Dinesh Divekar
Business Mentor, Consultant And Trainer
Labour Law & Hr Consultant
Korgaonkar K A
Vaishalee Parkhi
Hr Consultant & Trainer
Neeki Modi
Hr Executive
+4 Others

Hii all, We are medium scale manufacturing company of engineering material.
One employee who joined our organisation on 17th of July. At the time of his joining and in induction program i had explained him all rules and regulations of organisation.
Deduction like; PF, PT, security deposit (Rs.2000/-) every thing mentioned in induction program.
Now at this time of salary he is saying not to deduct security deposit by telling I will leave if you deduct my security deposit. We had hired him with long term planning and had offered him handsome package. He is saying you are making rules from your home i had worked in very good organisation there were no rules like this.
Advise me what should I do, whether i let him go or change organisation's rule for one employee???
Seek your Senior's advise in the matter.
Were the rules mentioned briefly in the Offer letter ? If the employee has signed Offer letter, he can't deny now.
Dear Neeki,
Two things emerge from your post. One is about security deposit and another is refusal of the employee to pay this deposit.
First question is why you would like to take security deposit? After all Rs 2,000/- is not that great amount. So why need was felt to charge this small amount? What is achieved out of this concept?
The second question is when did you communicate to the employee about the security deposit? Was it before 17th July or after? Did you clarify about the policy of security deposit at the time of his selection? If yes, then he should not grumble about it.
What he is says about charging meagre amount as security deposit is true. This is a novel concept. Nevertheless, if this was communicated to him and if the rule was applied to all the employees then he should not have any objection. I recommend you putting your foot down. For the sake of one employee, rules need not be bent. Waiver of this condition could demotivate the employees who have paid security deposit.
I perceive real issue to be different. I feel that he could be little nervous about your organisation's culture. Therefore, raising objection against security deposit and giving threat to quit the employment could be nothing but a manoeuvre to prepare ground for his exit. Please look from this angle also. Of course this is my perception and it may or may not be true.
Dinesh Divekar
hii Vaishali, Rules are not mentioned in offer letter but at time of his joining on 17th i brief him about all rules, also we sent mail of soft copy of employee handbook of our organization on the day of joining it was mentioned in it also.
hello Dinesh sir,
Deduction of security deposit Rs. 2000/- every month and employee will get Rs. 24000/- at the completion of 1 year tenure. It is decided by management and in practice by 3 years. this is to stop employee retention and employee stay to organisation at least one year.
All policies are mentioned in details in employee handbook of our organisation which I had mailed him on the day of joining.
Today I got the news that he got another job and due to that he is creating all this issues.
Now management had decided to terminate him with immediate effect.
Dear Neeki,
Well if you are deducting Rs 2,000/- per month then average candidate is bound to raise objection. In fact in your post also you did not clarify that deductions will recur for an year. Therefore, the issue arose because of incomplete communication or non-communication. Why you did not clarify rules of employment before the issue of the offer letter? You have complete freedom to design the on how to run a company but job candidates also have freedom to accept or reject those rules. If you keep job candidates in dark and spring surprises after joining, there is bound to be resistance.
Anyway, he also wishes to discontinue employment therefore, termination from your side does not have much bearing. However, as a lesson hereafter, before issue of the offer letter, clarify to the candidate what would be his salary break up and what would be his take-home salary.
Dinesh Divekar
Thank you sir.. I will keep in mind.
You are following a wrong HR policy.Rules and conditions are not to be informed at the time of joining. It should be mailed to selected employees before joining or in the offer letter,so that he can decide to or not join your company before resigning from the earlier job.
Normally security deposit is collected from a new employee if his duty mainly involves cash handling. Therefore, I am not able to understand or appreciate the concept of collecting security deposit in installments solely for the purpose of reducing employee retention for a specific period when the mutually agreed rules of exit are in place.
In my view, deduction towards security deposit from wages amounts to unauthorised deduction under the provisions of POW Act 1936.
POW Act 1936 applies to employee drawing wages up to Rs. 18000/- per month. You should have fair policy to retain the employee. Your policy is compelling the employee to stay with you which is against the fundamental right.
Dear Neeki,
I fully agree with Mr.Keshav. You can not have a company policies which are out of tune with the law of the land.
There are some companies who make employees sign a bond of a certain amount & if employee leaves before the contractual period, then he / she is bound to pay the sum to the company. But it happens where you are giving some specific training in some skills to the employee & want to retain him so that you can recover such training costs.
If challenged in court, your company policy is bound to receive an adverse judgement as it amounts to unfair practices & can be termed as "Bonded Labour ".
Anil Raina
Mob: 9810180148
I fully agree with Anil, this is a wrong HR practice and not as per law of land.
Tariq Pervaiz
Dear professional colleague,
The policy of deducting Rs 2000/- towards security deposit every month and returning the same after completion of one year as a retention measure can be debatable. Let us not question the wisdom of the policy makers as the same appears to have been successfully practiced for past three years. The real question is whether the company has the system of communicating the same well before accepting the offer or not. In the instant case, company had informed this policy and the candidate had accepted the same at the time of accepting /joining. Therefore his turnaround is unacceptable and company's action of termination is justified.
The question of legality like whether the Payment of Wages Act is applicable or whether it is unauthorised dedication will differ from individual to individual and can be examined but to jump to conclusion will not be appropriate.
Similarly, the view that the HR should raise voice against the policy by putting his foot down is impractical and unwise particularly when the same has worked well except for the instant employee.
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