Is It Legal for Companies to Deduct Uniform Costs Without Mentioning It in Offer Letters?

Hello all,

I have noticed that our company deducts uniform costs for our employees. It is only mentioned during induction and nowhere in the offer letter or appointment letter. Is it a deduction permissible under the Payment of Wages Act or not?

Thanks in advance for any valuable insights.

Hi, yes, legally it is not right to deduct. But what is the amount they are planning to deduct? If it is going to be a meager value, why can't you move ahead? Basically, the offer letter will briefly detail the designation, compensation package, period of employment, and place of posting only. You can't expect everything to be mentioned in the offer letter.

Payment of Wages Act: Deductions for Uniforms

Read sections 6 and 7 of the Payment of Wages Act. Deductions for uniforms are illegal, and the company will be liable to repay them. It does not matter whether it is mentioned in the appointment letter or not.

Has the company deducted any amount from the salary of employees on account of uniforms? This is not allowed and seems quite unlikely.

Some companies show the cost of the uniform in their CTC at the time of the offer, but obviously, it is not paid as the uniform is provided. Please clarify.

Uniform Deduction and the Payment of Wages Act in India

The Payment of Wages Act, 1936, is a key piece of legislation in India designed to regulate the payment of wages to certain classes of employed persons. It ensures that wages are paid on time and without unauthorized deductions.

Read More: Minimum Wages

Deductions Permissible Under the Payment of Wages Act

Section 7 of the Payment of Wages Act specifies the kinds of deductions that are permissible from the wages of an employee. These deductions include:

- Fines
- Deductions for absence from duty
- Deductions for damage to or loss of goods expressly entrusted to the employed person
- Deductions for house-accommodation provided by the employer
- Deductions for amenities and services supplied by the employer
- Deductions for recovery of advances or loans
- Deductions for income tax
- Deductions required to be made by law (such as provident fund contributions)
- Deductions for payments to cooperative societies
- Deductions for payments made to a provident fund
- Other deductions with the written consent of the employee

Uniform Deduction

Uniform deduction refers to the deduction from an employee's wages for the cost of uniforms provided by the employer. The permissibility of uniform deduction under the Payment of Wages Act can be evaluated based on the following criteria:

- Amenity or Service Supplied by the Employer: If the uniform is considered an amenity or service supplied by the employer, the cost could potentially be deducted from wages under the provision that allows for deductions for amenities and services.
- Written Consent: If the employee has given written consent to such a deduction, it may be permissible under the "other deductions with written consent of the employee" provision.

Practical Considerations

Employment Contract: Often, the terms regarding uniform deductions are specified in the employment contract or company policy. It is crucial that the employer clearly communicates these terms to the employee, and the employee consents to them.

Reasonableness: The deduction should be reasonable and not cause the employee undue financial hardship. It should not exceed the limits prescribed by the Act (which stipulates that total deductions should not exceed 50% of the wages in any wage period, or 75% in cases where deductions are for payments to cooperative societies).

Conclusion

Uniform deductions can be permissible under the Payment of Wages Act, 1936, if they fall within the categories of deductions allowed by the Act, particularly as an amenity/service or with the written consent of the employee. However, the exact applicability and permissibility can depend on the specific circumstances, such as the employment agreement and the employer's policies. Employers should ensure compliance with the Act and possibly seek legal counsel to avoid any violations.