Basic wages
Employees' Provident Funds and Miscellaneous Provisions Act, 1952, Section 2 (b), Payment of Gratuity Act, 1972, Sections 2(s) 4(2)
Section 2(s) of the Payment of Gratuity Act, 1972 defines the term ''wages'' as under:
''2. (s) 'wages' means all emoluments which are earned by an employee while on duty or on leave in accordance with the term and conditions of his employment and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance.''
Under Section 2(b) of the PF Act, the term ''basic wages'' is defined which reads as follows:
''2. (b) '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 any 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.''
A comparison between these two provisions will make it clear that there is no basic difference between the two expressions used in these two enactments insofar as the exclusion of bonus from the emoluments is concerned. The High Court has been carried away by the expression ''basic wages'' used in the PF Act while the term ''wages'' is used in the Act but that distinction will not be of any impact, if we closely examine the manner in which the two terms are defined in the respective Acts. The nomenclature of the two expressions will not alter the contents of the two terms.
Bonus stands excluded from the purview of ''wages'' for the purpose of calculating the contribution to be made in the provident fund or the gratuity payable under the Act. [Ticycles of Inda v. M.K. Gurumani, (2001) 7 SCC 204 (207, 208)]
