Any statutory law permits to do the deduction in the name of benevolent fund?

Dear All,

Our company has introduced a Benevolent Fund, and for that, management has decided to deduct contributions from the staff's salary.

In terms of legality, as far as my knowledge goes, this can be implemented either by incorporating it into company policies or standing orders. Since we do not have standing orders, we are considering amending the company policies to introduce this fund.

To the best of my knowledge, no statutory law permits deductions in the name of a benevolent fund. Therefore, an employee may potentially approach the labor office or court to request a refund of the deduction. I would appreciate further clarification on this matter.

Thank you.

Dear Destinywins,

Thank you for raising this query.

During the initial period of my professional career, I came across a benevolent fund in one of the reputed companies with a factory in Mumbai and another factory in Nasik. At that time, I asked many seniors about the legality of such a benevolent fund and whether we could make deductions from wages towards it.

To this day, I am unsure about the legality of such a benevolent fund. However, I can say that contributions towards any such fund are not included in the list of authorized deductions in the POW Act.

Experts, I kindly request your insights on this subject.

Thank you.

Kindly reply to this. I know seniors can answer this. Probably this post has skipped their attention, I suppose.

Dear Member,

Any deduction from the salary that is not statutory in nature and not listed in the list of permissible deductions under the Payment of Wages Act can be deemed illegal. All such deductions have to be made with the written consent of each individual. Management can create a policy but cannot force employees to be part of it.

The best approach is to discuss the policy before implementing it. Explain the benefits to all employees, clarify the process of claiming, the contribution management will make towards the fund, and seek individual approval. Having written consent from individuals would provide the required legal protection.

Regards,
Preetam Deshpande

Dear Preetam ji,

Thank you for your participation which compelled me to study again the section 7 to clear my conception.

According to Section 7 (2)(kk), deductions made with the written authorisation of the employed person, for the payment of his contribution to any fund constituted by the employer or a trade union registered under the Trade Unions Act, 1926 for the welfare of the employed persons or the members of their families, or both, and approved by the State Government or any officer specified by it in this behalf, during the continuance of such approval, is an authorised deduction.

Dear Destinywins,

You need to take approval of the State Government for such benevolent fund. To my knowledge, such fund/scheme may fall under the Charity Commissioner.

I'm sure that senior citizens can answer this, but I presume this post has escaped their notice at Word Hurdle website.