Hi everyone, I have a query regarding the advance taken by an employee. He has taken an advance of Rs. 1 lakh for a marriage in the family. His salary is Rs. 25,000 per month.
Salary Advance Deduction Query
I would like to know if there is a specific percentage of salary that can be deducted as a salary advance. Or is it legally possible that we can recover the whole amount in 4 months? Please provide your inputs.
Thanks & Regards,
Shweta Chirvi
From India, Pune
Acknowledge(0)
Amend(0)
Salary Advance Deduction Query
I would like to know if there is a specific percentage of salary that can be deducted as a salary advance. Or is it legally possible that we can recover the whole amount in 4 months? Please provide your inputs.
Thanks & Regards,
Shweta Chirvi
From India, Pune
Acknowledge(0)Amend(0)
Recovering the entire amount would mean not paying him FULL SALARY for 4 months! How do you expect an employee to run his family (and newly married) without salary for 4 months, irrespective of other sources of income he has or whether a family member is working or not? At the first instance, this thought itself is not practical.
You may take post-dated cheques by dividing the amount into 12 installments to ensure the employee's financial stability and also the company's security. If the employee happens to leave before this period, he needs to repay the entire amount.
I've never heard about any specific percentage or amount to be deducted from salary as an installment under any ACT for a corporate loan as it is a part of company policy, but wait for others to comment on the same.
From India, Ahmedabad
Acknowledge(4)
Amend(0)
207You may take post-dated cheques by dividing the amount into 12 installments to ensure the employee's financial stability and also the company's security. If the employee happens to leave before this period, he needs to repay the entire amount.
I've never heard about any specific percentage or amount to be deducted from salary as an installment under any ACT for a corporate loan as it is a part of company policy, but wait for others to comment on the same.
From India, Ahmedabad
Acknowledge(4)Amend(0)
Dear Mr. Hiral, Thanks a lot for your input. However I have read that a maximum of 50 % of employees' salary can be deducted in one month. R’s Shweta Chirvi
From India, Pune
Acknowledge(0)Amend(0)
From India, Pune
Acknowledge(0)Amend(0)
Just to correct - Ms. Hiral Mehta. Can you please mention the details or attach the specific document or act which states this? It would be really helpful. I would like to add that a maximum of 50% is acceptable, but the entire amount in no case is logical.
From India, Ahmedabad
Acknowledge(0)Amend(0)
From India, Ahmedabad
Acknowledge(0)Amend(0)
Advance Salary Policy Clarification
As per my knowledge and our practice, we give 75% of one month's salary. So, if the salary is Rs. 25,000/-, we will pay him 75%, which is Rs. 18,750 only. The reason is that in case this individual leaves the company abruptly without any information, how will you recover Rs. 100,000/- from him? Hence, the company does not provide advances based on annual salary but on monthly salary.
Furthermore, since you are deducting from his monthly gross salary, there is no need for monthly installments.
Regards,
Mahendra
From India, Mumbai
Acknowledge(0)Amend(0)
As per my knowledge and our practice, we give 75% of one month's salary. So, if the salary is Rs. 25,000/-, we will pay him 75%, which is Rs. 18,750 only. The reason is that in case this individual leaves the company abruptly without any information, how will you recover Rs. 100,000/- from him? Hence, the company does not provide advances based on annual salary but on monthly salary.
Furthermore, since you are deducting from his monthly gross salary, there is no need for monthly installments.
Regards,
Mahendra
From India, Mumbai
Acknowledge(0)Amend(0)
My query is regarding the maximum amount of money that can be recovered from him monthly. The practice that your company is following regarding giving an advance is totally justifiable, but in our case, considering the urgency from the employee, we have given him Rs. 1 lakh.
From India, Pune
Acknowledge(0)Amend(0)
From India, Pune
Acknowledge(0)Amend(0)
There is nothing written as such as per my knowledge. The logic says you should recover that much amount which will not affect his basic needs. Hence, as suggested by Hiral, you can recover equally in 12 installments.
