Is it legal for an employer to grant a wage advance in cash? Can the employer deduct the advanced amount from the regular wage payment? I am concerned that this might violate the Payment of Wages Act, which states that wage payments to employees should be made via cheque or RTGS only.
From India, Vadodara
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From India, Vadodara
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The legality of providing wage advances in cash and subsequently deducting them from regular wages depends on the specific labor laws of the country. In India, the Payment of Wages Act, 1936 governs the payment of wages to certain classes of employed persons. However, the Act does not specifically prohibit wage advances or their deduction from regular wages.
The Act does stipulate that wages should be paid in current coin or currency notes, or by cheque or by crediting into the bank account of the employee. However, this does not necessarily preclude the possibility of wage advances in cash, as long as the advance is properly documented and agreed upon by both parties.
The employer can deduct the advanced amount from the regular wage payment, provided it is done in accordance with the terms agreed upon by the employer and the employee. The Act allows for deductions from wages under certain conditions, including advances of wages. However, the total amount of deductions should not exceed 50% of the total wages in any wage period.
Here is a step-by-step action plan:
1. Ensure that the wage advance is properly documented and agreed upon by both parties.
2. Make sure that the total amount of deductions (including the wage advance) does not exceed 50% of the total wages in any wage period.
3. Ensure that the wage advance and subsequent deductions comply with all other provisions of the Payment of Wages Act and other relevant labor laws.
Additional tips:
- Always keep a record of all wage advances and deductions.
- Regularly review your wage payment practices to ensure compliance with labor laws.
- Consult with a labor law expert if you have any doubts or concerns.
Remember, violating labor laws can result in penalties and legal action. Therefore, it is always advisable to stay informed and compliant with all relevant laws and regulations.
From India, Gurugram
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139The Act does stipulate that wages should be paid in current coin or currency notes, or by cheque or by crediting into the bank account of the employee. However, this does not necessarily preclude the possibility of wage advances in cash, as long as the advance is properly documented and agreed upon by both parties.
The employer can deduct the advanced amount from the regular wage payment, provided it is done in accordance with the terms agreed upon by the employer and the employee. The Act allows for deductions from wages under certain conditions, including advances of wages. However, the total amount of deductions should not exceed 50% of the total wages in any wage period.
Here is a step-by-step action plan:
1. Ensure that the wage advance is properly documented and agreed upon by both parties.
2. Make sure that the total amount of deductions (including the wage advance) does not exceed 50% of the total wages in any wage period.
3. Ensure that the wage advance and subsequent deductions comply with all other provisions of the Payment of Wages Act and other relevant labor laws.
Additional tips:
- Always keep a record of all wage advances and deductions.
- Regularly review your wage payment practices to ensure compliance with labor laws.
- Consult with a labor law expert if you have any doubts or concerns.
Remember, violating labor laws can result in penalties and legal action. Therefore, it is always advisable to stay informed and compliant with all relevant laws and regulations.
From India, Gurugram
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Dear Yogesh Pandya,
1.It is legal for an employer to grant a wage advance either in cash or by bank.
2. Yes, the employer can deduct the advanced amount from the regular wage payment on installments.
3. The Payment of Wages in cash doesn't violate the payments of Wages. (Under the Payment of Wages Act, 1936, wages must generally be paid in current coins or currency notes , but employers can use cheques or bank transfers with the worker's written consent.
4. The Code on Wages, 2019 in India regulates wage advances by allowing deductions for recovery, but with limits, ensuring transparency through wage slips, and mandating advance pay for long leave; employers can give advances, but recovery rules are strict, especially for pre-employment advances (only from first payment, no travel costs) and after employment begins (conditions apply), with total deductions (including fines, loans) generally capped at 50% of wages, all detailed in prescribed rules for clarity and worker protection.
From India, Mumbai
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1.It is legal for an employer to grant a wage advance either in cash or by bank.
2. Yes, the employer can deduct the advanced amount from the regular wage payment on installments.
3. The Payment of Wages in cash doesn't violate the payments of Wages. (Under the Payment of Wages Act, 1936, wages must generally be paid in current coins or currency notes , but employers can use cheques or bank transfers with the worker's written consent.
4. The Code on Wages, 2019 in India regulates wage advances by allowing deductions for recovery, but with limits, ensuring transparency through wage slips, and mandating advance pay for long leave; employers can give advances, but recovery rules are strict, especially for pre-employment advances (only from first payment, no travel costs) and after employment begins (conditions apply), with total deductions (including fines, loans) generally capped at 50% of wages, all detailed in prescribed rules for clarity and worker protection.
From India, Mumbai
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Wage Ceiling Under The Payment Of Wages Act Increased From 18,000 To 24,000.pdf
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(Fact Checked)-Your response is accurate. It's legal for employers to provide wage advances and deduct them from regular wages, respecting the Payment of Wages Act and Code on Wages, 2019. (1 Acknowledge point)