My employer has a practice of taking an undertaking/bond from new joiners based on the following terms and conditions:
1) The employee will serve the company for 15 months from the date of joining.
2) The employer shall withhold one month's salary as a deposit for the above condition.
3) The deposit will be returned after completion of the 15-month period.
Is this legal?
From India, Pune
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1) The employee will serve the company for 15 months from the date of joining.
2) The employer shall withhold one month's salary as a deposit for the above condition.
3) The deposit will be returned after completion of the 15-month period.
Is this legal?
From India, Pune
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Dear Lalit, the legality or otherwise of such a deduction from the salary of the employee depends on whether the employee's wages fall below the ceiling (currently Rs. 24,000.00 per month) set for the application of the Payment of Wages Act, 1936 under section 1(6). Alternatively, in any other case, it depends on the specific terms of the employment contract authorizing such a deduction by withholding one full month's salary at once.
Payment of Wages Act, 1936
In the first case where the Payment of Wages Act, 1936 is relevant, despite any bond or agreement at the time of appointment, such a deduction is certainly illegal due to the exhaustive list of permissible deductions outlined in section 7(2).
Employment Contract Terms
In the second case, though it may seem unethical, it cannot be deemed illegal as the employee concerned has agreed to such a provision in the employment contract.
I want to clarify that my opinions above are solely related to the practice of withholding one month's salary by the employer. Even in the second scenario, the justification of the amount of deduction depends on the time and resources invested by the employer in training the employee on the job as stated in the bond or agreement.
Please let me know if you need further clarification or assistance on this matter.
Thank you.
From India, Salem
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6108Payment of Wages Act, 1936
In the first case where the Payment of Wages Act, 1936 is relevant, despite any bond or agreement at the time of appointment, such a deduction is certainly illegal due to the exhaustive list of permissible deductions outlined in section 7(2).
Employment Contract Terms
In the second case, though it may seem unethical, it cannot be deemed illegal as the employee concerned has agreed to such a provision in the employment contract.
I want to clarify that my opinions above are solely related to the practice of withholding one month's salary by the employer. Even in the second scenario, the justification of the amount of deduction depends on the time and resources invested by the employer in training the employee on the job as stated in the bond or agreement.
Please let me know if you need further clarification or assistance on this matter.
Thank you.
From India, Salem
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Bond of Employment.doc
Bond in employment.pdf
Salary Break up - After deduction.xls