Subsistence Allowance: Meaning, Rates & Examples
Updated 4 min read
Definition
Subsistence allowance is the part pay an employer gives an employee who is suspended while a misconduct charge is looked into.
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What Is Subsistence Allowance?
Suspension stops the work, but in a larger workplace it cannot stop all of the pay.
Subsistence allowance is the part pay an employer gives an employee who is suspended while a misconduct charge is looked into. In India, section 38 of the Industrial Relations Code, 2020 sets it at 50% of wages for the first 90 days of suspension, and 75% after that if the delay is not the employee’s fault.
The allowance sits in the middle of a disciplinary case: a charge, then suspension, then the allowance while the enquiry runs, and finally a decision. The rule binds establishments with 300 or more workers, where the standing orders must provide for it, whether that is a private hospital, a bank’s back office or a factory.
How Subsistence Allowance Is Calculated
The Code ties the amount to the wages the employee was entitled to just before the suspension. It then works in three steps:
- First 90 days. The employer pays 50% of those wages from the date of suspension.
- After 90 days. The rate rises to 75%, unless the delay is directly caused by the employee’s own conduct.
- The condition. The Model Standing Orders, 2026 allow it only while the employee takes no other job during the suspension.
The enquiry should ordinarily end within 90 days, so the higher rate is the price of a slow case. The Code’s definition of wages leaves out some allowances, so check with your lawyer or CA which pay items count before you fix the figure.
Subsistence vs Travel Allowance
| Aspect | Suspension | Travel |
|---|---|---|
| Paid when | Suspended for an enquiry | Away on a work trip |
| Purpose | Living costs while not working | Meals and stay away from base |
| Set by | Section 38 of the Code | Usually company policy |
| Amount | 50% or 75% of wages | A fixed daily rate |
The same two words carry both meanings. In travel rules, especially outside India, a subsistence allowance is the daily amount for food and lodging on a work trip. In Indian labour law it means the suspension payment, which is what this page covers.
Subsistence Allowance Example
A dairy plant in Ahmedabad (an example) has 380 workers, so the rule applies. On 5 January 2026, it suspends a forklift operator accused of damaging a load on purpose. His wages are ₹18,000 a month. A key witness is on leave, so the enquiry runs four months.
| Rate | Period | Monthly |
|---|---|---|
| 50% | 5 Jan to 4 Apr | ₹9,000 |
| 75% | 5 Apr to 4 May | ₹13,500 |
Note: this is an invented example for illustration only. The plant, the employee, the wages and the dates are made up.
The delay was not the operator’s doing, so the rate rose after day 90. In all, he receives ₹40,500 while suspended. The enquiry ends on 4 May with a finding of guilt and one increment stopped.
Settling the Allowance After the Enquiry
The outcome decides what happens to the allowance. Under the standing orders, a fine, a stopped increment, a reduction in rank or a finding of not guilty means the employee counts as on duty for the whole suspension. They get the wages they would have earned, less the allowance already paid.
In the example, that is ₹72,000 less ₹40,500, so ₹31,500 is still owed. In Attendo (formerly Petpooja Payroll), a balance like this can be recorded as arrears and settled outside the monthly pay run, with a log of every entry.