Dear HR Professionals,
Our manufacturing unit is based in Baddi (Himachal). We have employee base of 1500 people and we are into manufacturing of auto parts. Since there are no statutory provisions of Employee Welfare Fund in Himachal. If we can create our own Employee Welfare fund in the plant, and what will be legal repercussions if we deduct a nominal amount (Rs 5 from workers and Rs 10 from Staff) on monthly basis from the salaries of employees in name of Employee Welfare Fund. We will use the collected amount to support the deceased employees families and to the accident affected employees (Partial or Total Disability). Although employer provide assistance in these kind of circumstances apart from the statutory benefits from ESIC but we want to give extra help to the affected employees.
Please share your views and suggestions.
Thanks & Regards,
Sunil Jaglan
From India, Delhi
Our manufacturing unit is based in Baddi (Himachal). We have employee base of 1500 people and we are into manufacturing of auto parts. Since there are no statutory provisions of Employee Welfare Fund in Himachal. If we can create our own Employee Welfare fund in the plant, and what will be legal repercussions if we deduct a nominal amount (Rs 5 from workers and Rs 10 from Staff) on monthly basis from the salaries of employees in name of Employee Welfare Fund. We will use the collected amount to support the deceased employees families and to the accident affected employees (Partial or Total Disability). Although employer provide assistance in these kind of circumstances apart from the statutory benefits from ESIC but we want to give extra help to the affected employees.
Please share your views and suggestions.
Thanks & Regards,
Sunil Jaglan
From India, Delhi
Payment of Wages Act, 1936
7. Deductions which may be made from wages
(1) Notwithstanding the provisions of sub-section (2) of section 47 of the Indian Railways Act 1890 (9 of 1890) the wages of an employed person shall be paid to him without deductions of any kind except those authorised by or under this Act.
Explanation I: Every payment made by the employed person to the employer or his agent shall for the purposes of this Act be deemed to be a deduction from wages.
Explanation II: Any loss of wages resulting from the imposition, for good and sufficient cause upon a person employed of any of the following penalties namely:-
(i) the withholding of increment or promotion (including the stoppage of increment at an efficiency bar);
(ii) the reduction to a lower post or time scale or to a lower stage in a time scale; or
(iii) suspension;
shall not be deemed to be a deduction from wages in any case where the rules framed by the employer for the imposition of any such penalty are in conformity with the requirements if any which may be specified in this behalf by the State Government by notification in the Official Gazette.
(2) Deductions from the wages of an employed person shall be made only in accordance with the provisions of this Act and may be of the following kinds only namely:
(a) fines;
(b) deductions for absence from duty;
(c) deductions for damage to or loss of goods expressly entrusted to the employed person for custody or for loss of money for which he is required to account where such damage or loss is directly attributable to his neglect or default;
(d) deductions for house-accommodation supplied by the employer or by government or any housing board set up under any law for the time being in force (whether the government or the board is the employer or not) or any other authority engaged in the business of subsidising house-accommodation which may be specified in this behalf by the State Government by notification in the Official Gazette;
(e) deductions for such amenities services supplied by the employer as the State Government or any officer specified by it in this behalf may by general or special order authorise.
Explanation: The word "services" in this clause does not include the supply of tools and raw materials required for the purposes of employment;
(f) deductions for recovery of advances of whatever nature (including advances for travelling allowance or conveyance allowance) and the interest due in respect thereof or for adjustment of over-payments of wages;
(ff) deductions for recovery of loans made from any fund constituted for the welfare of labour in accordance with the rules approved by the State Government and the interest due in respect thereof;
(fff) deductions for recovery of loans granted for house-building or other purposes approved by the State Government and the interest due in respect thereof;
(g) deductions of income-tax payable by the employed person;
(h) deductions required to be made by order of a court or other authority competent to make such order;
(i) deductions for subscriptions to and for repayment of advances from any provident fund to which the Provident Funds Act 1952 (19 of 1952) applies or any recognised provident funds as defined in section 58A of the Indian Income Tax Act 1922 (11 of 1922) or any provident fund approved in this behalf by the State Government during the continuance of such approval;
(j) deductions for payments to co-operative societies approved by the State Government or any officer specified by it in this behalf or to a scheme of insurance maintained by the Indian Post Office and
(k) deductions made with the written authorisation of the person employed for payment of any premium on his life insurance policy to the Life Insurance Corporation Act of India established under the Life Insurance Corporation 1956 (31 of 1956) or for the purchase of securities of the Government of India or of any State Government or for being deposited in any Post Office Saving Bank in furtherance of any savings scheme of any such government.
