Are These Employee Deductions Legit? Seeking Clarity on Register of Deductions Rules

Register of Deductions for Loss Caused to the Employer

The register of deductions for loss caused to the employer needs to be maintained under Form II of the Minimum Wages Act and Form E under the Punjab Shops and Commercial Establishment Act.

According to the Act, the definition is: "Deduction for damage to or loss of goods expressly entrusted to the employed person for custody, or for loss of money for which he is required to account, where such damage or loss is directly attributable to his neglect or default."

Query on Deductions

Now, I have a query about whether the following deductions should be shown under this register:

• Recovery for loss of ID Card.
• Employee background verification expenses recovery.
• Notice period recovery.
• Joining expenses recovery.
• Service continuity bond recovery.

Your views are invited on these issues.

In my view, I-card deduction is okay, but all other deductions are illegal. Even I-card deduction should not be shown in this register.

All the deductions are as per the acts and rules. Nothing is illegal in any of the deductions. Each and every recovery is legal. All the deductions are as per the agreement between the employee and the company.

Explanation of Deductions

1. Recovery of Loss of ID Card: This amount is recovered when an employee has lost their ID card and applies for a new one.

2. Employee Background Verification Expenses Recovery: If an employee leaves the company during the probation period, the amount is recovered from them.

3. Notice Period Recovery: If an employee has left the company without serving the required notice period, the amount is recovered from them.

4. Joining Expense Recovery: If we have paid an amount to an employee to be given to their previous company due to non-service of the required notice period and the employee leaves the company during the probation period, the amount is recovered from them.

5. Service Continuity Bond Recovery: If an employee has not served the company for the period specified in the bond, usually 2 years, then they are required to pay the amount mentioned in the bond signed at the time of joining.

All these types of recoveries are conducted by almost every MNC, PSU, and listed companies.

Regards

Except for the first one, the issue of a duplicate ID card, all are beyond the purview of the Payment of Wages Act and therefore should not be shown in the Register of Deductions. The amounts shown in the register are expected to be used for staff welfare activities only.

Regards,
Madhu.T.K