Absenteeism Penalties: Can We Legally Deduct Double Salary for Uninformed Leave?

If an employee is absent without informing their line manager or HR for one day, can we deduct their salary for two days, i.e., double the salary as a penalty? If not, under which statutory documents should we refer, and what could be the fallback plan?

Please share the statutory documents.

First, already you are not going to treat that leave as approved. So, there will be one LOP. If you want to deduct more, that one more day salary amount (as you mention) can be calculated and deducted as "fine" or "other deduction".

As per Statutory compliances, imposing a fine is possible. In Chennai, I need to record it in the Fine Register and I need to submit quarterly returns of fine deducted to the TN Labour Welfare Board. As per law, these amounts should be paid to the TN Labour Welfare Fund.

Dear Meenakshi,

We cannot do that as per the provisions of the Payment of Wages Act. There are certain deductions allowed, and other than that, we cannot deduct any wages from an employee. The term "double penalty" is not always justifiable under the law. In the case where you want to impose any punishment or fine, you can very well do that but need to follow certain procedures as per the provisions of the certified standing orders of the company.

Hope this is clear now.

If the employee is not governed by the Payment of Wages Act or Minimum Wages Act, you can do it if permitted by standing orders. Otherwise, you can't.

Dear Meenakshi,

You cannot deduct an employee's salary for two days for being absent without information for a day unless there are provisions in the certified standing orders of the company or there is a company policy to this extent. If you do this, it will be an illegal deduction from their salary for which an employer can be prosecuted.

BS Kalsi
Member since August 2011

Hi Meenakshi,

A question of common sense for you and your HR: Can HR pay the salary of two months to each employee for their one month's work? If not, why deduct two days' salary for the absence of one day? HR can't act arbitrarily. You don't have any right under any law to deduct two days' leave or salary for one day's absence.

Hi Dhingra,

Just asking a general question, if imposing a fine is possible as per the "Payment of Wages Act" up to 3% of the wages, why should it not be implemented to control uninformed absenteeism? Uninformed absenteeism affects production, project delivery, and other losses to the employer.

Hi,

A fine can be imposed, but you need to give him a reasonable opportunity to explain his case. That means issuing a formal show-cause notice for his absenteeism. If his explanation is not acceptable, we can impose punishments, including a fine. Keep in mind that the quantum of all punishments should be proportionate to the misconduct.

Management Discretion and Penalties in Labor Laws

Had you asked for my opinion, as per the provisions made in your CSO, I would have been much pleased to provide my opinion. In labor and service laws, there is no exception to using the discretion of the management. Penalty is something else, but that too needs to be included in the Standing Orders, not to be imposed arbitrarily merely at the discretion of some negatively minded HR personnel. You can include even a 3 or 5 days' cut of salary for one day's absence in the Standing Order, but with the due consent of the respective trade union and finally on the satisfaction of the certifying authority. However, no conventional or arbitrary penalty can be imposed on any worker.

No doubt, uninformed absenteeism affects production, project delivery, and other losses to the employer, but if that happens, that clearly vindicates the incapability and incapacity on the part of the management for inapt handling of the situation or by keeping imperfect conduct and discipline rules.

A pertinent question arises: what are the managers appointed for? To oversee, manage, or control the work and conduct of the workers or to ensure unaffected productivity?

Mere punitive measures of the management, that too conventional, can't ensure production, project delivery, or cut in losses to the employer. Rather, that tends to workers' unrest that sometimes becomes unmanageable to control on the part of the management. Only a positive attitude of the management can ensure productivity and discipline on the part of the employees.

Regards

Mr. Dhingra,

You still haven't answered my direct question. If the provision of applying a fine is available in the Act, why should it not be implemented? I agree with the suggestion of Ramesan.

It seems you have not read my post properly, where I have very clearly written, "You can include even 3 or 5 days' cut of salary for one day's absence in the Standing Order, but with the due consent of the respective trade union and finally on the satisfaction of the certifying authority. However, no conventional or arbitrary penalty can be imposed on any worker."

If you want a reply specifically aimed at a fine of 3% of wages, that does not entail the deduction of double the due salary of the employee in the absence of any description in the CSO. Any fine should be clearly represented through the CSO and not imposed arbitrarily at the whims and fancy and power-veiled manner by the HR. In any case, 3% of wages won't work out even for a single day's wage, let alone 2 days' wages.

Penalty for Unapproved Leave

For your kind information, 3% of wages equates to one day's wage. Already, one day will be deducted from his attendance due to his unapproved/uninformed leave (resulting in 29 working days instead of 30). It will be at the discretion of the management to decide on the penalty (whether one day's salary or a fixed amount less than one day's salary).

Role of HR in Penalty Decisions

Do you believe HR can determine the penalty? Every decision will be made by the management. Without their approval, HR must be accountable to the Finance department, which could pose issues during an audit.

As you mentioned, HR's focus should not solely be on imposing penalties, as they are also tasked with managing attrition, a key performance metric. It's important to note that imposing fines does not contribute to an HR's performance evaluation. An HR professional will not receive a salary increase or promotion solely for enforcing fines on employees. Imposing fines will make them accountable to employees, department managers, the finance department, statutory bodies, and the management.

HR's Concern for Employee Well-being

How many HR professionals do you know who only impose fines based on management directives and genuinely concern themselves with the well-being of employees?

Let me know if you require further assistance.

Regards