Saturday, April 7, 2012

what is permissible deduction under payment of wages Act

what is permissible deduction under payment of wages Act

Following are some of them



a) An employed person can be fined only for acts and omissions which are specified in a list which is approved by the State Government or the prescribed authority.(section-8)

b) Before the fine is imposed on an employed person , he must be given an opportunity for explanation. (section-8)

c) Fines should not exceed 3% of the wages in a month. (section-8)

d) Fines shall not be recovered by installment or later than 60 days of the date of imposition. (section-8)

e) The paymaster shall maintain a register of Wages, Fines, Damages, Deductions and Advances in Form VI(PW) (Rule 3,4 &17 )

2. Deductions(section-9 to13)

i) Deductions for the absence from duty.

ii) Deductions for damages to or loss of goods expressly entrusted to the employed person for custody ,or for loss of money for which he is required to account, where such damage or loss is directly attributed to his negligence or default.

iii) Deductions for house accommodation.

iv) Deduction for amenities as authorized by the Govt.

v) Deduction for recovery of advances and interest, and for adjustment of over payment of wages.

vi) Deductions for recovery of loans from any fund constituted for the welfare of labour approved by state Govt.

vii) Deductions for recovery of loans for house building or for purpose approved by Govt.

viii) Deduction for income-tax.

ix) Deduction on orders of a court or other authority.

x) Deductions for subscription and repayment of advance from any provident fund.

xi) Deduction for payments to cooperative sectors.

xii) Deduction of premium for LIC policy or for post office saving scheme on written authorization of the employed person.

xiii) Deduction for contribution to any fund constituted by the employed or trade union for welfare of employed person with the approval of state govt.

xiv) Deduction for payment of membership fee of trade union with written authorization of employed person.

xv) Deduction for contribution to Prime Ministers' National Relief Fund or to such other fund as notified by Central Govt. with the written authorization of the employed person

Total amount of deductions should not exceed 75% of wages of the employed person in any wage period if whole or part of the deduction are meant for payment to cooperative societies.

In other cases it should not exceed 50%.

Law does not allow an employer to make any type of deduction out of the wages of a worker except those authorized by this Act.

a)The advance may be recovered in installment by deductions from wages spread over not more than twelve months. No installment shall exceed one third or where the wages for any wage period are not more than 20 rupees ¼of the wages for the wage period in respect of which deduction is made.

(b)Recovery of advances of wages or loans or payment to cooperative societies and insurance scheme shall be subject to any rules/conditions of the State Govt.


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