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Is allowance part of salary ?

Mon, 12 Nov 2007 08:52:06 PM  (Last updated: Tue, 13 Nov 2007 12:18:07 PM)

colleague of mine being layoff and the company claimed that her car allowance (a fixed sum payable with salary everymonth) is not salary and was not included for calculation for severance payment. Is it true that fixed allowance are not package of salary thus not a salary ?

KL Siew
Mon, 12 Nov 2007 09:21:52 PM

I don't know whether your colleages is covered by the Employment Act or not (i.e. her salary does not exceed 1500 per month). If she is covered, please advise her to verify her company's calculation of the termination and layoff benefits with the Labour Department. If her salary is over 1.5K, advise her to approach the Industrial Relations Department for their opinion.

Tue, 13 Nov 2007 12:18:07 PM

I have contacted the IR and would like to share the information obtained with your readers should they have similar query.. .. ..

According to the Penolong Pengarah of IR, if the company did not lay down the terms and conditions as to how to calculate layoff payment any fixed allowance which is payable with salary is considered package of salary.

Thus is subjected to add in when calculate for termination and layout benefit.

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