‘Ordinary rate of wages’ do not include HRA, CCA, TA and SFA

The phrase ‘ordinary rate of wages’ appear in Section 59 of the Factories Act, which require an employer to pay ‘extra wages for overtime’ work in a factory. According to the said section, where a worker works in a factory for more than 9hrs in a day or for more than 48hrs in any week, he shall, in respect of overtime work, be entitled to wages at the rate of twice his ‘ordinary rate of wages’. The Kerala High Court, in the case of Jossie v. Flag Officer, was confronted with the question of eligible allowances that form part of ‘ordinary rate of wages’.  The court held that ‘ordinary rate of wages’ includes only salary and allowances for the work [like Dearness Allowance (DA)]. It does not include such allowances which are either compensatory in character or incentive in nature. Therefore court held that House Rent Allowance (HRA), City Compensatory Allowance (CCA), Transport Allowance (TA), and Small Family Norm Allowance (SFA) etc. are not part of ‘ordinary rate of wages’.

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About Thomas Geeverghese

Advocate, Ernakulam
This entry was posted in Calculation, Computation, Labour Law Kerala and tagged , , , , . Bookmark the permalink.

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