Propose a Standard Operating Procedure for Advance Loans
I suggest you should go ahead and propose a standard operating procedure for advance loans, such as how to apply, approve, disburse, recover, etc. Because if such a situation arises again next time, you will be clear on what to do.
Regards
From India, Mumbai
Acknowledge(0)Amend(0)
Propose a Standard Operating Procedure for Advance Loans
I suggest you should go ahead and propose a standard operating procedure for advance loans, such as how to apply, approve, disburse, recover, etc. Because if such a situation arises again next time, you will be clear on what to do.
Regards
From India, Mumbai
Acknowledge(0)Amend(0)
Dear Shweta, As per my knowledge, the deduction should not more than 50% on take home (net amount) salary. regards rajesh k
From India, Hyderabad
Acknowledge(0)Amend(0)
From India, Hyderabad
Acknowledge(0)Amend(0)
As per my knowledge and in our company, we follow this process:
1. If we pay a salary advance below ₹50,000, we will recover 50% every month so the employee can accommodate personal expenses with the remaining 50% of their salary.
2. If we pay more than ₹50,000, we will recover 75% every month until the advance is fully recovered. This is because we don't know when the employee might quit the job, and if any problem arises, there will be no alternative to recover the money.
Regards,
Chandrasekhar
From India, Bangalore
Acknowledge(0)Amend(0)
1. If we pay a salary advance below ₹50,000, we will recover 50% every month so the employee can accommodate personal expenses with the remaining 50% of their salary.
2. If we pay more than ₹50,000, we will recover 75% every month until the advance is fully recovered. This is because we don't know when the employee might quit the job, and if any problem arises, there will be no alternative to recover the money.
Regards,
Chandrasekhar
From India, Bangalore
Acknowledge(0)Amend(0)
If your company is registered under the Factories Act, then the total deduction from the salary should not exceed 25%. When you pay a bulk advance (we will call it a LOAN) to an employee, you have to consider their service period as well. We will only pay a bulk advance to an employee who has completed 5 years of service. The sanctioned loan amount will be equal to 75% of their gratuity amount. The maximum number of installments to repay the amount is 12 months. (This is the general policy we are following, and there is no documentary evidence for this.)
Regards,
Batmanabane
From India, Bangalore
Acknowledge(1)Amend(0)
Regards,
Batmanabane
From India, Bangalore
Acknowledge(1)Amend(0)
You have mentioned it correctly that the statute (Payment of Wages Act, 1936) prohibits the total amount of deductions from the wages of any employed person not to exceed 50% in a month. Ms. Hiral has rightly pointed out that it is impractical to deduct the entire salary (Rs. 25k) for four months in order to recover Rs. One Lac given to the employee as a salary advance. Did you try to realize how that man will manage his family for four months without a salary? If he had been financially well off, he would not have taken a salary advance of Rs. One Lac. It appears that his financial condition is not good, and thinking to deduct the entire salary for four months calls for judicious rethinking. Hiral has rightly suggested taking 12 post-dated cheques; it will ensure that your company gets back the loan amount even if the employee chooses to leave the company during the recovery period.
Regards,
Rakesh Pd Srivastav
From India, Gurgaon
Acknowledge(1)Amend(0)
Regards,
Rakesh Pd Srivastav
From India, Gurgaon
Acknowledge(1)Amend(0)
As per the thumb rule, the net take-home pay should be 40% of the gross pay. For example, if the gross pay is 100, then 40 would be the deductions. Therefore, I suggest calculating backward. If the Gross Salary is 25,000, then the total allowable deductions would be 10,000. Now, calculate the amount based on this Rs. 10,000 per month deduction.
Furthermore, I am unsure whether the notional interest applicable on this will be taxable as perks. Perhaps a CA or an accounting person can shed light on this.
