Hi Richuka
Thanks for this suggestion as well since I need to present this also in front of my mgmt. because still request for salary advances(being the genuine one) are coming after the revision of my policy.
Would request you to pls elaborate more on this as how should I proceed as I might have to face a challenge of taking out money from my employees. And how will the deductions happen, like yearly, monthly etc..
Best Regards,

From India, Delhi
I dont agree with Punit.
Its better to make a policy and keep it transparent.
One of the roles of HR is to creat systems and processes, ensure fairness and transparency and communicate the same to employees.
Hence, you prepare a policy & inform employees about it.
Few points can be inbuilt in it:
  1. Max 3/4 times in a year
  2. Not more than 1 time in a quarter
  3. Not more than 50% of salary
  4. One imp point: Ensure to recover all the amount from next month's salary..What if employee leaves..Why to have hassles? Esp in today's scenario, why to increase financial burden on the company? Hence should not be more than the salary being credited to employee.
Even if, employee takes it as a right, he works within guidleines which smoothens the entire process.
Hope that helps.

From India, Gurgaon
Hi Tarun,

Before my reply, can i get to know whether the advance issue has prop out suddenly or
Is there any problem with the frequency of the salary disbursal ???

Generally the HR Policy should incorporate the procedure for applying for salary advance -

Let me guide through certain important points in this regard -

1. Try to link the Ceiling Limits of advance to 2 or 3 times of Basic.
2. Give Advance to employees who had served the company for at least 1 Year.
3. Always make provisions in the policy to recover the advances (in part / full) against earnings other than normal salary e.g. Incentives, EL Encashments, Performance Pay etc.
4. No provisions for a Second advance unless and until the 1st one is cleared.
5. Always investigate the genuinity of the application. Advances should not be sanctioned at will. The Associate / employees have to provide legitimate reasons for the advances and only the section head has to give consent before the final approval from the HR and Finance Deptt.
6. The recovery period should be done in full / in installments. Further the recovery period should not extend beyond 6 Months.
7. Try to maintain a gap between two consecutive Advances (at least a year), since there will be some employees who will always try to keep their advance accounts running for their advantage.

Rest the approvals judgement.

I do respect all the above mentioned comments & would suggest u to ask for a testimonials before issuing the advance salary loan.
and there should not be any dues on employee before applying and can be given upto double of their monthly gross salary. it should be payback in equal installments and one needs to understand that employer is just adding another benefits to the employees pocket. It is not a financial institution or BANK.

From India, New Delhi
There has to some responsibility on employees and line managers. I believe this is one motivational/ incentive given to employees. Employees should request through a formal application, which needs to get 1st approval from manager, so as he/she is also aware.

You have got lots of suggestion on periodicity and process.

Lastly, you need to look into finance deppt. problems also. Discuss with them and draft a policy accordingly. Suggest to have cap how much amount can be given out as advances in a month. They need to do company financial management.

From India, Delhi

As u want to know abt the deduction procedure, that u can do the deduction on monthly bases. For the same u need to calculate the amount that should be loaned and how much should be deducted.
1) U need to do the forful deduction till the loaned amount is not completed.
2) Employee's are not allowed to leave the job till they didn't refund the loan. If they really have some issues and want to leave early, they need to refund the amount in one go. Till that time don't provide any document and dues.
Due to this ur company will be benefitted by Stability of the employees as well.

Another point u asked is about the new policy, that should be that vouluntiar process (informal process). Here i mean that who ever wants to join it, they may join that society. It can be in form of lucky draw system and need to be rotated, one person cann't able to put the chit on his/her name till the loan is not refunded, rest peoples may continue. Now u need to sit with ur senior and all employees at the time of any even and need to check their interest in the same.
Becoz forcefull u cann't able to deduct the salary for the same practice.

For further query u can send a mail or can contact me on my gmail.


From India, New Delhi
Hi, Can any one suggest me if an employees doesn’t receive the payment for almost three month what preventive action can be taken against the management
From India, Pune
paise paise paise money money money money,,, what to do :sad::sad::sad::sad: this piece of paper got so much value :sad::sad::sad:
From India, Pune
it appears we are mixing two issues. one is salary advance and other is loan. and we are talking about salary advance.
1- salary advance means: a emplyoee is entitled for his montly remunaration at the end of each month (for the month he worked) now due to some urgent need he intend to take that salary in advance.
2- loan is entirely different issue and company can grant him loan looking to his circumstances and nothing to do with currnet salary. it is to determined how he will repay by installment or else.
SALARY ADVANCE ISSUE: must be given after 10 of every month so that previous month account may be closed. and this salary advance should not acceede monthly salary.

From Pakistan, Karachi

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