Legally how much amount can be recovered from the salary - CiteHR
Dinesh Divekar
Business Mentor, Consultant And Trainer
Kritarth Consulting
Spl Educators Posh Programs; Hr & Ir
Mohandas_1986
Manager Hrd
+1 Other

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Dear CiteHR Team,
I have required clarification regarding the recovery of deduction from the salary for company losses. If any employee who are getting salary is 20k per month. Due to his negligence or technical error or any chance company got a loss Rs. 2 lakhs. Employee is accepting this mistake happen and apologies but not accepting in writing this amount can be recovered from his salary for full and final.
Can we recovered all the amount from his salary or full and final (i.e. salary/bonus/ gratuity etc )
Does he can challenge this issue in court for this is a illegal deduction as he is not accepting in writing for recovery from his salary / full and final.
If we recover all this amount from his settlement, can company will comes in trouble after this recovery, or how much amount we can recover from his salary as per the law . full of there is any limit. ( please share if any judgment which is related to this.)

Payment of Wages Act, Chapter Authorized & Unauthorized Deduction may help you
Kritarth Team
7.12. 19

Sir, Thanks for your prompt response, i will be very great full to you if you explained me more, its just to help for someone who has getting very less salary
Salary cannot deduct in your case.
Not more than 75% of salary if co-operative recovery is there,otherwise 50 %..In your case you can deduct the amount subject to the above limit if the loss is due to damage of goods entrusted to the employee or loss of money, directly attributable to his negligence or default.
Dear friend,
You have raised the query on the recovery of the damages from the employee. However, you need to consider the following pertinent questions:
a) Whether you have conducted an enquiry to assess the loss?
b) In the enquiry has it been established that:
i) The work that the employee did was it part of his Job Description?
ii) Was the employee given sufficient training to execute that work? Did he use the right tools and instruments?
iii) Were the SOPs in place for the execution of work? If the SOPs were in place, were these communicated to the employee?
iv) Did the employee violate the SOP in spite proper communication to him?
v) Is it a supervisory failure but the employee has been made a scapegoat?
vi) What safeguards were in place to avoid the loss to the company?
Acceptance of actus reus by an employee is not a ground for initiating the recovery of the damages. An enquiry should focus on the incident and not on the person. The enquiry should help in improving your systems and processes. What if you focus on the person but do not take preventive measures to avoid repetition of the incident? In that case, you could end up in punishing one more employee in future.
Lastly, about awarding the punishment. This is beyond the scope of the enquiry. It the guilt of the employee is proved, then you need to take into account the following factors while awarding the monetary punishment:
a) Age of the employee
b) Experience in years of the employee
c) Monthly take-home salary of the employee
Irrespective of the quantum of damages, while recovering the damages, you can recover a small per cent of the employee salary.
Thanks,
Dinesh Divekar

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