own treatment or their spouse's. Would it be fair to effect a pro-rata cut of the medical bills actually paid by them? Can we also refuse a proportionate amount of educational allowance for their children?
Cost to Company (CTC) is an accounting concept to evaluate the total cost incurred by management in respect of each employee. Take the case of employees in managerial or white-collar jobs and in essential services. Will their CTC be proportionate to the actual value, time, and energy they spend on their jobs? I don't mean to say that such benefits should be freebies. Every benefit should be given measuredly. But that measure should not be stingy like a pro-rata basis.
Even for certain statutory social security benefits, a minimum length of service is prescribed for eligibility and entitlement. So, there is no harm in prescribing broader norms rather than a pro-rata basis with reference to CTC.
From India, Salem
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SALARY CAN BE SPLIT INTO COMPONENTS BUT NOT LESS THAN THE MINIMUM WAGES.docx