jagadish paranjape (Advocate) 01 February 2025
It is prescribed in letter of appointment of managerial staff that if the service is terminated three months salary is to be paid.What allowances other than basic and D.A. are included in salary .In short how the salary is to be calculated?
If some precedent is available,it would be useful.
Regards.
T. Kalaiselvan, Advocate (Advocate) 01 February 2025
When an employment contract states that a terminated employee will receive "three months salary" upon leaving, this typically includes all allowances that are part of their regular monthly pay, meaning the allowances will be calculated and included in the total three-month payout.
Most companies consider all allowances like housing allowance, transportation allowance, and dearness allowance as part of the total salary when calculating termination pay.
Always refer to the specific wording in your employment contract to confirm exactly what components are included in the "three months salary" calculation.
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