The National Assembly passed the Special Allowance Act on 20 December 2024. This article provides an overview of the mechanism of the Act. In Part A, we identify the entitlement of some employees to the Special Allowance. In Part B, we identify the entitlement of some employers to Financial Assistance.
PART A – ENTITLEMENT OF EMPLOYEES TO THE SPECIAL ALLOWANCE
Who is entitled to receive the Special Allowance?
A person who –
(i) who has been in the continuous employment of an employer for the whole of the year 2024, or
(ii) who has been in the continuous employment of an employer for part of the year 2024,
and who earns up to a maximum basic wage or salary* of Rs 50,000 per month will be entitled to receive the Special “14th month bonus” Allowance.
Who is not entitled?
The following are not entitled –
(i) a job contractor,
(ii) a consultant,
(iii) a self-employed,
(iv) a person taking part in a training scheme set up by the Government or under a joint public-private initiative with a view to facilitating the placement of jobseekers in gainful employment,
(v) a person whose monthly basic wage or salary* is in excess of 50,000 rupees,
(vi) a public officer, a local government officer, an employee of a statutory body who is, or has opted to be governed by the terms and conditions in a report of the Pay Research Bureau, and
(vii) an employee who is employed on terms and conditions specified in a report of the Pay Research Bureau.
What is “basic wage or salary”?
Basic wage or salary* means either of the following:
(i) the basic wage or salary prescribed in a Remuneration Regulation, Arbitral Award or Employment Agreement governing the employment relationship, or
(ii) such higher basic wage or salary paid by the employer; or
(iii) in any other case, the basic wage or salary paid by an employer.
What is included in the computation of “basic wage or salary”?
(i) The Additional Remuneration payable for the year 2024, and
(ii) the Wage Adjustment payable as from 1 July 2024 (under the Remuneration Regulations or such other regulations made under the Employment Relations Act).
Does an employee need to be in employment on 31 December 2024 to be entitled to the Special Allowance?
Not necessarily. The following persons will be entitled to receive the Special Allowance even if they are not in employment on the 31 December 2024:
(i) a person whose employment is terminated in the course of the year for any reason;
(ii) a person whose contract of employment comes to an end during the course of the year;
(iii) a person who passes away in the course of the year;
(iv) a person who retires in the course of the year in accordance with the provisions of any agreement or enactment; or
(v) a person who resigns in the course of the year on or after having been in continuous employment for at least 8 months.
How is the Special Allowance computed?
§ If an employee –
(i) has been in the continuous employment with the same employer for the whole of the year 2024, and
(ii) is still in employment as at 31 December 2024,
the special allowance will be equivalent to one month basic wage or salary.
§ If the employee has been in continuous employment with the same employer for only part of 2024, he will be paid pro-rata, based –
(i) on the number of completed months during which he has remained in the continuous employment of the employer in the year 2024, and
(ii) the monthly basic wage or salary payable in respect of the month of December 2024 or in respect of the last month of his employment.
When does the Special Allowance have to be paid?
The Statutory Principle
Every employer has to pay the Special Allowance in 2 equal instalments as follows –
(i) the first half on or before the last working day of December 2024; and
(ii) the second half on the last working day of January 2025.
The Exception – if an Agreement is reached
An employer and an employee may agree on the payment of the Special Allowance in not more than 4, and equal, instalments.
The first instalment has to paid on the last working day of December 2024.
However, the employer and the employee are free to reach an agreement on the dates when to pay for to the two or three remaining instalments.
If there is no agreement as to when the remaining instalments have to be paid, the Act provides that the employer will have to pay the outstanding Special Allowance at the end of each successive month following the month of December 2024. Hence, end of January and February 2025 if there are three equal instalments, and end of January, February and March 2025 if there are four equal instalments.
PART B – ENTITLEMENT OF EMPLOYERS TO FINANCIAL ASSISTANCE
Who is eligible for Financial Assistance equivalent to the whole Special Allowance paid?
Three criteria must be satisfied. The first criterion is that the employee must be an “Eligible Employee”, i.e. –
(i) employed on a fulltime basis,
(ii) from an export enterprise,
(iii) from a SME deriving gross income from business, or
(iv) from such other category of employer or employee as may be prescribed, and
(v) who has been paid the Special Allowance under the Special Allowance Act 2024, and
(vi) whose basic wage or salary for the month of December 2024 (or where he is not in employment in December 2024, his last month of employment) does not exceed 50,000 rupees;
but does not include –
(i) an employee employed by a Ministry, a Government department, a local authority, a statutory body or the Rodrigues Regional Assembly; and
(ii) such category of employees as may be prescribed.
The second criterion is that the employer must be –
(i) an export enterprise,
(ii) a SME, or
(iii) an employer falling within such other category as may be prescribed.
The third criterion is that the employer had for the year of assessment 2023-2024 –
(i) an accounting loss; or
(ii) an accounting profit that would be reduced by more than 50 per cent –
(A) if the additional remuneration 2024, the increase in national minimum wage payable as from January 2024 and the Special Allowance payable for the year 2024 to its employees were deducted from that accounting profit; and
(B) if the financial assistance payable to the employer under section 150EB of the Income Tax Act (“Financial assistance for payment of national minimum wage and salary compensation 2024”) were added to that accounting profit.
Who is eligible for Financial Assistance equivalent to only 50% of the Special Allowance paid?
The first and second criteria are the same as above.
The third criterion is that the employer had for the year of assessment 2023-2024 an accounting profit that would be reduced by more than 10 per cent –
(i) if the additional remuneration 2024, the increase in National Minimum Wage payable as from January 2024 and the Special Allowance payable to its employees were deducted from that accounting profit; and
(ii) if the financial assistance payable to the employer under section 150EB of the Income Tax Act (“Financial assistance for payment of national minimum wage and salary compensation 2024”), were added to that accounting profit.
What is the maximum allowance payable?
The maximum financial assistance payable to an employer is MUR 50,000 in respect of each Eligible Employee.
Disclaimer: This article only provides general information concerning the subject matter. It is not intended to amount to legal advice nor should it be considered as such.
