Hi Seniors,
I have recently joined a new company as HR. However, the company's MD has directed me to deduct 5% of an employee's salary as a penalty for not completing the work within the deadline. Please guide me on whether this is the correct policy. Also, clarify whether it is legally valid to penalize an employee for non-completion of work.
Please provide your valuable input in this regard.
Regards,
Aman
From India, Agra
Acknowledge(0)
Amend(0)
3I have recently joined a new company as HR. However, the company's MD has directed me to deduct 5% of an employee's salary as a penalty for not completing the work within the deadline. Please guide me on whether this is the correct policy. Also, clarify whether it is legally valid to penalize an employee for non-completion of work.
Please provide your valuable input in this regard.
Regards,
Aman
From India, Agra
Acknowledge(0)Amend(0)
Dear Mr. Aman,
Deduction from salary as a penalty for non-completion of work is absolutely wrong.
This type of approach can be seen between two parties who attend to each other's work based on a clear-cut understanding of work which is to be completed within the time frame agreed upon. The copy of the conditions will be printed and signed by both parties. The above approach can be deemed valid between two entities or organizations or companies who perform an activity on agreed payment terms and conditions.
The same cannot be applied to employees. Why? Because the non-performance of any employee is due to various factors, not the employee alone. The suitable infrastructure, proper training facilities, cooperation at the workplace, etc., points have to be considered before penalizing any employee. I mean to say that the degree of loss is to be clearly defined before the start of the work, not after the actual loss. We should not forget that even employees are governed by various laws, and a harassment case can also be registered against the company and its representatives based on the seriousness of the case.
To put it simply, this approach is a serious dent to the image of the company in the long run, and by such activities, the unprofessional way of dealings is exposed. Human resources are a valuable resource that is to be treated with utmost care and respect.
Regards,
Dayal
From India, Hyderabad
Acknowledge(0)Amend(0)
Deduction from salary as a penalty for non-completion of work is absolutely wrong.
This type of approach can be seen between two parties who attend to each other's work based on a clear-cut understanding of work which is to be completed within the time frame agreed upon. The copy of the conditions will be printed and signed by both parties. The above approach can be deemed valid between two entities or organizations or companies who perform an activity on agreed payment terms and conditions.
The same cannot be applied to employees. Why? Because the non-performance of any employee is due to various factors, not the employee alone. The suitable infrastructure, proper training facilities, cooperation at the workplace, etc., points have to be considered before penalizing any employee. I mean to say that the degree of loss is to be clearly defined before the start of the work, not after the actual loss. We should not forget that even employees are governed by various laws, and a harassment case can also be registered against the company and its representatives based on the seriousness of the case.
To put it simply, this approach is a serious dent to the image of the company in the long run, and by such activities, the unprofessional way of dealings is exposed. Human resources are a valuable resource that is to be treated with utmost care and respect.
Regards,
Dayal
From India, Hyderabad
Acknowledge(0)Amend(0)
Hi,
Let me share a practical case from our company. One day, I sent one of our accountants to the bank to deposit a cheque. However, the accountant mistakenly wrote the wrong account number on the deposit slip, and as a result, the cheque couldn't be cleared. In this situation, the company's Managing Director instructed me to deduct 5% of the accountant's salary.
When I tried to explain to the Managing Director that it may not be legally valid to deduct the employee's salary, the MD insisted that we pay our employees for their work, and every employee is responsible for performing their tasks correctly and on time. The MD also mentioned that if any employee fails to complete their work accurately and within the deadline, they should face a penalty.
Please advise on how to handle this situation.
Thank you.
From India, Agra
Acknowledge(0)Amend(0)
Let me share a practical case from our company. One day, I sent one of our accountants to the bank to deposit a cheque. However, the accountant mistakenly wrote the wrong account number on the deposit slip, and as a result, the cheque couldn't be cleared. In this situation, the company's Managing Director instructed me to deduct 5% of the accountant's salary.
When I tried to explain to the Managing Director that it may not be legally valid to deduct the employee's salary, the MD insisted that we pay our employees for their work, and every employee is responsible for performing their tasks correctly and on time. The MD also mentioned that if any employee fails to complete their work accurately and within the deadline, they should face a penalty.
Please advise on how to handle this situation.
Thank you.
From India, Agra
Acknowledge(0)Amend(0)
Dear Aman,
The MD seems to be used to having his orders obeyed, and he is trying to bend the rules as per his vision. Kindly brief the MD that the company pays the salary to the employees for the work they have rendered. Penalties cannot be imposed on them as their work depends on various factors.
