Legal Deductions As Security

There is no provision in Law - Payment of Wages Act or any other Act, permitting the employer to make deduction from salary of employee against retention or security. Please note that any deduction other than authorised deductions as listed in section 7(2) of POW Act 1936 is unathorised deduction.[/QUOTE]

Dear Sir

In our company too, there is deduction of LTA an d medical and in our appointment letter it was mentioned that this is retention amount and will be repaid after completion of one year but practically we are not getting this it will be paid once in a 2.5years or 3 years thus every month substanatial amount is depoisted with the employer and its the practice that employer generally do not return this amount to employee in its full and final settlement.. This is shown in employees ctc thus there is short salary equivalent to amunt of lta and medical generally each component say lt a is approx 8% of the emplyees basic salary..

PLease advise how to recover this amount.. as every amount substantial amount is not refunded by empoyer.... kindly advise any legal method as there is mention of this point in our apptment letter.

Regards

Rajendra

Salary accrued to a person is his property and hence is protected by Article 300A of the Constitution. Any deduction could be effected only if required under a statute or if there is any recovery against any advance given or overpayment made etc.

Quite illegal. No deduction of such type is permissible. You can only resort to service bond or training bond to be entered in to with the employee, but no recovery of security money to be deducted out of salary./ wages just to secure probation period.

There is a lot of discussion on CTC deductions

Please go and read the various threads.

I think in your case, the CTC provides certain amount for LTA and medical reimbursement. That is not being given. First, CTC is a fictitious amount created by HR to show how much you MAY cost the company and make your salary look higher than what it is. CTC has no validity in law and no meaning either.

If the deduction was from gross salary, then it is illegal. So you need to check if the deduction is appearing in gross salary in your salary slip. Otherwise, you have been fooled by HR when you joined to think the pay is higher than what it actually is and there is little you can do about it now.

Dear Sir

In our company too, there is deduction of LTA an d medical and in our appointment letter it was mentioned that this is retention amount and will be repaid after completion of one year but practically we are not getting this it will be paid once in a 2.5years or 3 years thus every month substanatial amount is depoisted with the employer and its the practice that employer generally do not return this amount to employee in its full and final settlement.. This is shown in employees ctc thus there is short salary equivalent to amunt of lta and medical generally each component say lt a is approx 8% of the emplyees basic salary..

PLease advise how to recover this amount.. as every amount substantial amount is not refunded by empoyer.... kindly advise any legal method as there is mention of this point in our apptment letter.

Regards

Rajendra[/QUOTE]

[/QUOTE]
Dear Rajendra,
There is definitely a marked line of difference between deduction from salary and retention of part of CTC payable after some specific period. No parallels can be made. LTA or medical allowance, paid or not paid is a separate issue to be decided on merits of the individual cases.

@maze_now...
You can go to labour union office and file a formal complaint. They will call your employer for a hearing where they would ask both the parties to present the cases. The concerned officer then pronounces the verdict and the employer will have to comply with it.

Legally permissible deductions are listed in payment of wages act. Deduction towards security deposit is not in the list and as such it is illegal deduction.

The course of action, as suggested above, would be based on expediency than any principle. It is my considered view that HR needs to based on rule of law than one of overawing the hapless employees.

If the employee has not been made aware of any provision through the terms & conditions mentioned offer/ appointment letter about deduction of security deposit, it would be quite unlawful on your part to deduct any amount in the name of security deposit.

Why do you have to stoop to such level. Employees should be motivated enough to come to work and get associated with the company for long duration. This requires a complete employee engagement driving vision, mission and values.
Apart from being illegal, this would be harmful for the company as no one would like to work in such environment.
Make sure the culture of the company is good where employees are happy.