My employer has practice of taking undertaking /bond from new joiner on below T&C:
1) Employee will server company 15 months from the date of joining.
2) Employer shall withhold one month salary as a deposit for above.
3) The deposit will be paid after completion of 15 months.
Is this legal?
9th December 2018 From India, Pune
Dear Lalit,
The legality or otherwise of such a deduction from the salary of the employee depends on the fact whether the employee's wages falls below the ceiling ( at present Rs.24000-00 pm) fixed for the application of the Payment of Wages Act,1936 u/s 1(6) OR in any other case on the contrary, the specific terms of the contract of employment authorizing such a deduction by way of with holding one full month's salary at a stretch.
In the first case in which the PW Act,1936 is applicable, despite the bond or undertaking at the stage of appointment, certainly such a deduction is illegal in view of the permissible deductions enumerated u/s 7(2) which are certainly exhaustive and not illustrative.
In the second case, though sounding unethical, it can not be construed as illegal as such an enabling term in the contract of employment stands agreed to by the employee concerned.
Here, I would like to insist that my above views are restricted to the practice of with holding of one month's salary/wages by the employer only. Even in the second case, the justifiability of the quantum of such a deduction depends on the time and money invested by the employer by way of training the employee on the job as mentioned in the bond/undertaking.
9th December 2018 From India, Salem
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