Is It Fair to Deduct Paid Leave for Being Late? Seeking Clarity on Attendance Policies

Dear All, Can anyone help me out? Our company has implemented a punching attendance system, and if anyone comes late, it deducts our PL/EL for every 15-minute delay. I want to know whether it is right or wrong to deduct the PL, and whether it is as per laws. I have heard many companies deduct CL for late coming. Please clarify for me.

Regards, Anjana

What you are doing is correct. It is as per the law. If we deduct CL or EL for late coming, we are compliant with the act. Therefore, you can proceed with sending a circular stating that we are going to deduct CL/EL for late coming, then implement it to avoid future problems.

Regards

I do not think this is correct and strictly as per the law. Many companies have rules for penalties for late coming. Most, I know, deduct half-day pay for every 3 late arrivals in a month. Further, they deduct this as leave without pay rather than deducting from leave, as it has a more immediate impact. A deduction for every day is a little harsh to my understanding.

Legal Considerations for Late Arrival Penalties

You need to check if this is specified in your standing orders/model standing orders (where applicable) or if this is a penalty/fine approved by the Labour Officer under the Payment of Wages Act. Further, it needs to be clearly displayed prominently and should also be a part of the terms of employment/office rules clearly communicated to all employees. I have a feeling it will be deemed an illegal deduction under the Payment of Wages Act.

I completely agree with Saswatabanerjee ji. As per my knowledge, it depends on company policies. Many companies have rules to deduct half-day pay for every 3 late arrivals by more than 15 minutes in a month.

Based on my understanding, most companies implement a policy of marking employees as late after a set login time (e.g., 9:30 am / 10:00 am) with a buffer time of 5 to 10 minutes. If an employee arrives late three times in a month, it is typically considered as half a day of leave, which is deducted from their earned leave balance.

I would appreciate any comments if I have misunderstood any aspect of this.

Regards,
Vishakha

Many companies have rules to deduct half-day pay for every three late arrivals by more than 15 minutes in a month. However, repeated tardiness by employees also leads to loss.

Regards,
Sreenivas V M

Dear Anjana, In my opinion, there is no law that endorses EL/PL deductions for latecomings. Generally, companies frame policies relating to latecomings.

Example Policy for Latecomings

For example, if the reporting time is, say, 08:30 Hrs:

- There can be a grace period, say 1-2 minutes every day for employees. They can report till 08:32. This is because they may get stranded in traffic, rain, or for some unforeseen reason. If we are too stringent, then employees may tend to travel at relatively higher speeds to meet the deadline of 08:30 hours, and this could endanger their lives and the lives of other road users. It will also be seen that you are fair.

- Thereafter, if he reports beyond 2 minutes, then the latecoming is considered from 08:30 hours. If he reports at 08:33 hrs, he is considered as 3 minutes late.

- Such latecomings may be permitted 3 times a month or up to 15 minutes cumulatively. In other words, if he reports for work more than 3 times a month, even if his cumulative latecoming is less than 15 minutes or

- If he exceeds 15 minutes cumulatively, even on the first occasion he reports for work at 08:45, then it is considered that he has exhausted his latecoming privilege.

- For every latecoming beyond conditions c & d, you may consider deducting 1/2 day for every latecoming.

- In case an employee has an emergency work to be attended, you may consider granting permission up to 1 hour cumulatively and restrict the number of times the employee can avail this permission to, 1-2 times without exceeding the 1-hour cumulatively.

The above is only an example, and you can frame your own company policy.

Regards, M.V. Kannan

Many learned followers have contributed, and I somewhat agree with Mr. Saswat Banerjee and Mr. Kannan. They have shared valuable experiences. From their contributions, you might have understood that leave policy and Standing Order provisions should be taken into account before taking any harsh action. I would like to sum up as follows, including the practices being followed in our industry, which is a large-sized industry.