(kk) deductions made with the written authorisation of the employed person for the payment of his contribution to any fund constituted by the employer or a trade union registered under the Trade Union act 1926 (16 of 1926) for the welfare of the employed persons or the members of their families or both and approved by the State Government or any officer specified by it in this behalf during the continuance of such approval;
(kkk) deductions made with the written authorisation of the employed person for payment of the fees payable by him for the membership of any trade union registered under the Trade Union Act 1926 (16 of 1926);
(l) deductions for payment of insurance premia on Fidelity Guarantee Bonds;
(m) deductions for recovery of losses sustained by a railway administration on account of acceptance by the employed person of counterfeit or base coins or mutilated or forged currency notes;
(n) deductions for recovery of losses sustained by a railway administration on account of the failure of the employed person to invoice to bill to collect or to account for the appropriate charges due to that administration whether in respect of fares freight demurrage wharfage and carnage or in respect of sale of food in catering establishments or in respect of sale of commodities in grain shops or otherwise;
(o) deductions for recovery of losses sustained by a railway administration on account of any rebates or refunds incorrectly granted by the employed person where such loss is directly attributable to his neglect or default;
(p) deductions made with the written authorisation of the employed person for contribution to the Prime Minister's National Relief Fund or to such other Fund as the Central Government may by notification in the Official Gazette specify;
(q) deductions for contributions to any insurance scheme framed by the Central Government for the benefit of its employees.
(3) Notwithstanding anything contained in this Act the total amount of deductions which may be made under sub-section (2) in any wage-period from the wages of any employed person shall not exceed -
(i) in cases where such deductions are wholly or partly made for payments to co-operative societies under clause (j) of sub-section (2) seventy-five per cent of such wages and
(ii) in any other case fifty per cent of such wages:
Provided that where the total deductions authorised under sub-section (2) exceed seventy five per cent or as the case may be, fifty per cent of the wages the excess may be recovered in such manner as may be prescribed.
(4) Nothing contained in this section shall be construed as precluding the employer from recovering from the wages of the employed person or otherwise any amount payable by such person under any law for the time being in force other than the Indian Railways Act 1890 (9 of 1890).
Comment: The list given in this section is exhaustive and no other deduction from the wages is permissible. AIR 1956 Madras 79
Advice you to read the above and then decide.
From India, Pune
31247. Deductions which may be made from wages
(1) Notwithstanding the provisions of sub-section (2) of section 47 of the Indian Railways Act 1890 (9 of 1890) the wages of an employed person shall be paid to him without deductions of any kind except those authorised by or under this Act.
Explanation I: Every payment made by the employed person to the employer or his agent shall for the purposes of this Act be deemed to be a deduction from wages.
Explanation II: Any loss of wages resulting from the imposition, for good and sufficient cause upon a person employed of any of the following penalties namely:-
(i) the withholding of increment or promotion (including the stoppage of increment at an efficiency bar);
(ii) the reduction to a lower post or time scale or to a lower stage in a time scale; or
(iii) suspension;
shall not be deemed to be a deduction from wages in any case where the rules framed by the employer for the imposition of any such penalty are in conformity with the requirements if any which may be specified in this behalf by the State Government by notification in the Official Gazette.