Regards,
Ramakant
From India, Pune
Acknowledge(0)Amend(0)
Furthermore, I am unsure whether the notional interest applicable on this will be taxable as perks. Perhaps a CA or an accounting person can shed light on this.
Regards,
Ramakant
From India, Pune
Acknowledge(0)Amend(0)
At first instance, I was surprised to see the question raised by you about how much is to be deducted after the employee took the "Salary advance"!
General Practice for Salary Advances
In the industry, the general practice is that there is a prescribed format which needs to be filled by the employee, duly mentioning how much he/she is going to remit every month or in how many months he is going to clear it. If the terms are accepted, then only the advance is sanctioned.
Surety Requirement
Secondly, note that at least two sureties will be taken (employees only, and it's the responsibility of the advance taker to get it) when he is applying, to ensure that in any case if this employee leaves.
Management Approval
Lastly, make a note that the salary advance is given/approved by the management/MD only, and it's his discretion to agree/disagree on how much to deduct or sometimes to waive off!!
In general, these salary advances are not shown in the books of accounts, as the auditors and IT may object. (As per IT rule, need to deduct TDS if paid to any employee.)
Regards
From India, Hyderabad
Acknowledge(1)
Amend(0)
General Practice for Salary Advances
In the industry, the general practice is that there is a prescribed format which needs to be filled by the employee, duly mentioning how much he/she is going to remit every month or in how many months he is going to clear it. If the terms are accepted, then only the advance is sanctioned.
Surety Requirement
Secondly, note that at least two sureties will be taken (employees only, and it's the responsibility of the advance taker to get it) when he is applying, to ensure that in any case if this employee leaves.
Management Approval
Lastly, make a note that the salary advance is given/approved by the management/MD only, and it's his discretion to agree/disagree on how much to deduct or sometimes to waive off!!
In general, these salary advances are not shown in the books of accounts, as the auditors and IT may object. (As per IT rule, need to deduct TDS if paid to any employee.)
Regards
From India, Hyderabad
Acknowledge(1)Amend(0)
Dear Vanswetha,
At first instance, I was surprised to see the question raised by you regarding how much is to be deducted after the employee took the "Salary advance."
General Practice in the Industry
In the industry, the general practice is that there is a prescribed format which needs to be filled by the employee, duly mentioning how much he/she is going to remit every month or in how many months he is going to clear it. If the terms are accepted, then only the advance is sanctioned.
Secondly, note that at least two sureties will be taken (employees only, and it's the responsibility of the advance taker to get it) when he is applying, to ensure that in any case if this employee leaves.
Approval and Management Discretion
Lastly, make a note that the salary advance is given/approved by the management/MD only, and it's his discretion to agree/disagree on how much to deduct or sometimes to waive off.
In general, these salary advances are not shown in the books of accounts, as the auditors and IT may object. (As per IT rules, there is a need to deduct TDS if paid to any employee from the company's account.) This advance is an internal matter.
So, if the above written confirmation was not taken, kindly ensure the same at least now and get it approved so there is no burden on you/HR.
Do not worry about how much to deduct. They can clear it in a month or 12 months. As you are not going to deduct, the employee has agreed to pay back and management has accepted.
The only thing is you need to ensure the above procedure.
Regards,
Musipatla
From India, Hyderabad
Acknowledge(0)Amend(0)
At first instance, I was surprised to see the question raised by you regarding how much is to be deducted after the employee took the "Salary advance."
General Practice in the Industry
In the industry, the general practice is that there is a prescribed format which needs to be filled by the employee, duly mentioning how much he/she is going to remit every month or in how many months he is going to clear it. If the terms are accepted, then only the advance is sanctioned.
Secondly, note that at least two sureties will be taken (employees only, and it's the responsibility of the advance taker to get it) when he is applying, to ensure that in any case if this employee leaves.
Approval and Management Discretion
Lastly, make a note that the salary advance is given/approved by the management/MD only, and it's his discretion to agree/disagree on how much to deduct or sometimes to waive off.