Attendance and Leave Policy Practices

1. A cushion of 15 minutes is given, as it is not possible to get the attendance of all the employees at the exact reporting time, and early arrival cannot be emphasized. If the company is not ready to give a 15-minute cushion, a sufficient number of card-punching machines will have to be installed to facilitate card punching near the workplace. But in all cases, a reasonable cushion has to be allowed.

2. After the cushion period of 15 minutes from the arrival time, the person is marked late. In some establishments, such late arrivals are summed up at the end of the month, and the salary is deducted accordingly. In some establishments, one half-day casual leave is deducted for three such late arrivals, but if the delay is by 1 hour or more, the person is not allowed on that day. Either he has to apply for leave, or he is marked absent.

3. If such a practice is not being followed earlier and is being introduced afresh, a notice under Section 9(A) of the ID Act should be displayed on notice boards at prominent places 21 days prior to implementing such a change in service conditions. It will help in convincing the workers' representatives and workers to cooperate in the implementation of the new policy and avoid industrial relations problems.

Regards,
AK Jain

Understanding Legal Provisions for Late Arrival Deductions

A strict reading of the Payment of Wages Act seems to indicate you are right, that there is no legal provision allowing deductions for late arrival. In fact, it would amount to an illegal deduction.

However, the Factory Act has a provision under which any worker coming late will not be allowed into the factory for that shift. But if you allow him into the factory to work for that shift, you are required to pay him his full salary. There is a provision for deduction for absence from work, which could be seen to include this situation, so probably you can justify a deduction of a proportionate amount for the number of minutes he was absent. There is no such provision under the Shop and Establishment Act that I have come across.

So, the employee will probably agree to a pay cut instead of losing an entire day's salary. However, a half-day pay cut for a 15-minute absence seems excessive. I suspect the employee will say - chuck it, I will come to work in the second half.

Of course, if it is specified in terms of employment (standing orders, or notice under the Industrial Dispute Act), then it should be okay.

Opinion on EL/PL Deductions for Late Comings

In my opinion, there is no law that endorses EL/PL deductions for late comings. Generally, companies frame policies relating to late comings.

For example, if the reporting time is, say, 08:30 Hrs:

- There can be a grace period, say 1 - 2 minutes every day for employees. They can report till 08:32. This is because they may get stranded in traffic, rain, or for some unforeseen reason. If we are too stringent, then employees may tend to travel at relatively higher speeds to meet the deadline of 08:30 hours, and this could endanger their lives and also the lives of other road users. It will also be seen that you are fair.

- Thereafter, if he reports beyond 2 minutes, then the late coming is considered from 08:30 hours. If he reports at 08:33 hrs, he is considered as 3 minutes late.

- Such late comings may be permitted 3 times a month or up to 15 minutes cumulatively. In other words, if he reports for work more than 3 times a month, even if his cumulative late coming is less than 15 minutes or

- If he exceeds 15 minutes cumulatively, even on the first occasion he reports for work at 08:45, then it is considered that he has exhausted his late coming privilege.

- For every late coming beyond conditions c & d, you may consider deducting 1/2 day for every late coming.

- In case an employee has emergency work to be attended, you may consider granting permission up to 1 hour cumulatively and restrict the number of times the employee can avail this permission to 1 - 2 times without exceeding the 1-hour cumulatively.

The above is only an example, and you can frame your own company policy.

Regards,

M.V. Kannan

Publication of Working Time

The model standing orders, central says:

4. Publication of working time.--The periods and hours of work for all classes of workers in each shift shall be exhibited in English and in the principal languages of the workmen employed in the establishment on notice-boards maintained at or near the main entrance of the establishment and at the time-keeper's office, if any.

Attendance and Late Coming

8. Attendance and late coming.--All workmen shall be at work at the time fixed and notified under Paragraph 4. Workmen attending late will be liable to the deductions provided for in the Payment of Wages Act, 1936.

NOTE: All workmen shall have to do the work in the establishment at the time fixed and notified under Para 4. There is a provision for deduction in the payment if someone becomes late according to the Payment of Wages Act, 1936.

