Company Loan And Deduction

Dear Sir,
In our company, one employee has taken company loan and deduction will be start from next month. He is telling that please deduct 80% amount from my gross salary.
So, I would like to know that is it ok according to labour law??
Best regards,
Parimal

If his salary is above Rs18000/-pm,no labour law will be violated if you deduct the amount as agreed by the employee.
VARGHESE MATHEW

Hi Mathew,
Will pls send the any act or law pertaining to the same.? if it is there

Pl refer to sec 7(3) of the Payment of wages Act ,1936.This is the Act which regulate the payment, deductions of wages.The Act restrict the total recovery to 50% of the wages.(75% in cases where recovery is partly to Co-op society).This law is applicable only to wages below Rs 18001/ pm.
Varghese Mathew

Dear Mr. Varghese,
I go though the clause 7 (3) of the payment of wages act, 1936.
I have found the same as you mentiong but now i have query that in 50% value, all statutoru deductions are included?? (like PF, ESI, PT, etc..)
Please clarigy urgently if possible.
Best regards,
Parimal

No,Parimal all statutory deductions are not included. What is included are those listed in sub section 2 of sec 7 only.
Varghese Mathew
9961266966

Dear Parimal,
Concerned employee is giving in writing to deduct his 80% of salary there is no issue. On your own you cannot deduct salary more than 1/3 of salary. Keep the letter in his personal file.
Regards==S.Rao

Total deduction from wages or salary can not exceed 50% of gross wages / salary
(75% where it includes amount of contribution to coop society or repayment of loan to coop society). This includes all statutory dues (except perhaps income tax).
However, only items listed as deductible under sec 6 and 7 of the pay,net of wages act can be deducted from salary. Any other amount deducted, even if below 50% is illegal
As stated by others, payment of wages act applies only up to a salary of 18000 per month. However, it is good practice to follow similar rules for employees with salary beyond that also. It ensures the person has enough to sustain himself during the month.

If you are making cash payment, do not show deduction in pay sheet. While making salary payment, deduct the loan amount and give him separate receipt.
If you are making salary by cheque or net payment, you make entire salary and take separate cheque from him towards repayment and give him separate receipt.
Regards
Pramod Thakar

Please note that under payment of wages act, any amount paid by the employee to the employer or his agent is equivalent to deduction from salary. So by giving full salary and then taking part back is not going to solve any problem.