In general, these salary advances are not shown in the books of accounts, as the auditors and IT may object. (As per IT rules, there is a need to deduct TDS if paid to any employee from the company's account.) This advance is an internal matter.
So, if the above written confirmation was not taken, kindly ensure the same at least now and get it approved so there is no burden on you/HR.
Do not worry about how much to deduct. They can clear it in a month or 12 months. As you are not going to deduct, the employee has agreed to pay back and management has accepted.
The only thing is you need to ensure the above procedure.
Regards,
Musipatla
From India, Hyderabad
Acknowledge(0)Amend(0)
Payment of Wages Act and Salary Deductions
Please refer to the Payment of Wages Act, which clearly states that only under circumstances provided under the act, the deduction cannot exceed 50% of the Gross Salary.
As a security measure, you can take an undated cheque from the employee for the full amount. In the event the employee leaves the services, you can recover the balance amount. If you take the cheque, please ensure to record the reason for taking the cheque and the modalities/circumstances under which the cheque would be presented for encashment.
Regards,
Preetam Deshpande
From India, Mumbai
Acknowledge(1)
Amend(0)
Please refer to the Payment of Wages Act, which clearly states that only under circumstances provided under the act, the deduction cannot exceed 50% of the Gross Salary.
As a security measure, you can take an undated cheque from the employee for the full amount. In the event the employee leaves the services, you can recover the balance amount. If you take the cheque, please ensure to record the reason for taking the cheque and the modalities/circumstances under which the cheque would be presented for encashment.
Regards,
Preetam Deshpande
From India, Mumbai
Acknowledge(1)Amend(0)
You can follow the rules set by any bank or financial institution that provides loans where the EMI does not exceed 50% of one's salary. It is outlined in RBI guidelines that only a certain percentage of income can be deducted each month.
From India, Kanpur
Acknowledge(0)Amend(0)
From India, Kanpur
Acknowledge(0)Amend(0)
Policy on Advances
You need to have a policy on advances to keep it controlled. This means specifying the upper limit and the repayment process.
Examples of Advance Policies
- **Example One:** If a company never provides advances, the employee emergency fund, if established, would be utilized for any arising needs.
- **Example Two:** If the company does offer advances, it's advisable to limit it to a maximum of 3 months' basic salary, to be repaid over a maximum of 6 months—NO MORE.
Risks of Advances
Advances pose risks—not only are they administratively burdensome, but employees may feel empowered if they decide to depart. It is preferable to promote savings rather than enabling requests for additional advances and outlining the repayment terms.
From Tanzania, Dar Es Salaam
Acknowledge(0)Amend(0)
You need to have a policy on advances to keep it controlled. This means specifying the upper limit and the repayment process.
Examples of Advance Policies
- **Example One:** If a company never provides advances, the employee emergency fund, if established, would be utilized for any arising needs.
- **Example Two:** If the company does offer advances, it's advisable to limit it to a maximum of 3 months' basic salary, to be repaid over a maximum of 6 months—NO MORE.
Risks of Advances
Advances pose risks—not only are they administratively burdensome, but employees may feel empowered if they decide to depart. It is preferable to promote savings rather than enabling requests for additional advances and outlining the repayment terms.
From Tanzania, Dar Es Salaam
Acknowledge(0)Amend(0)
First, you need to stop calling it a salary advance. It is a loan given to the employee. Under the Payment of Wages Act and Minimum Wages Act, there are limits on both the amount of the salary advance and how much can be recovered. Since the loan has already been given, discussing how it should have been lower is not useful.
Recovery Considerations
Now, for the recovery, you have to consider the following:
1. Ask the employee what he is comfortable with (assuming he is on good terms with the management, given the large amount provided).
2. Ensure that the total deductions from his gross salary (including PF) do not exceed 50% of his gross salary.
3. Do not plan to deduct the full salary or request repayment after the employee receives their salary by issuing a cheque to the company. Any amount paid back by the employee to the company is considered a deduction, and the same rule applies.
