Can Companies Deduct Loss Of Pay From Basic Salary? Seeking HR Policy Insights

Hi Everybody,

Please clarify this doubt of mine and suggest a suitable solution:

1. If an employee has Loss Of Pay (let's take 4 days) for a particular month, can the deductions be from the BASIC SALARY? Can an organization deduct the money from the basic salary?
2. Does the basic salary change for that month?

What does the standard HR POLICY say on this issue?

Regards,
Rivti

Hi Rivti,

Yes, it changes. If there is a loss of pay from the earnings, then the whole salary structure will change. Even PF will be affected.

Regards,
aru

Hey,

Definitely, Yaar, the salary is calculated based on the number of days worked and leaves allowed, excluding Loss of Pay.

For example:
Basic = 4000
Others = 2000

For 30 days, it will be paid in full without any change. For 25 days, it will be calculated as 4000/30*25 = 3333 and 2000/30*25 = 1666.

Regards,
Deepak. M

Yes Rivti,

It is the basic fundamental of any payroll accounting: Basic is part of total pay, and loss of pay means a deduction in the basic salary. There is no doubt in this.

Anu :D :D :D

Hi!

In addition to adjusting the basic pay, you will also have to consider proportionate adjustments in benefits such as earned leaves and end-of-service benefits.

Regards,
Salman

Hi Rivti,

The loss of pay would apply to all components of the salary, thus the basic pay would be affected. If the person is eligible under the PR Act, then the PF for that month would also be affected, and the ESI, again, if applicable.

Hope this resolves your query.

Best regards,
Ajay

Yes, I got your point. The loss of pay has affected my DA, HRA, PF, along with BASIC as well.

Thanks...

Regards,

Rivti

Hi,

Yes, all components of your salary will change. For example, the basic salary is 5000/-. The loss of days is 5. Based on the above, your basic salary and other components of the salary would be calculated as follows: 5000/30*25= 4167. All other components of the salary (mostly in %) will be calculated based on Rs. 4167/-, not on Rs. 5000/-. 😢

Hi Rivti,

Certainly, it will change because the entire salary structure depends on the number of working days.

Regards,
Vivek

As per practice followed, the allowances are allowed at a certain percentage of the basic salary. Once the basic salary is changed for a month, it is obvious that the other allowances, which are allowed as a percentage, will also be affected. However, the allowances, if any, which are allowed as a slab are not affected.

Deepak Thukral
Chandigarh

Hello Rivti,

Employers can deduct wages according to the list given in Section 7 of the Payment of Wages Act, 1936. As per Section 7 Subsection 2 (b), deductions for absence from duty can be made from the wages of employed persons.

As per Section 9 of the Payment of Wages Act, 1936:

1) Deductions may be made under Clause (b) of Subsection (2) of Section 7 only on account of the absence of an employed person from the place or places where, by the terms of his employment, he is required to work, such absence being for the whole or any part of the period during which he is so required to work.

2) The amount of such deduction shall in no case bear to the wages payable to the employed person in respect of the wage period for which the deduction is made a larger proportion than the period for which he was absent bears to the total period, within such wage period, during which, by the terms of his employment, he was required to work.

So it is clear that you can always deduct the wages/salary accordingly, and the basic salary is a main component of the salary structure.

Hi,

It will affect the entire structure of your salary.

Basic - 2000
HRA - 1000
Conv - 1000
Total - 4000

4 days deduction and the month is June with 30 days.
Basic - 1733 (PF 12% of Basic)
HRA - 866

4 days deduction and the month is July with 31 days.
Basic - 1741 (PF 12% of Basic)

Thanks,
Girija

Basic pay is fixed at 30%. Can anyone advise on how to determine the minimum basic pay legally?

Regards,
Satnish