Is bonus payable on suspension allowance?

Under Indian Labour laws, suspension allowance is paid during pendency of inquiry when an employee has been suspended. The suspension allowance/subsistence allowance is a payment made out of a  statutory obligation. The payment is made to enable the employee to meet his subsistence requirements. Therefore subsistence allowance will not attract Bonus, as per labour law in India.

In Motor Industries Company Limited V/s Popat Muralidhar Patil, the Hon’ble Bombay High Court held that subsistence allowance paid to an employee was purely by reason of a statutory obligation and not by remuneration. Therefore it did not fit the definition of wages under the Act and therefore not eligible to receive Bonus.

Further, in Deccan Merchant Co-operative Bank Ltd V/s Avdhoot Marutirao Rane & Anr.  the Hon’ble Bombay High Court held that bonus is not payable on subsistence allowance because the employee does not actually work during that period and secondly because the subsistence allowance cannot be considered as salary or wages under Indian employment law.

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