4. To avoid issues with income tax for TDS and prevent it from being clubbed as his income, consult with your auditor and ensure that the necessary documentation is completed.
From India, Mumbai
Acknowledge(1)Amend(0)
Recovery Considerations
Now, for the recovery, you have to consider the following:
1. Ask the employee what he is comfortable with (assuming he is on good terms with the management, given the large amount provided).
2. Ensure that the total deductions from his gross salary (including PF) do not exceed 50% of his gross salary.
3. Do not plan to deduct the full salary or request repayment after the employee receives their salary by issuing a cheque to the company. Any amount paid back by the employee to the company is considered a deduction, and the same rule applies.
4. To avoid issues with income tax for TDS and prevent it from being clubbed as his income, consult with your auditor and ensure that the necessary documentation is completed.
From India, Mumbai
Acknowledge(1)Amend(0)
Types of Advances Granted by Companies
There are various types of advances granted by companies/establishments to their employees.
Types of Advances
Generally, the types of advances comprise:
- (i) Salary Advance
- (ii) Annual/Festival Advance
- (iii) Special Advance, etc.
Salary Advance
A salary advance is granted to meet certain urgent and unforeseen expenses. Such an advance will be paid only after the completion of a specified number of days, for example, 10 days, from the date of the last salary period. The amount of advance will not exceed the amount of salary accrued as of the date of advance payment. Also, the salary advance paid in a month is supposed to be recovered in the same month from the salary payable for that month.
Annual/Festival Advance
An annual/festival advance is paid once a year to meet the expenses of celebrating any one important festival of the employee's choice. This advance is limited to a fixed amount as decided by the employer (possibly after negotiation by the Trade Unions if in practice) and is recovered in equal monthly installments, for instance, over 10 months.
Special Advance
A special advance refers to an advance sought by an employee in emergencies (e.g., to meet urgent medical expenses) or on special occasions (e.g., an employee's marriage or a death in the family, etc.). The amount of advance and the number of installments for recovery depend on the company's policy. If there is no such policy, it depends on the employer's decision based on factors such as the employee's status, length of service, goodwill earned in the company, etc.
Regards,
S. Dass
DGM (Finance & HR),
Multitrack Engineering Pvt. Ltd.
From India, Bangalore
Acknowledge(0)Amend(0)
There are various types of advances granted by companies/establishments to their employees.
Types of Advances
Generally, the types of advances comprise:
- (i) Salary Advance
- (ii) Annual/Festival Advance
- (iii) Special Advance, etc.
Salary Advance
A salary advance is granted to meet certain urgent and unforeseen expenses. Such an advance will be paid only after the completion of a specified number of days, for example, 10 days, from the date of the last salary period. The amount of advance will not exceed the amount of salary accrued as of the date of advance payment. Also, the salary advance paid in a month is supposed to be recovered in the same month from the salary payable for that month.
Annual/Festival Advance
An annual/festival advance is paid once a year to meet the expenses of celebrating any one important festival of the employee's choice. This advance is limited to a fixed amount as decided by the employer (possibly after negotiation by the Trade Unions if in practice) and is recovered in equal monthly installments, for instance, over 10 months.
Special Advance
A special advance refers to an advance sought by an employee in emergencies (e.g., to meet urgent medical expenses) or on special occasions (e.g., an employee's marriage or a death in the family, etc.). The amount of advance and the number of installments for recovery depend on the company's policy. If there is no such policy, it depends on the employer's decision based on factors such as the employee's status, length of service, goodwill earned in the company, etc.
Regards,
S. Dass
DGM (Finance & HR),
Multitrack Engineering Pvt. Ltd.
From India, Bangalore
Acknowledge(0)Amend(0)
Recovery of the advance against salary depends on the employee's choice and his declaration through written communication. Many companies follow the practice of recovering the amount from the employee in ten installments.
