Payment allowances must be universally applied to qualify as basic wages for provident fund contributions.

JUDGMENT

Dated this the 12^th day of March 2026 Devan Ramachandran, J The constitutive issue in this appeal revolves on the question, whether some of the heads of payment made by the respondent to their employees – namely “site inspection”, “conveyance allowance” and “ERNI”, ought to be construed to be part of basic wages, for the purpose of calculation of the contribution kpayable to the Provident Fund.

2. The matter has travelled all the way up to this Court, after the Central Government Industrial Tribunal – cum - Labour Court Ernakulam, the (Tribunal for ‘Short’) found against the 1^st respondent; with them, challenging its order, namely ExtP7, by filing WP(C)No.4879 of 2022.

3. A learned Judge of this Court allowed the writ petition, holding that the aforementioned allowances cannot be construed to be part of basic wages because, they were not paid universally to all employees by the 1^st respondent; and the Assistant Provident Fund Commissioner, is before us in appeal.

4. We have examined Ext.P7 - which is the order of the Tribunal, wherein, it has been recorded that even the respondent herein has no case that the above said allowances are universally paid by them to all the employees. This observation is relevant because, it has been well settled by various judgments includingRegional Provident Fund Commissioner (II) West Bengal v. Vivekananda Vidyamandir and Ors. [AIR 2019 SC 1240], that one of the acme tests for determining if a payment is to be excluded from basic wages, is that it must have a direct nexus and linkage to the payment of such special allowance as not being common to all.

5. The learned single Judge has taken the view that, even going by the order of the learned Tribunal, there is no finding that the allowances are universally paid to all the employees; and therefore, that the essential facts have not been established and proved. He thus gave relief to the 1^st respondent herein.

6. However, it is well settled, without requirement for restatement or expatiation that when an assertion is made, it is for the assertor to prove it.

7. In the case at hand, the Provident Fund Department notified the respondent that a suspicion arises why they are making certain payments to all their employees under heads like “site allowance”, “conveyance allowance”, “ERNI” etc. When one reads Ext.P7, it is rendered luculent that the stand of the respondent herein was that they are entitled to do so, but without offering any explanation as to what each of these terms mean.

8. Before us, the learned counsel for the 1^st respondent - Sri.Ashok Shenoy, submitted that the charges for conveyance and site allowances represent the actual expenses that the security guards, who are employed by his client have to suffer; while, as regards “ERNI”, he was unable to tell us what this meant. In other words, the learned counsel tried to justify the payments as being expenses, rather than being part of the wages; but without being in a position to define some of the heads.

9. In refutation, Smt.S.Nitha - learned Standing Counsel for the appellant, submitted that, when it was conceded before the learned Tribunal by the 1^st respondent that they have made payments to all employees under the above heads, it can only be taken to be part of ‘basic wages’, as defined under Section 2 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 .

10. We do not want to hazard a guess on any of the afore contentions, for the singular reason that we find most of the germane facts to be still remaining amorphous. We say as afore because when, the Enforcement Officer of the EPFO settled a report to the effect that wages are being split up by the 1^st respondent under the heads “site all