Employee Safety vs. Salary Deductions: Is a 10% Cut Fair for Earphone Use?

Employee Safety and Salary Deductions

I work as an HR manager in a factory setup. Two of the floor employees were caught wearing earphones during working hours, which is strictly prohibited and poses a safety hazard as they work with sharp and heavy machinery. I have received orders from above to deduct 10% of their salary for the month of July. My doubt is, is the company allowed to deduct such a high percentage as a fine when there was actually no loss to the company due to their actions?

Looking forward to gaining some knowledge on this issue.

Hello,

If employees violate the company's policies, it falls under misconduct. Therefore, the initial step is to issue a warning letter to the employees. This letter should clearly state that if the same error is repeated in the future, a specific amount will be deducted from their salary. The employee must acknowledge receipt of this warning either via email or a physical letter.

Thank you,
Khirod Kumar
HR Executive (Production)

Approved List of Acts and Omissions for Wage Deductions

Before enforcing any deduction from wages, do you have an approved list of acts and omissions for which a wage cut could be imposed from the appointed authority?

Under The Payment of Wages Act, 1936 Section 8, Fines - (1) No fine shall be imposed on any employed person except in respect of acts and omissions on his part as specified by the employer with the previous approval of the appropriate Government or the prescribed authority, under a notice as per sub-section (2). (2) A notice specifying such acts and omissions must be exhibited in the prescribed manner on the premises where the employment is carried out or, in the case of persons employed on a railway (excluding factories), at the prescribed place or places.

I believe that your establishment, as well as the two employees, would fall under the purview of the Payment of Wages Act, 1936 (even though the proposed Labor Code, 2019 seems to have removed the salary ceiling for applicability). Section 8 of the Payment of Wages Act, 1936 imposes certain restrictions on the imposition of fines on employees, including prior approval from the Authority under the Act, providing a reasonable opportunity to the employee, setting the maximum quantum of the fine amount as a fixed percentage of the earnings in the wage period, and so on.

Viewed from this perspective, the implementation of orders from above would certainly be arbitrary. Therefore, I suggest that you politely convey this legal position to your top brass and proceed cautiously in the matter.

Best regards, [Your Name]