(2) Deductions from the wages of an employed person shall be made only in accordance with the provisions of this Act and may be of the following kinds only namely:
(a) fines;
(b) deductions for absence from duty;
(c) deductions for damage to or loss of goods expressly entrusted to the employed person for custody or for loss of money for which he is required to account where such damage or loss is directly attributable to his neglect or default;
(d) deductions for house-accommodation supplied by the employer or by government or any housing board set up under any law for the time being in force (whether the government or the board is the employer or not) or any other authority engaged in the business of subsidising house-accommodation which may be specified in this behalf by the State Government by notification in the Official Gazette;
(e) deductions for such amenities services supplied by the employer as the State Government or any officer specified by it in this behalf may by general or special order authorise.
Explanation: The word "services" in this clause does not include the supply of tools and raw materials required for the purposes of employment;
(f) deductions for recovery of advances of whatever nature (including advances for travelling allowance or conveyance allowance) and the interest due in respect thereof or for adjustment of over-payments of wages;
(ff) deductions for recovery of loans made from any fund constituted for the welfare of labour in accordance with the rules approved by the State Government and the interest due in respect thereof;
(fff) deductions for recovery of loans granted for house-building or other purposes approved by the State Government and the interest due in respect thereof;
(g) deductions of income-tax payable by the employed person;
(h) deductions required to be made by order of a court or other authority competent to make such order;
(i) deductions for subscriptions to and for repayment of advances from any provident fund to which the Provident Funds Act 1952 (19 of 1952) applies or any recognised provident funds as defined in section 58A of the Indian Income Tax Act 1922 (11 of 1922) or any provident fund approved in this behalf by the State Government during the continuance of such approval;
(j) deductions for payments to co-operative societies approved by the State Government or any officer specified by it in this behalf or to a scheme of insurance maintained by the Indian Post Office and
(k) deductions made with the written authorisation of the person employed for payment of any premium on his life insurance policy to the Life Insurance Corporation Act of India established under the Life Insurance Corporation 1956 (31 of 1956) or for the purchase of securities of the Government of India or of any State Government or for being deposited in any Post Office Saving Bank in furtherance of any savings scheme of any such government.
(kk) deductions made with the written authorisation of the employed person for the payment of his contribution to any fund constituted by the employer or a trade union registered under the Trade Union act 1926 (16 of 1926) for the welfare of the employed persons or the members of their families or both and approved by the State Government or any officer specified by it in this behalf during the continuance of such approval;
(kkk) deductions made with the written authorisation of the employed person for payment of the fees payable by him for the membership of any trade union registered under the Trade Union Act 1926 (16 of 1926);
(l) deductions for payment of insurance premia on Fidelity Guarantee Bonds;
(m) deductions for recovery of losses sustained by a railway administration on account of acceptance by the employed person of counterfeit or base coins or mutilated or forged currency notes;
(n) deductions for recovery of losses sustained by a railway administration on account of the failure of the employed person to invoice to bill to collect or to account for the appropriate charges due to that administration whether in respect of fares freight demurrage wharfage and carnage or in respect of sale of food in catering establishments or in respect of sale of commodities in grain shops or otherwise;
(o) deductions for recovery of losses sustained by a railway administration on account of any rebates or refunds incorrectly granted by the employed person where such loss is directly attributable to his neglect or default;
(p) deductions made with the written authorisation of the employed person for contribution to the Prime Minister's National Relief Fund or to such other Fund as the Central Government may by notification in the Official Gazette specify;
(q) deductions for contributions to any insurance scheme framed by the Central Government for the benefit of its employees.
(3) Notwithstanding anything contained in this Act the total amount of deductions which may be made under sub-section (2) in any wage-period from the wages of any employed person shall not exceed -
(i) in cases where such deductions are wholly or partly made for payments to co-operative societies under clause (j) of sub-section (2) seventy-five per cent of such wages and
(ii) in any other case fifty per cent of such wages:
Provided that where the total deductions authorised under sub-section (2) exceed seventy five per cent or as the case may be, fifty per cent of the wages the excess may be recovered in such manner as may be prescribed.