The only provision I find in the Payment of Wages Act is as below. I do not find any provision for deduction for late arrival. So it looks like this can be construed as illegal. Looking for feedback from seniors.

Deductions for Absence from Duty

9. Deductions for absence from duty.-(1) Deductions may be made under clause (b) of sub-section (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:

Provided that, subject to any rules made in this behalf by the State Government, if ten or more employed persons acting in concert absent themselves without due notice (that is to say without giving the notice which is required under the terms of their contracts of employment) and without reasonable cause, such deduction from any such person may include such amount not exceeding his wages for eight days as may be any such terms be due to the employer in lieu of due notice.

1*[Explanation.--For the purposes of this section, an employed person shall be deemed to be absent from the place where he is required to work if, although present in such place, he refuses, in pursuance of a stay-in strike or for any other cause which is not reasonable in the circumstances, to carry out his work.]

Dear Srihari, can you specify which law in India prescribes that PL or other leaves can be deducted for late coming? There is no such law. Even the Payment of Wages Act can only be applicable to employees whose wages are not more than Rs 18,000 per month. Additionally, the Shops and Establishments Act or Section 9A of the Industrial Disputes Act is applicable only to workmen.

Regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]

Dear Saswata Banerjee, I have endorsed the fact that, in my opinion, there are no provisions in the act for deducting leave for latecomings. However, if you announce that you are going to deduct leave for latecoming, I am sure, as you have indicated, employees will say, "OK, I will report in the second half of the shift."

This will not happen frequently because if he recognizes that he is likely to be late for work, he will choose to stay off for the first half and report for the second shift. So latecoming on record will come down. But, in my opinion, this will also diminish because his leave balance will keep reducing, and he may not have leave to his credit and will have to be on leave without pay sooner or later. Moreover, he will find it difficult to commute once again from his residence for the second half, which is quite arduous. Hence, he will try to tune his reporting time in line with the organizational policy.

Attendance Incentive Scheme

Yet another feature that can be introduced is the attendance incentive scheme. The scheme can encourage employees to restrict their leave availing in a month to, say, 1-2 days, apart from their regular weekly off and National and Festival holidays declared by the company, and the amount can be quite lucrative. This will promote reporting on time indirectly.

In short, a policy for latecoming clubbed with an attendance incentive scheme will bring in the desired benefit.

Managing Habitual Latecomers

In my opinion, there are habitual latecomers, and if these habitual latecomers are not discouraged, it encourages others who are reporting on time to follow suit. If these habitual latecomers, who are generally few in number, are controlled, then this feature will be quite manageable.

Latecoming, in my opinion, if uncontrolled, leads to extended lunch breaks (more than the stipulated time).

Importance of Reporting to Work Spot on Time

Reporting to work on time has to slowly culminate in leading to reporting at the work spot on time. This is because we do find employees reporting to work on time but still do not report to their work spot on time and keep chatting about the news of the day with their colleagues, wasting precious man-hours of theirs as well as their colleagues.

Regards, M.V. Kannan

I agree with the views of Arun Jain. For late coming or late punching of attendance, we can initiate a proportionate deduction of salary as per the provisions of the Payment of Wages Act, on the principle of "No work - No wages." Deduction of 1/2 day's salary is not correct or fair, and a latecomer may prefer to come in the second half instead of being immediately 15 minutes late. In that case, we are incurring production loss knowingly. For habitual latecomers, we should initiate disciplinary action as per standard operating procedures.

Regards,
Mohan BR - GM HR - Bangalore

Thank you for your comments and suggestions. I have proposed to management that instead of deducting EL/PL, we should deduct duty days.

Proposed Deduction Method

For example, if someone arrives late throughout the month, let's say 8 hours late in total (calculating each day's lateness from the standard official time), then one day's salary should be deducted. Similarly, if someone is 6 hours late in total for the month, a stern warning letter will be issued immediately to prevent a repeat.

If I am wrong, please kindly suggest.

Regards,
Anjana