Can We Legally Offer Monthly Salary Advances Under the Factory Act? Seeking Advice for Rural Workers

Hi there, I hope everyone is doing well. It is urgent. Kindly give me clearance. Our organization is under the Factory Act. Can someone please tell me if I can give advance payment every month or if it is, according to law, twice a year? We were giving advance payments, but our owner said they want to give it as per laws. We are in a rural area, that's why everyone here is not that rich. They can do things for a month only on a salary basis. Kindly give me a solution so that I can tackle this situation.

There is no law mandating 'twice a year'. It is up to your discretion and administrative convenience.

Regards, Varghese Mathew

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Salary Advances for Low-Paid Workers

It is very common among low-paid workers to ask for a salary advance. If your salary day is the 1st of every month, normally, we will not allow any salary advance before the 15th of the month. The advance given will be fully recovered from the salary payable for the month.

Changing Wage Periods

To address this situation, you can either change your wage period from monthly to fortnightly or even weekly. However, transitioning to weekly or fortnightly payouts will result in additional work for your personnel executives.

Advance Payment Regulations

There is no law requiring you to give advances or limit them to a certain number of times in a year. However, under the Payment of Wages Act, there are rules on how much advances can be given.

It is a bad practice (and imprudent) to give advances every month to the same person. You need to encourage them to avoid advances and counsel/guide them on how they can manage with their monthly salary. Often, bonus time is when the cycle of advances can be broken, but you need to know the actual circumstances and not impose a solution based on your whim.

Also, please ensure all advances are given by way of bank transfer and not in cash.