Regards,
Krishna.B
From India, Pune
Acknowledge(0)Amend(0)
Regards,
Krishna.B
From India, Pune
Acknowledge(0)Amend(0)
Swetha, you cannot recover the given amount in 4 equal installments as you are an organization and not running a pawn shop to withdraw his whole earnings of the month. Please inform the employee that the amount will be recovered in 10 or 12 installments from his pay.
Regards,
Dr. T.V. Venkataramanan
From India, Madras
Acknowledge(0)Amend(0)
Regards,
Dr. T.V. Venkataramanan
From India, Madras
Acknowledge(0)Amend(0)
Dear Shweta,
It is not that the concerned employee has "taken" an advance of Rs. 1 Lac from the Company. The fact remains that he had applied for the advance, and the Company agreed to give it to him. I am sure the entire process of asking for the "advance" and "granting" of the same would have been in writing.
Loan Repayment Process
Normally, at the time of giving such advances (actually, it is a loan that has been given in this case), it is clearly spelled out that the amount given as a loan will be deducted in a fixed number of installments from the salary of the employee, and his consent to the same obtained as a precondition to the grant of the loan.
In the instant case, the employee's salary is Rs. 25,000/-, and if you adjust his entire salary against the loan, you will actually be putting the employee in severe hardship. You could, maybe, decide to recover the amount in 10 equal installments from the salary of the employee. But do put this in writing and get the employee's consent to such deductions.
Clarification on Legal Provisions
Someone has talked about the Factories Act and 50% deductions, etc. This is not quite right. The Factories Act does not deal with such matters.
Best Wishes,
Vasant Nair
From India, Mumbai
Acknowledge(0)Amend(0)
It is not that the concerned employee has "taken" an advance of Rs. 1 Lac from the Company. The fact remains that he had applied for the advance, and the Company agreed to give it to him. I am sure the entire process of asking for the "advance" and "granting" of the same would have been in writing.
Loan Repayment Process
Normally, at the time of giving such advances (actually, it is a loan that has been given in this case), it is clearly spelled out that the amount given as a loan will be deducted in a fixed number of installments from the salary of the employee, and his consent to the same obtained as a precondition to the grant of the loan.
In the instant case, the employee's salary is Rs. 25,000/-, and if you adjust his entire salary against the loan, you will actually be putting the employee in severe hardship. You could, maybe, decide to recover the amount in 10 equal installments from the salary of the employee. But do put this in writing and get the employee's consent to such deductions.
Clarification on Legal Provisions
Someone has talked about the Factories Act and 50% deductions, etc. This is not quite right. The Factories Act does not deal with such matters.
Best Wishes,
Vasant Nair
From India, Mumbai
Acknowledge(0)Amend(0)
You may refer to the provisions under the sections of the Payment of Wages Act, 1936, for the extent of deductions permissible from the monthly salary of an employee. In any case, deductions from salary should not exceed 50%.
From India, Bokaro
Acknowledge(0)Amend(0)
From India, Bokaro
Acknowledge(0)Amend(0)
Salary Advance Approval and Documentation
Salary advance should be given after obtaining proper approval from the management. Care should be taken to ensure that proper documentation and an undertaking are obtained from the employee.
Repayment Terms
Repayment can be fixed based on the employee's request and management approval.
From India, Bangalore
Acknowledge(0)Amend(0)
Salary advance should be given after obtaining proper approval from the management. Care should be taken to ensure that proper documentation and an undertaking are obtained from the employee.
Repayment Terms
Repayment can be fixed based on the employee's request and management approval.
From India, Bangalore
Acknowledge(0)Amend(0)
Understanding Deductions Under the Payment of Wages Act
The Payment of Wages Act states that all deductions and recoveries from the salary cannot exceed more than 75% if the individual is a member of a cooperative society. If the individual is not a member, then the deductions cannot exceed 50% of the salary. The law mandates that at least 25% of the salary should be paid to meet the employee's basic needs. Violating this requirement constitutes an offense.
