Dinesh Divekar
Business Mentor, Consultant And Trainer
John Chiang
Insolvency N Gst Professional
Management Consultancy
+3 Others

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Dear All,
We are running a factory in Haryana state. According act and state rule and can we give advance to our workers. If yes, what will be maximum amount and what type of records are required to keep for safe side...?

From India, Panipat
Dear Surinder,
Salary advance or financial loan are out of purview of law. That is internal matter of your company. Earlier there was similar query wherein I had given my reply. Check the following link:
Dinesh Divekar

From India, Bangalore
Dear Surinder,
Pl see the Payment of Wages Act 1936 along with Haryana Rules. The relevant Section of PWA is given below:
12. Deductions for recovery of advances.
—Deductions under clause (f) of sub-section (2) of section 7 shall be subject to the following conditions,
(a) recovery of an advance of money given before employment began shall be made from the first payment of wages in respect of a complete wage-period, but no recovery shall be made of such advances given for travelling expenses;
[(aa)recovery of an advance of money given after employment began shall be subject to such conditions as [the appropriate Government] may impose;]
(b) recovery of advances of wages not already earned shall be subject to any rules made by
[the appropriate Government] regulating the extent to which such advances may be given and the installments by which they may be recovered.
However, care has to be taken so that the total amount of deductions which may be made in any wage-period from the wages of any employed person shall not exceed—
(i) in cases where such deductions are wholly or partly made for payments to co-perative societies under clause (j) of sub-section (2), seventy- five per cent, of such wages, and
(ii) in any other case, fifty per cent, of such wages .
So while granting advances ensure that the Haryana PW Rules are complied and the deuction thereof falls within the said limits

From India, Mumbai
You can extend 8 times of their Basic+DA as advance .
From Spain, Burgos
Kindly refer Sec 79 Of Factories At
From India, Pune
I appreciate the comments given by Sri Dinesh ji in the attached link and worth reading. I can only add while processing the loan / advance applications, we need to keep in mind the provision of Sec. 7(3) of the Payment of Wages Act, 1936

Under 10(3) of The Punjab Payment of wages rule 1937, "Advances of unearned wages can be made at the paymaster’s discretion during employment but must not exceed the amount of two month’s wages without the permission of an Inspector" But can be recovered by instalment spread over not more than twelve months and the installments must not exceed one-third or if
the wages are not more than twenty rupees one-forth of the wages for
any wages period,
Thanks & Regards,
Sumit Kumar Saxena

From India, Ghaziabad
A salary advance may be granted to an employee only to give him relief extreme personal hardship or to accommodate personal needs during business travel on approved paid leave.
Any permanent employee, after probationary period, is eligible to apply for a salary advance. The employee is not overly indebted to the company, his credit rating, based on experience known to the Company, is satisfactory and there is no question about continuation of employment.
A request for salary advance must be submitted in writing to HR Manager via the Department Manager. If the request is approved by Department Manager and HR Manager, the letter will arrange with the General Accounting Department to verify the employee's eligibility and to issue a check or cash to fill the request.
Normally a salary advance will be limited to a maximum of one month's pay. However, the request should be limited to no more than be reasonably necessary.
The advance may be paid in the currency, and by cash or check, and at the location selected by the employee, provided it is convenient and appropriate for the Company to accommodate him.
The entire amount of any advance granted to accommodate personal needs during business travel will be deducted from the employee's salary at the next subsequent pay date(s). No delayed or periodic repayments are authorized. Repayment of any salary advance granted for relief from extreme personal hardship will be deducted from the employee's salary in equal amounts over a period not to exceed six months beginning at the next subsequent pay date(s).
Basically speaking, the salary advance for the employee is a benefit without interest required. If the time of reimbursement exceed the stipulated period, the company will charge the salary advance for the interest rate of the current market.
Best regards,

From China, Shanghai
It is sole discretion of employer to how much amount of advance can be given to concerned worker, moreover, while giving said amount, one need to make documentation of said entry along with terms and conditions regarding repayment / adjustment of advance amount refund.
Girish V


From India, Pune
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