It is okay if the employer shows the amount payable to an employee at the time of his retirement as cost to company from date of joining, but it should not be part of salary. If you see the definition of wages/ salary under any Act, it excludes bonus, amount payable by employer towards PF, gratuity etc. These costs can be costs to company and you can show it as cost to company in the appointment letter also, but no way can he deduct it from the salary payable. If deducted from the salary, it should be paid back to him without any qualification as to length of service.