Respected Seniors, I wanted to draft a clause in the appointment letter which indicates that "there should be 1k contribution from the Company and 1k deduction from the employees in hand salary for the period of 1.5yrs. If the employee continues to work for 1.yrs in the Company, the consolidated benefit will be provided to him". Now how should I frame this sentence legally? Please correct me if I am wrong.
From India, Pune
Dinesh Divekar
Business Mentor, Consultant And Trainer
Partner - Risk Management
Sriramulu Ch

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Its 1.5 years in above statement.
From India, Pune
Dinesh Divekar

Dear Neha,

What is the validity of this deduction? I mean to say under the provision which acts you can do this deduction?

I doubt whether the Payment of Wages Act approves this deduction. Therefore, deduct the amount but do not mention anything in the appointment letter about this deduction. After 18 months, pay the employee Rs 36,000/- as a joining bonus. However, if the employee quits the employment before 18 months, then he/she foregoes the joining bonus.


Dinesh Divekar

From India, Bangalore
sriramulu ch
Respected sir/mam,

If Company can be given Maintenance Holidays (Shut down) 6 days or below. can the employee eligible for salary or not.? if the company can't pay what type of action can go thriugh. please let me know.

From India, Bangalore

Dear Dinesh Sir, Your guidance really helps me to grow and improve in my career. Thank you for being there with us.
From India, Pune


Primarily, the deduction is illegal.
Under Payment of Wages act (and in the new Code on Wages Act), you can not make such arbitrary deductions, even if the employee agrees. The deductions are specified under sec 6 and 7 and you can only deduct what falls under that category. If you can put it under one of those categories, then you can deduct it.

The fact that you are contributing an equal amount if immaterial if the employee does not get the money. So this clause would be allowed if you were not forfeiting the money if he does not work for 18 months. Even if you were not forfeiting the amount, it would still not be allowed as the ₹ 1,000 would be an illegal deduction.

If you want to still do it, put it under CTC but do not put it under gross wages. Instead lower his actual salary by ₹ 1000 a month and give the full ₹ 36,000 as retention bonus at the end of 18 months.

@Dinesh Sir, I hope you agree with this.

From India, Mumbai

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