Supreme Court of India
Regional Provident Fund Commissioner (II), West Bengal v. Vivekananda Vidyamandir
Whether special allowances paid to all employees are part of the basic wages on which provident fund contributions are paid.
Decided under an earlier law
The Court decided this case under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. Section 164 of the Code on Social Security, 2020 repeals the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. The Court's words are shown below beside the Code provision this library compares them with. This library does not say whether the decision holds good under the Code: compare the two texts.
What the Court decided
Each point is this library's summary, followed by the Court's own words, checked word for word against the text of the report. The pinpoint gives the page of the Supreme Court Reports and the margin letter (A to H) printed beside the line where the words begin.
Allowances paid across the board to all employees in a category, and not shown to be variable or linked to extra output, were part of 'basic wages' for provident fund contributions. The crucial test is universality.
The crucial test is one of universality.
[2019] 2 S.C.R. 275, at 283 D, para 9 · open the report at p. 283 no material has been placed by the establishments to demonstrate that the allowances in question being paid to its employees were either variable or were linked to any incentive for production resulting in greater output by an employee and that the allowances in question were not paid across the board to all employees in a particular category or were being paid especially to those who avail the opportunity.
[2019] 2 S.C.R. 275, at 287 F, para 14 · open the report at p. 287 To take a payment outside basic wages, it has to be shown that the worker became eligible for it by work beyond the normal work he was otherwise required to put in.
In order that the amount goes beyond the basic wages, it has to be shown that the workman concerned had become eligible to get this extra amount beyond the normal work which he was otherwise required to put in.
[2019] 2 S.C.R. 275, at 287 G, para 14 · open the report at p. 287 The Court did not interfere with the authorities' finding that the allowances were part of the basic wage presented as an allowance to avoid provident fund contributions.
the allowances in question were essentially a part of the basic wage camouflaged as part of an allowance so as to avoid deduction and contribution accordingly to the provident fund account of the employees. There is no occasion for us to interfere with the concurrent conclusions of facts.
[2019] 2 S.C.R. 275, at 288 B, para 14 · open the report at p. 288
The earlier provision and the Code
Employees' Provident Funds and Miscellaneous Provisions Act, 1952, section 2(b)
As quoted in the judgment: [2019] 2 S.C.R. 275, at 282 B, para 8 · open the report at p. 282
"Basic Wages" means all emoluments which are earned by an employee while on duty or (on leave or on holidays with wages in either case) in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include- (i) The cash value of any food concession; (ii) Any dearness allowance (that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living), house-rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment. (iii) Any presents made by the employer;
Social Security Code, section 2(88)
Definitions In force
(88) "wages" means all remuneration, whether by way of salaries, allowances or otherwise, expressed in terms of money or capable of being so expressed which would, if the terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment, and includes,—
(a) basic pay;
(b) dearness allowance; and
(c) retaining allowance, if any,
but does not include—
(a) any bonus payable under any law for the time being in force, which does not form part of the remuneration payable under the terms of employment;
(b) the value of any house-accommodation, or of the supply of light, water, medical attendance or other amenity or of any service excluded from the computation of wages by a general or special order of the appropriate Government;
(c) any contribution paid by the employer to any pension or provident fund, and the interest which may have accrued thereon;
(d) any conveyance allowance or the value of any travelling concession;
(e) any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment;
(f) house rent allowance;
(g) remuneration payable under any award or settlement between the parties or order of a court or Tribunal;
(h) any overtime allowance;
(i) any commission payable to the employee;
(j) any gratuity payable on the termination of employment;
(k) any retrenchment compensation or other retirement benefit payable to the employee or any ex gratia payment made to him on the termination of employment, under any law for the time being in force:
Provided that for calculating the wages under this clause, if payments made by the employer to the employee under sub-clauses (a) to (i) exceeds one-half, or such other per cent. as may be notified by the Central Government, of the all remuneration calculated under this clause, the amount which exceeds such one-half, or the per cent. so notified, shall be deemed as remuneration and shall be accordingly added in wages under this clause:
Provided further that for the purpose of equal wages to all genders and for the purpose of payment of wages, the emoluments specified in sub-clauses (d), (f), (g) and (h) shall be taken for computation of wage.
Explanation.—Where an employee is given in lieu of the whole or part of the wages payable to him, any remuneration in kind by his employer, the value of such remuneration in kind which does not exceed fifteen per cent. of the total wages payable to him, shall be deemed to form part of the wages of such employee;
Wording in common: 17% of the words, in the same order.
Wording differs; the decision may not carry over. The Code provision is not worded like the provision the Court interpreted.