What Should Be the Minimum Take-Home Pay After Deductions? Seeking HR Insights

Dear All,

I am looking after the HR department and would like to know what the minimum take-home pay should be for an employee when paying wages or salaries, after deducting all statutory and authorized deductions.

Thanks & Regards,
M Srinivas
IIL

Dear Mr. Srinivas,

Under Section 7(3) of the Payment of Wages Act, 1936, it is stated that "notwithstanding anything contained in this Act, the total amount of deductions that may be made under subsection (2) 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 cooperative societies under clause (j) of subsection (2), 75% of such wages; and
(ii) in any other case, 50% of such wages.

There is no precise legal status for employees whose wages exceed Rs. 6500/- (the Payment of Wages Act is applicable to employees whose wages are less than Rs. 6500/-).

Regards,
Michael Nicholas

Mr. Srinivas,

Regarding fixation of salary for staff category, there are no specific norms being followed. It differs from one industry to another. You have to search around and collect more information with regard to your industry and arrive at the particular norms or policy as per your requirement.

With respect to the worker category:
1. You will have to follow the Minimum Wages Act. First, check your type of industry.
2. Determine the type of labor to be employed (skilled, semi-skilled, and unskilled). Try to obtain the latest Government order and establish the salary for workers. The salary to be fixed should be slightly higher than the norms set by the government.
3. You may also refer to the Payment of Wages Act for minimum salary fixation.

I hope you now have an idea about the salary issue. If you have any further doubts, feel free to ask.

Regards,
Devarajan

Dear friend,

As Mr. Nicholas pointed out, the Take-Home Pay allowed under The Payment of Wages Act in a normal case is 50%. If there is a deduction for the cooperative society, then the take-home pay is 25%.

P. Arunachalam Consultant-HR