HOUSE RENT ALLOWANCE(HRA)
House Rent Allowance is wage in cases where it is being paid. Notional amount of house rent can not be presumed as wages for deciding the coverage. In cases where an employee is being paid house rent allowance, the same will be included both for coverage and contribution. In cases where the staff quarters have been allotted the amount of salary and wages paid will count for coverage and contribution and no notional house rent allowance is to be presumed in such cases.
In the cases of Braithawait & Co. Vs. ESIC and M/s.Harihar Polyfibres Vs. ESIC, Bangalore, Supreme Court has also held that house rent allowance is a ‘wage’ under Sec.2(22) of the ESI Act.
(Earlier instructions were issued vide memo No.T-11/13/11/15-Ins.III dt. 28.9.75, No.Ins.III(2)/15/15/74-Ins.Desk.I dated Dec.,76, No.T-11/13/53/19-84/Ins.IV dt. 19.9.84 & No.D.Ins.II/11/3087/303 dated 1.3.1985).
MEDICAL ALLOWANCE
The employees working in factories/establishments are being provided medical services in kind by the employer but in certain factories/establishments instead of providing medical services in kind, the amount spent by the employees on medical care is reimbursed while in some other organisations, employees are being paid monthly cash allowance in lieu of medical aid/reimbursement of medical expenses. Where such payments are made by the employer in lieu of the medical benefit, the same are to be treated as wages under Sec.2(22) of the ESI Act and the contribution is chargeable.
(Earlier instruction were issued vide letter No.Ins.5(5)/68-Ins.III dt. 21.8.71 & Ins.III/2(2)2/68 dated 24.6.71)
NEWSPAPER ALLOWANCE
In certain factories/establishments the employees are reimbursed the cost of Newspapers while in some other factories/establishments the employees are paid monthly newspapers allowance instead of reimbursement of the cost of the Newspapers. Where the amount is being paid regularly to the employees by the employer as Newspapers allowance the same will be treated as wages under Sec.2(22) of the ESI Act and the contribution is chargeable. However, where the cost of Newspapers is reimbursed to the employees, no contribution is to be charged on such payments.
EDUCATION ALLOWANCE:
Employees are being paid monthly Education allowance for the children studying in the Schools/Colleges. Where such education allowance is being paid monthly, the same is to be considered as wages under Sec.2(22) of the ESI Act and the contribution is chargeable on the said amount.
However, in such cases where instead of paying the education allowance on monthly basis, the amount spent as fee is reimbursed to the employees and booked under education allowance, in such cases no contribution is payable.
DRIVERS’ ALLOWANCE
In some of the factories/establishments the officers employed as employees are being paid drivers’ allowance per month. This allowance is being paid to enable the officers to appoint a driver at their own level and such drivers employed are not being paid salary directly by the factories/establishments. Where such allowance is being paid to the employees and the drivers are not engaged by the employees, in such event the allowance paid as such will be considered as wage under Section 2(22) of the ESI Act and contribution will be chargeable provided the employee is coverable under the Scheme..
However, where the services of the drivers are being utilised, in such event the drivers so engaged will be covered as employee and contribution will be payable on the amount paid to the drivers as salary and booked in the ledgers of the employer under the heading ‘Drivers’ Allowance’.
FOOD/MILK/TIFFIN/LUNCH ALLOWANCE:
Each case of payment of Food, Milk, Tiffin and Lunch Allowance has to be examined on its merits depending on the following conditions under which the allowance is payable:-
Tiffin/Food/Milk/Lunch Allowance paid in cash at a fixed rate irrespective of whether the person is absent or on authorised leave etc. may be treated as wages.
Tiffin/Food/Milk/Lunch allowance paid in cash with deduction for leave or absence etc. may not be treated as wages.
Tiffin/Food/Milk/Lunch allowance paid in kind i.e. canteen subsidy/food subsidy etc. may not be treated as wages.
(Earlier instructions were issued vide letter No.P-11/13/97-Ins.IV dated 2.2.1999)
GAZETTED ALLOWANCE
Certain factories/establishments are paying gazetted allowance to its employees in lieu of duties performed by them on gazetted holidays. Such gazetted allowance is not wage for the purpose of Sec.2(9) of the ESI Act. However, it will be wage for the purpose of Sec.2(22) of the ESI Act and the contribution are to be recovered on such payments.
