Partner - Risk Management
R B Yadav
Advocate & Management Consultant On Labour
Hr Executive
Radhakrishna K P
Manager - Human Resources
+8 Others

Dear All,
My query is We have paid last three years Excess payment of DA to Unionized employees now management is ready to deduct the same.
Please suggest is there any legal complications.
if available any judgement copies for the same.

From India, Pune
If you are certain that the DA has been paid excess, then the company is entitled to recover the same since the employees are not entitled to retain what they are not entitled to and shall refund to the company. however, you should, in my view, give notice of the same to the emplyees concerned and obtain desirably letters of consent from the employees concerned and secondly since the DA was not paid them in lumpsum, it is not approparite to recover them at once but in instalments.
HR & labour Law Advisor

From India, Mumbai
i am presently doing my masters in hr i have a project on gratuity , provident fund , fixed dearness allowance , pension and house rent allowance. Could you help me understand the above concepts in detail especially the exceptions to the act and various provisions. I would also want to know how the income tax is deducted ?
From India, Mumbai
You have made a mistake and paid an amount higher than what you should have paid
This has gone on for 3 years
What has happened is that your salary levels have in effect been increased
People have sent the money.
They have got used to getting that money every month.
It may have been different fine mistake was for a month or 2
After 3 years you can't say give it back.
In fact, you can not even reduce it now.
Any such action will result in an industrial dispute
Probably it can be adjusted in the next settlement or when da increases you do not increase it till you reach parity. However, you must communicate this to your workers clearly.

From India, Mumbai
I agree with the views of our member Saswata Banerjee.
For your mistake of paying higher amount of a salary component for three years, employees cannot be penalised now.
You have the only alternative of adjusting the excess paid amount against any future increases by explaining the position suitably to the employees.
S. Dass

From India, Bangalore
If you are going to recover Excess DA now, what about the PF payment you have deducted on Basic & DA? You cannot get it back either from PF authorities or from the Employees. Please think and Act wisely. Now You can not reduce the DA from the rate what you were paying earlier anf should pay as per the Govt. Index.

From India, Mumbai
if you Paid more than what actual rate is not an issues, as you aware that DA is revising every six month in Maharashtra, then you need need not revise it, because your already paying Excess DA.
my suggestions not recovery from employee, it means you are demotivating Employees and they will lose the trust on Company, as HR point wive we need to satisfy the employee working in an great organizations, like Great place to Work.

From India, Mumbai
Mr Saikumar of Mumbai has given a very clear answer on the matter. Management is having full right to recover any excess payment made. But, recovery should not penalise or put the employee in to difficulty with a lumpsum recovery. Make aware the employees about the excess payment; then, recover the excess paid amount without much affecting the take home pay of the employee. If take home pay is meagre, serve notice on the employee to refund the excess paid amount. He can avail a loan or some other way can arrange for repayment. Also, management can give an option of recovering the amount from future payments.
From India, Cochin
The option of adjusting the excess DA agaisnt future increases in DA by Babu Poojari seems to be a worthwhile suggestion.Mr.Radha Krishnan raised a very valid point with regard to P.F contributions paid on the excess DA. The P.F contributions paid on excess DA cannot be recovered.If the option of adjusting the excess amount against future incremenatl DA or recovery of the same in instalments every month is adopted , it will not disturb the existing rate of P.F contributions.

From India, Mumbai
Mr.Babu Poojari's suggestion is apt and as mentioned by Radhkrishna the PF related matter comes in to picutre hence you should act wisely. First of all communicate to the employees and union in writing. You can adjust accordingly till the DA hike is matched or else link with the next settlement ie., calculate the total amount to be refunded by the each employee and deduct the same amount from the arrears / lumsum amount payable to the workers on finalization of wage settlement. First you need to communicate the same.
In addition to this your management needs to initate action on the employees who are responsible for this grave mistake.
Regards - kamesh

From India, Hyderabad

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