Question

Under the Wage Code, 2019, the term “wages” excludes which of the following?

• A. Bonus
• B. Dearness Allowance
• C. House Rent Allowance
• D. Gratuity

Hint:

The new Wage Code has a specific list of exclusions from the definition of 'wages'. Gratuity, being a terminal (end-of-service) benefit, is a key exclusion from the regular wage calculation.

Answer 1

The Correct Option is D

Step 1: Understand the definition of 'Wages' in the Wage Code, 2019.
Section 2(y) of the Code provides a comprehensive definition.
It includes basic pay, dearness allowance, and retaining allowance.

Step 2: Identify the specific exclusions.
The same section also provides a list of components that are excluded from the definition of wages.
This list includes:
Bonus payable under any law.

Value of house-accommodation or supply of light, water, medical attendance.

Employer's contribution to any pension or provident fund.

Conveyance allowance.

House Rent Allowance.

Gratuity payable on the termination of employment.

Retrenchment compensation and other retirement benefits.
While bonus and HRA are in the exclusion list, there is a proviso that if these excluded components exceed 50% of the total remuneration, the excess amount will be treated as wages.
However, Gratuity is a clear and absolute exclusion as it is a terminal benefit.