Understanding Salary Deduction Rules for Late Coming under the Payment of Wages Act

Legality of Salary Deductions for Tardiness

Is it legal to deduct an amount from an employee's salary for coming in late? An employer is deducting Rs. 200 per day for any employee who reports to work even 5 minutes late from their scheduled time. Is this legal? Please advise.

Deduction of Wages for Absence

Deduction of wages for absence from work is permitted under the Payment of Wages Act. However, it should be proportionate to the hours of absence. This means that if an employee was absent for half a day, only half day's wages can be deducted. Similarly, if the absence was for one hour, wages for one hour only can be deducted. Therefore, deductions should be proportional to the late coming and should not be arbitrary.

Madhu.T.K

Deduction of wages for absence from work is permitted under the Payment of Wages Act. However, it should be proportionate to the hours of absence. This means that if an employee was absent for half a day, only half-day wages can be deducted, and if the absence was for 1 hour, wages for 1 hour only can be deducted. Therefore, deductions should be proportionate to the late coming and should not be arbitrary.

Thank you for your response, Madhu. Would you be able to let me know the section and the clause that talks about salary deduction under the Payment of Wages Act?

Regards,
Madhu.T.K

The section in the Payment of Wages Act regarding deductions for absences applies to special cases related to being in the factory but not at the place of work, such as in the case of a partial strike or attending protest rallies. The company has the freedom to establish its own rules for debiting late arrivals as a form of punishment, which does not necessarily have to be proportionate to the work lost, but it must be reasonable.

Most companies typically implement a practice of deducting half a day's pay for every three days of late arrival, up to a cutoff of 20 minutes. Beyond that, employees may either be sent back home or allowed to stay with a half-day loss of pay. For larger units, these terms must be outlined in the standing orders, which then require certification by the labor officer or inspector.

Any deduction in this scenario, unless covered by standing orders, would be considered a fine or penalty under the act and must be approved by the authority under the Payment of Wages Act and displayed accordingly.

Section 7(2)(b) is a general clause permitting an employer to deduct wages if an employee is absent from work. At the same time, Section 9 speaks about the deduction of wages for abstaining from the workplace while having come for work. In both cases, unless it is a concerted effort of ten or more persons without notice and without due cause, in which the deduction may be 8 days' wages, the deduction should be proportionate to the wages.

Madhu.T.K

Applicability of the Payment of Wages Act

The Payment of Wages (POW) Act is applicable to a person whose wages are not above Rs 18,000/- in a wage period. In cases where persons have wages above this limit, the company's rules will apply. However, it is desirable to deduct proportionately. Yet, doing so may cause it to lose its punitive value.

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

If an employee is getting a salary of ₹25,000 a month and is 15 minutes late, according to this rule, they will lose ₹30. I don't think he will care. He will lose about ₹700 per month even if he is late every day.

Incidentally, I checked the model standing orders for Haryana. It states that if the employee is late by more than 5 minutes, the employer can send him home. Otherwise, the employee can be allowed in with a penalty as per company rules.

In the case of those not covered by labor laws, it is okay, and you can impose punishment according to the company's rules and regulations. However, in practice and from my own experience, what I have seen is that these late-coming rules and punishments are confined only to workers. For others like team leaders or managers, these rules will not be applicable, and they will claim to have "flexible timing." In many cases, this flexibility is misused. This seems to be true in almost all sectors.

Regards,
Madhu.T.K

Again, I would differ. Large and professionally managed factories have strict in-time monitoring for managers as well. In smaller, less structured companies, managers often get away with a lot. There are provisions to explain that you had to work outside and therefore you are late, but this cannot happen repeatedly. Additionally, it requires the approval of the Head of Department (HOD) or, in the case of the HOD, the approval of the business head or plant head. The standard late penalty is a deduction of half a day's pay for every three days of late arrival. Flexi-time arrangements are not common in the Indian scenario yet.

But what about using it as a tool to harass? I know of some incidents where one year's data is utilized for deductions on a fine day.