Suspension pending an inquiry is a holding measure. The employment continues, the charge is not proved, and nothing has been decided. Employers who treat it as a way of switching off the salary while they take their time are usually on the wrong side of both the statute and the contract.
The statutory rule, and who it reaches
The Industrial Relations Code, 2020 deals with this in the standing orders chapter, and it does two things at once. First, where a worker is suspended pending an investigation or inquiry into complaints or charges of misconduct, that investigation or inquiry, or both where there is an investigation followed by an inquiry, shall ordinarily be completed within ninety days from the date of suspension. Second, the certified standing orders must provide that the employer pays the suspended worker subsistence allowance at:
- fifty per cent of the wages the worker was entitled to immediately preceding the date of suspension, for the first ninety days of suspension; and
- seventy five per cent of those wages for the remaining period of suspension, if the delay in completing the disciplinary proceedings is not directly attributable to the conduct of the worker.
Read the second limb carefully, because it is where the argument sits. The higher rate is the default once ninety days have passed. It drops back only if the employer can show that you caused the delay, by seeking repeated adjournments or by not attending. Keep a record of every date, every adjournment and who asked for it, because that record decides which rate applies.
That provision sits in the chapter on standing orders, and the chapter applies to an industrial establishment employing three hundred or more workers, or which employed that number on any day of the preceding twelve months. A smaller employer, or an employee who is not a worker because the role is mainly managerial or administrative, does not get the fifty and seventy five per cent figures as a direct statutory entitlement. That does not mean the pay simply stops. It means the entitlement is located somewhere else.
If the chapter does not apply to you
- Start with the appointment letter and the policy. Many employers reproduce the fifty and seventy five per cent formula in the HR manual, and once it is in the contract of employment it binds them whatever the headcount. Our guide on what an Indian employment agreement should contain explains why the disciplinary and suspension clauses deserve a careful read at the time of joining rather than at the time of trouble.
- Then look at the wages Code. Under the Code on Wages, 2019 there can be no deduction from an employee's wages except as authorised by that Code. The Code adds that a loss of wages resulting from a suspension is not treated as a deduction only where the provisions made by the employer for that purpose satisfy the requirements specified in the notification issued by the appropriate Government. An employer that has no such provision, or whose provision does not meet what has been notified, is on weak ground when it stops the salary entirely, and the point is worth putting to it in writing.
- Check what kind of suspension this is. Suspension pending inquiry is not a punishment. Suspension as a punishment can only follow a completed inquiry and a finding. If the letter is ambiguous, ask which it is, in writing, and the answer will often be more useful than the payment.
The other things suspension does not do
- It does not break your service. The employment subsists, so the period counts for continuous service unless the statute or the standing orders say otherwise.
- It does not entitle the employer to your resignation. A suspension is often followed by an offer to let you resign quietly. A resignation removes the very order that every remedy is built on.
- It does not survive indefinitely. A suspension that runs for months with no charge sheet and no inquiry is a suspension the employer will struggle to justify, and the ninety day norm is the yardstick to hold it to.
- It does not stop your provident fund or other statutory obligations on the wages actually paid to you during it.
What to do in the first week
Acknowledge the suspension order in writing and ask four things: the charge, the rate of subsistence allowance and the date it will be paid, the name of the inquiry officer, and the expected date of the inquiry. Do not stop reporting availability. Send a short line each wage period confirming you remain available for duty and that you have not taken up other employment, because that record supports both the subsistence claim and any later claim for wages. Keep the payslips for the suspension period, because they prove what was paid and at what rate.
If nothing is paid at all, the claim is a wages claim and it goes to the authority appointed under the Code on Wages, which can order the payment together with compensation. If the suspension ends in a dismissal, the subsistence question folds into the larger challenge, and our guide on wrongful termination and employee rights in India sets out that sequence. For why the section numbers in older material on suspension and subsistence allowance no longer match the statute book, see our overview of what the four labour codes changed for employees.