House Rent Allowance is wage in cases where it is being paid. Notional amount of house rent can not be presumed as wages for deciding the coverage. In cases where an employee is being paid house rent allowance, the same will be included both for coverage and contribution. In cases where the staff quarters have been allotted the amount of salary and wages paid will count for coverage and contribution and no notional house rent allowance is to be presumed in such cases.
In the cases of Braithawait & Co. Vs. ESIC and M/s.Harihar Polyfibres Vs. ESIC, Bangalore, Supreme Court has also held that house rent allowance is a ‘wage’ under Sec.2(22) of the ESI Act.
(Earlier instructions were issued vide memo No.T-11/13/11/15-Ins.III dt. 28.9.75, No.Ins.III(2)/15/15/74-Ins.Desk.I dated Dec.,76, No.T-11/13/53/19-84/Ins.IV dt. 19.9.84 & No.D.Ins.II/11/3087/303 dated 1.3.1985).
MEDICAL ALLOWANCE
The employees working in factories/establishments are being provided medical services in kind by the employer but in certain factories/establishments instead of providing medical services in kind, the amount spent by the employees on medical care is reimbursed while in some other organisations, employees are being paid monthly cash allowance in lieu of medical aid/reimbursement of medical expenses. Where such payments are made by the employer in lieu of the medical benefit, the same are to be treated as wages under Sec.2(22) of the ESI Act and the contribution is chargeable.
(Earlier instruction were issued vide letter No.Ins.5(5)/68-Ins.III dt. 21.8.71 & Ins.III/2(2)2/68 dated 24.6.71)
NEWSPAPER ALLOWANCE
In certain factories/establishments the employees are reimbursed the cost of Newspapers while in some other factories/establishments the employees are paid monthly newspapers allowance instead of reimbursement of the cost of the Newspapers. Where the amount is being paid regularly to the employees by the employer as Newspapers allowance the same will be treated as wages under Sec.2(22) of the ESI Act and the contribution is chargeable. However, where the cost of Newspapers is reimbursed to the employees, no contribution is to be charged on such payments.
EDUCATION ALLOWANCE:
Employees are being paid monthly Education allowance for the children studying in the Schools/Colleges. Where such education allowance is being paid monthly, the same is to be considered as wages under Sec.2(22) of the ESI Act and the contribution is chargeable on the said amount.
However, in such cases where instead of paying the education allowance on monthly basis, the amount spent as fee is reimbursed to the employees and booked under education allowance, in such cases no contribution is payable.
DRIVERS’ ALLOWANCE
In some of the factories/establishments the officers employed as employees are being paid drivers’ allowance per month. This allowance is being paid to enable the officers to appoint a driver at their own level and such drivers employed are not being paid salary directly by the factories/establishments. Where such allowance is being paid to the employees and the drivers are not engaged by the employees, in such event the allowance paid as such will be considered as wage under Section 2(22) of the ESI Act and contribution will be chargeable provided the employee is coverable under the Scheme..
However, where the services of the drivers are being utilised, in such event the drivers so engaged will be covered as employee and contribution will be payable on the amount paid to the drivers as salary and booked in the ledgers of the employer under the heading ‘Drivers’ Allowance’.
FOOD/MILK/TIFFIN/LUNCH ALLOWANCE:
Each case of payment of Food, Milk, Tiffin and Lunch Allowance has to be examined on its merits depending on the following conditions under which the allowance is payable:-
Tiffin/Food/Milk/Lunch Allowance paid in cash at a fixed rate irrespective of whether the person is absent or on authorised leave etc. may be treated as wages.
Tiffin/Food/Milk/Lunch allowance paid in cash with deduction for leave or absence etc. may not be treated as wages.
Tiffin/Food/Milk/Lunch allowance paid in kind i.e. canteen subsidy/food subsidy etc. may not be treated as wages.
(Earlier instructions were issued vide letter No.P-11/13/97-Ins.IV dated 2.2.1999)
GAZETTED ALLOWANCE
Certain factories/establishments are paying gazetted allowance to its employees in lieu of duties performed by them on gazetted holidays. Such gazetted allowance is not wage for the purpose of Sec.2(9) of the ESI Act. However, it will be wage for the purpose of Sec.2(22) of the ESI Act and the contribution are to be recovered on such payments.
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