Also, if one of them approaches the Labor officer, you are opening a Pandora's box. However, if the MD still insists on making deductions, for your own protection, ensure to get the same thing in writing from the MD.
Regards,
Ashutosh
From India, Mumbai
Acknowledge(0)Amend(0)
The MD seems to be used to having his orders obeyed, and he is trying to bend the rules as per his vision. Kindly brief the MD that the company pays the salary to the employees for the work they have rendered. Penalties cannot be imposed on them as their work depends on various factors.
Also, if one of them approaches the Labor officer, you are opening a Pandora's box. However, if the MD still insists on making deductions, for your own protection, ensure to get the same thing in writing from the MD.
Regards,
Ashutosh
From India, Mumbai
Acknowledge(0)Amend(0)
Sir, can you please provide any relevant case law, section, etc., which state that the employee cannot be penalized? Actually, when I tried to convince the MD, he asked, "In which law is it written that the employee cannot be penalized for not completing the work within the deadline?" Please provide any case law or relevant section for the same.
From India, Agra
Acknowledge(0)Amend(0)
From India, Agra
Acknowledge(0)Amend(0)
Non-completion of work can be due to various reasons. Some may not be in the employee's control. If an employee is a habitual non-performer or underperforms, counsel him, correct him, ask for an explanation, and still, if there is no improvement, then issue a show-cause notice. Based on the reply, initiate further actions. The Managing Director (MD) cannot just offhandedly or abruptly decide to cut 5% of the salary as a penalty. Everyone has to follow the laid-down procedures to impose fines or punishments.
From India, Pune
Acknowledge(0)Amend(0)
From India, Pune
Acknowledge(0)Amend(0)
Dear Aman,
From your post, it is not clear to whose account the cheque was supposed to be deposited. Was the account number written clearly and given to the accountant? Have you ascertained why the mistake happened?
Our learned friends have already aired their views about the legal position. What loss was incurred due to the mistake of the accountant?
It appears from your messages that it's a small privately owned firm and the MD does not know the rules and acts based on his whims.
From United Kingdom
Acknowledge(0)Amend(0)
From your post, it is not clear to whose account the cheque was supposed to be deposited. Was the account number written clearly and given to the accountant? Have you ascertained why the mistake happened?
Our learned friends have already aired their views about the legal position. What loss was incurred due to the mistake of the accountant?
It appears from your messages that it's a small privately owned firm and the MD does not know the rules and acts based on his whims.
From United Kingdom
Acknowledge(0)Amend(0)
Dear Seniors,
It was the mistake of the accountant that the account number given to him was correct. The name "Nirdesh" was written wrongly by the accountant. Due to this mistake, one of the creditor's cheques has bounced. The creditor has directly approached our MD regarding the cheque bounce. When this matter was brought to the attention of the MD, he immediately instructed me to deduct 5% of the accountant's salary. However, the accountant has also accepted the mistake made by him.
Please clarify in this case whether it is correct to deduct 5% of the accountant's salary.
From India, Agra
Acknowledge(0)Amend(0)
It was the mistake of the accountant that the account number given to him was correct. The name "Nirdesh" was written wrongly by the accountant. Due to this mistake, one of the creditor's cheques has bounced. The creditor has directly approached our MD regarding the cheque bounce. When this matter was brought to the attention of the MD, he immediately instructed me to deduct 5% of the accountant's salary. However, the accountant has also accepted the mistake made by him.
Please clarify in this case whether it is correct to deduct 5% of the accountant's salary.
From India, Agra
Acknowledge(0)Amend(0)
Anonymous,
Answer is no. You cannot deduct 5% of the salary. Your MD may think he is the boss - I agree he is your boss - but he is subject to the laws of the land. The accountant can be warned or even punished for the offense. However, without due process, no punishment should be given.
From India, Pune
Acknowledge(0)Amend(0)
Answer is no. You cannot deduct 5% of the salary. Your MD may think he is the boss - I agree he is your boss - but he is subject to the laws of the land. The accountant can be warned or even punished for the offense. However, without due process, no punishment should be given.
From India, Pune
Acknowledge(0)Amend(0)Looking for something specific? - Join & Be Part Of Our Community and get connected with the right people who can help. Our AI-powered platform provides real-time fact-checking, peer-reviewed insights, and a vast historical knowledge base to support your search.