Can We Legally Deduct Salary for Employee Mistakes with Corporate Cards? Seeking Advice

Dear All, in my company, employees are using company-provided corporate cards for online transactions. If there are any faults or mistakes made by the employees, it can lead to significant losses in the transactions, for which the amount has to be retrieved from the employees through deductions from their salaries.

Seeking Legal Guidance on Salary Deductions for Transaction Losses

Please advise on whether I can create an agreement or bond for debiting their salary if they have made any transactions that resulted in losses for the company. I am seeking guidance on the legality of this action and how we can implement it in a legal manner.

Regards, Rajesh

Dear Rajesh, if any of the employees officially entrusted with a card for the purpose of online transactions falls within the monthly salary ceiling of Rs. 18,000.00, the deduction for such financial loss can be effected under Section 7(2)(c) of the Payment of Wages Act, 1936, and no agreement or bond is required.

In the case of employees with a monthly salary above Rs. 18,000.00, deductions can be made based on the individual undertaking to that effect given in writing by them at the time of issue of the cards. My personal view is that no such agreement or bond is required for this purpose.

Thank you.

Dear Rajesh, this is in addition to what Mr. Umakanthan M has said. He has given views from the legal side. Keeping legal issues aside, I recommend you have some communication from the company side about the issues involved in the usage of the corporate card for online transactions. If it is not a company agreement, then it could be a letter addressed to the employee. You must have taken a loan card from the employee when issuing the corporate card. On the same card, either you can attach the liabilities owing to the misuse of the card or issue a separate letter that covers the details of the card as well as the instructions and liabilities.

A communication from the company would help in creating psychological deterrence. This deterrence helps them to use the card judiciously and helps in obviating the problems caused by misjudgment.

Thanks,
Dinesh Divekar

The employees are using cards provided by the company for which clear instructions are given regarding the use of the card and its utilities. Are you providing these cards for personal use or for company use? It is very clear that in rare cases such things happen when using the cards personally. Also, it is crystal clear that not all employees are issued with such cards; it is the responsible person or the individual leading the marketing or services provided for the benefit of the company. Such cards are used in service industries like medical aids/camps, bulk sales events, trade centers, etc. In other cases, for tours or marketing of the products, in such instances, expenses are inevitably met by the leading person, thus there is no question of misuse of the cards. Be clear in the happenings rather than giving a lot of instructions or restrictions. Give corporate cards to the responsible persons who know what to do.

Please let me know if you need any further assistance.

Best regards, [Your Name]

You must inform your employees in written form when you provide corporate cards. You should have a signed copy of such agreement/T&C so that they can be aware of it. Make sure they ask the company before making any transactions.