Can We Legally Deduct Rs. 10 Monthly for a Staff Welfare Fund to Support Employees in Need?

Is it advisable to form a staff welfare fund at the organizational level by deducting a minimal amount like Rs. 10 monthly from employees' salaries? Is it permissible under the law? If yes, what is the procedure? (HR department point of view).

The purpose is to provide immediate support to staff and their family members during situations like critical illness or the death of a staff member.

Employee Relief Scheme

You can have an 'Employee Relief Scheme' which is purely voluntary and could be administered by the company. I have experience managing a 'Death Relief Scheme' where, upon the reported death of an employee, the management used to release an amount equal to the net contribution of members of the scheme immediately upon receipt of information of the employee's death, followed by recovery of the contribution from the next salary of all member employees. We used to make a payment of nearly Rs. 50,000/- to the family.

Normally, it takes some time for the payment of terminal benefits, and there will be an immediate cash crisis for the bereaved family to tide over the day-to-day expenses. Timely payment (in 2-3 days) would be a significant help. You can devise a suitable scheme looking at the requirements.