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Subsistence Allowance For Temporary And Daily Wage Workers

No temporary workmen whether monthly rated, weekly rated, piece rated or badli workers are entitled to any notice or pay in lieu thereof, if his services are terminated, but the services of a temporary workman shall not be terminated as a punishment unless he has been given an opportunity of explaining the charges of misconduct alleged against him.[1]

During the proceedings of the charges, the temporary workers are entitled to subsistence allowance in the same manner as permanent workers as provided in the Central Statute or in accordance with the law related to subsistence allowance in the state. This is to ensure that the proceedings are concluded in a timely manner and the employee is able to adequately represent himself before the Tribunal.

An order of suspension does not put an end to the relationship between the master and the servant but prevents the worker from rendering service. If the proceedings are concluded in favour of such worker, he/she shall be entitled to all the benefits as if the worker had not been suspended irrespective of the status of the worker i.e. permanent or temporary. In case of termination, the right to claim subsistence allowance under the act survives and it is open to the aggrieved person to claim the same.

However, the workers right to draw suspension allowance altogether expires if he joins another establishment during the term of the proceedings.

Calculation Of Subsistence Allowance

The calculation of subsistence allowance for the daily wage workers must be done in the manner in which the industry in which they were employed continues its operations, if the industry does not operate on holidays and festivals they shall not be entitled to the subsistence allowance for those days pending the proceedings.

However, if the industry operates on all days, they shall be entitled to subsistence allowance for all days and the contention no subsistence allowance on the holidays cannot be raised.[2] In case of agreement between the management and the workers for new wages with retrospective effect, the payment of subsistence allowance shall be according to the wages that the worker would have rightly drawn just prior to suspension not according to the actual wages drawn before suspension.[3]

Typically, the subsistence allowance constitutes 50% of the wages drawn by the worker prior to his suspension, up to a period of 90 days from the date of his suspension. 75% for the period ranging from 90-180 days and 90% for any day above 180[4]. But it may vary in different states according to the State acts thereby applicable. If the employee�s wage is below the Minimum wage prescribed, the subsistence allowance shall be calculated on the basis on the Minimum Prescribed Wage.

If the delay in the proceeding occurs on account of the employee concerned, the allowance maybe reduced to � of the wages payable prior to the suspension.

The subsistence allowance paid to a suspended employee is not recoverable or refundable even though ultimately the suspended employee is removed from service on the proof of misconduct for which he was proceeded against in departmental enquiry.

Non-Payment Of Suspension Allowance

Non-Payment of Suspension allowance does not ipso facto invalidate a disciplinary proceeding, however if it is shown that on account of non-payment the employee is unable to present his case or not meet his daily expenses which render him unable to present himself for the proceedings, the decision is liable to be quashed.[5] The employee must have a fair chance at hearing to present his case in relation to the misconduct alleged, failing to provide such chance would be a violation of the Principles of Natural Justice and cannot be entertained.

Subsistence allowance is paid to an employee to ensure continued survival, availability of basic necessities while ensuring that unnecessarily delay does not prolong the ultimate fate of the employee.

If such allowance is not paid and the employee is denied these basic necessities, it will be a straight violation of the Right to Life of the employee. During the period of suspension the employee is still a employee willing to render services as and when called upon to do so, however the employer prohibits him from rendering such services on account on fairness in the departmental proceedings, therefore he is rightfully entitled to such allowance from the employer and any non-payment which handicaps him is actionable.

Subsistence allowance ensures survival of the employee and maintenance of his family during the suspension period and serves as a motivation for speedy disposal of the proceedings on the part of the employer. Any person employed in or in connection with the work of any establishment to do skilled, semi-skilled or unskilled manual, supervisory, technical, clerical or any other kind of work for hire or reward, whether the terms of employment be express or implied, but does not include any such person who is employed mainly in a managerial or an administrative capacity or as an out-worker[6] is entitled to a subsistence allowance if suspended on account of misconduct.

All such persons can rightfully claim subsistence allowance and relevant interest on account of delay in payment of such allowance during the pendency of proceedings against them. In case of delay in proceedings on their account the employer can reduce the subsistence allowance thus paid to � of the wages drawn prior to suspension.

Adequate opportunity should be given to the employee to present his case and if non-payment of subsistence allowance renders him incapable in any manner,  judgement rendered on account of such proceedings is liable to be quashed. The rates of subsistence allowance vary in states, with Tamil Nadu and Kerala providing 100% allowance post 180 days of the commencement of the proceeding.

  1. Government of  India, Ministry of Labour and Employment, Industrial Employment (Standing Orders) Central Rules, 1946 available at :
  2. V. Mohanna v. Commissioner of Labour/ Appellant Authority under Tamil Nadu Payment of Subsistence Allowance Act, 1981, 2003 SCC Online Mad 679, 2004 (1) LLN 589 (Mad).
  3. Savithri A.N. v. Authority under the Kerala Payment of Subsistence Allowance Act, 2008 SCC Online Ker 112.
  4. Fundamental Rules, Chapter VIII, Fundamental Rule 53, 54, Industrial Employment (Standing Orders) Act, 1946, 10 A, 14(4).
  5. Vatsala Premchand Sarmal v. Raghunath Damodar Krachale, 2007 (4) BomCR 375 : 2007 (1) MhLj 705, Capt. M. Paul Anthony v. Bharat Gold Mines Ltd. (1999) LLJ 1094.
  6. The Kerala Payment of Subsistence Allowance Act, 1972 s. 2(a).

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