How you/your Employers intend to Make this Unauthorized Deductions a sprovided for in Payment ofWages Act?
Workers/Employees Work For Bread, But All do not Work For "Bread Alone" and More Money Never Motivated Employd Person to Continue / Stay Back.
Actively Engaged Employees can't be lured Better Create Condifitions which get them Glued to your Org (Culrure/Ethos).
Employee Commitment is By-Product of incessant Induced Sense of Belongingness not created Overnight.
Kritarth Team of Org Dev Partner
You can initiate the Retention Bonus policy and it is very much legal. Many organizations run such practices in order to retain people. You can add Rs. 3000 per month to their total compensation, however do not show it as a deduction from earning. Such bonus is separate and over n above the earnings. It does not attract any PF.
As this bonus will be earned only by those who complete the stipulated period in the organization, this bonus will be taxed as per the existing Income Tax norms when it is disbursed. So as to account for the expense, your finance team needs to book provisions for it.
You can arrive at the maturity team (mentioned 3 years) basis what you want to achieve realistically with employees.
It appears from your submission that the organisation is interested to retain employee by providing Retention Allowance @3000/- per month for 3 years = Rs.1,08,000/- at the end of 3 years. You have also mentioned that Rs.3000/- will be deducted from salary every month. Your query is also whether PF, ESI deduction is applicable or not.
What appears to me that Rs.36,000/- per year is in build in the CTC and you are processing payroll from CTC. Every month your organisation is showing 3000/- in the earning side and again 3000/- in the deduction side. This may create confusion to statutory authority (PF, ESI etc.) and also to the employee. Better you process payroll from monthly gross and do the deduction of standard items - PF, ESI, PTAX etc. Retention allowance is a carrot will be paid after completion of 3 years service with the company provided the employee will be at the payroll of the company in the month of disbursement of the Retention Allowance. This very common now a days with many organizations.
Thanks & Regds.,
S K Bandyopadhyay( WB, Howrah )
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