From India, Bangalore
Acknowledge(0)Amend(0)
The Payment of Wages Act states that all deductions and recoveries from the salary cannot exceed more than 75% if the individual is a member of a cooperative society. If the individual is not a member, then the deductions cannot exceed 50% of the salary. The law mandates that at least 25% of the salary should be paid to meet the employee's basic needs. Violating this requirement constitutes an offense.
From India, Bangalore
Acknowledge(0)Amend(0)
Salary Advance and Staff Loan Policies
A salary advance cannot exceed a month's salary. It can also be deducted in one go. In this case, it concerns a staff loan, which depends on the company's policy. As rightly mentioned by Muslipatla and Banerjee, the staff loan norms should be followed.
From India, Ahmadabad
Acknowledge(1)
Amend(0)
A salary advance cannot exceed a month's salary. It can also be deducted in one go. In this case, it concerns a staff loan, which depends on the company's policy. As rightly mentioned by Muslipatla and Banerjee, the staff loan norms should be followed.
From India, Ahmadabad
Acknowledge(1)Amend(0)
When an employee takes a salary advance, the company should clearly communicate with the employee regarding the EMI for recovering the advance before approving the same. This amount may be ₹500/- depending on the decision of the management.
Thank you.
From India, Delhi
Acknowledge(0)Amend(0)
Thank you.
From India, Delhi
Acknowledge(0)Amend(0)
Loan Policy for Employees
You are not supposed to give a loan to any employee unless they complete one year of service. Even after the completion of one year, the employee will be eligible for a loan equivalent to two months' basic salary. Deducting the full salary is not advisable; loan recovery terms should be decided before providing the loan. Now, you can deduct the loan in ten equal installments. All loan matters should be mentioned in the policy.
With regards,
Sharath
From India, Kolkata
Acknowledge(0)Amend(0)
You are not supposed to give a loan to any employee unless they complete one year of service. Even after the completion of one year, the employee will be eligible for a loan equivalent to two months' basic salary. Deducting the full salary is not advisable; loan recovery terms should be decided before providing the loan. Now, you can deduct the loan in ten equal installments. All loan matters should be mentioned in the policy.
With regards,
Sharath
From India, Kolkata
Acknowledge(0)Amend(0)
Salary advance means paying about 75% of the salary in advance and recovering it in the same month. As far as your case is concerned, it should be treated as a loan taken for a specific purpose, which can be recovered in agreed installments. Always make sure that the deductions (statutory and others) should be around 25%, and the take-home salary should be 75%.
Regards
From India, Coimbatore
Acknowledge(0)Amend(0)
Regards
From India, Coimbatore
Acknowledge(0)Amend(0)
I agree with Mr. Batmanabane. It is better to go with an installment basis in the case of employees who have not completed two years. Another option is to execute a bond agreement; even if the employee defaults in payment, you can raise a suit against them. This situation will arise only when you fail to take post-dated cheques.
This is up to my knowledge; if there is anything wrong, please ignore.
Regards,
Nagarajan D.
From India, Chennai
Acknowledge(0)Amend(0)
This is up to my knowledge; if there is anything wrong, please ignore.
Regards,
Nagarajan D.
From India, Chennai
Acknowledge(0)Amend(0)
There are no hard and fast rules for the deduction of salary advances given to employees for different purposes. As per my knowledge, we provide an advance of three times the gross salary, which will be recovered within 12 installments. If it is not recovered within 12 installments, it will be treated as a long-term loan, and interest may be charged.
Regards,
Banarasi
From India
Acknowledge(0)Amend(0)
Regards,
Banarasi
From India
Acknowledge(0)Amend(0)CiteHR is an AI-augmented HR knowledge and collaboration platform, enabling HR professionals to solve real-world challenges, validate decisions, and stay ahead through collective intelligence and machine-enhanced guidance. Join Our Platform.
Employee Assistance Program.doc
Salary & Compensation Guidelines.zip