(4) Nothing contained in this section shall be construed as precluding the employer from recovering from the wages of the employed person or otherwise any amount payable by such person under any law for the time being in force other than the Indian Railways Act 1890 (9 of 1890).
Comment: The list given in this section is exhaustive and no other deduction from the wages is permissible. AIR 1956 Madras 79
Advice you to read the above and then decide.
From India, Pune
Employee's Family Benefit Scheme to benefit the bereaved Family can work well and serve the purpose. And after due Consultations with prospective Members, with the Employer/Management, and finalizing the Membership Eligibility, Beneficiary Eligibility, Regular Membership-Contributory Sum, Ways & means to Administer the Scheme and launch Formalities including Documentation, the Purpose for which Disbursements shall be made etc
you need to apply for and Obtain Necessary Permission form Govt Authorities including the Income Tax Dept.
Your idea to be there in Times of acute Need, is worthwhile.
Kritarth Team,
7th July 2018
From India, Delhi
you need to apply for and Obtain Necessary Permission form Govt Authorities including the Income Tax Dept.
Your idea to be there in Times of acute Need, is worthwhile.
Kritarth Team,
7th July 2018
From India, Delhi
Dear Friend,
There are some 13 states to which Employee Welfare Fund act is not applicable, HP is one of them.
Your idea to have Employee Welfare Fund for your manufacturing unit is welcome decission.
You have got a strong manpower of 1500 numbers and must be having workers union. You involve the union in the matter of forming "Employee Welfare Fund" . You need to constitute a body of trust and bye-laws to operate.
The body constituted should come out with a decission by means of a resolution to form an "Employee Welfare Fund" out of contribution from the employee and matching grant from the employer on monthly basis. The company has to enroll the decission in its board meeting and come out with resoultion that the board of the comapny allowed to form such a "Welfare Fund". This way it would be answered to many objections you may face in future.
Take the help of a consultant for drat of bye-law/ constitution and follow any good of this kind in operation.
From India, Mumbai
There are some 13 states to which Employee Welfare Fund act is not applicable, HP is one of them.
Your idea to have Employee Welfare Fund for your manufacturing unit is welcome decission.
You have got a strong manpower of 1500 numbers and must be having workers union. You involve the union in the matter of forming "Employee Welfare Fund" . You need to constitute a body of trust and bye-laws to operate.
The body constituted should come out with a decission by means of a resolution to form an "Employee Welfare Fund" out of contribution from the employee and matching grant from the employer on monthly basis. The company has to enroll the decission in its board meeting and come out with resoultion that the board of the comapny allowed to form such a "Welfare Fund". This way it would be answered to many objections you may face in future.
Take the help of a consultant for drat of bye-law/ constitution and follow any good of this kind in operation.
From India, Mumbai
Hi Sunil
Your good gesture to extend welfare facilities to your employees is highly appreciable. The employer is always at liberty to extend any additional facilities for his employees apart form what has been prescribed under different labour law.
However, you cannot deduct any contribution from the workers/employees wages.salaries on this score which is illegal, What are the deductions legally the employer can make from the wages/salaries are clearly spelt out in The Payment of Wages Act.
I appreciate our friend Prabhat Ranjanji for his elaborate posting in this forum, particularly, the heads of deductions under The Payment of Wages Act.
As rightly pointed out by Prabhatji, there are 13 States including HP which have so far not enacted any Welfare Fund Act. The following are the 13 States
Assam, Bihar, Himachal Pradesh. J&K. Jharkhand, Meghalaya .Orissa Pondicherry, Rajasthan Sikkim Tripura, UT of Chandigarh and Uttarakhand
In the State of Uttar Pradesh even though The Uttar Pradesh Labour Welfare Fund Act, 1965 is in existence, as of now no contribution is payable either by the employer or employees. The Govt take care of the welfare activities.
The remaining States have their own Labour Welfare Fund Act and the rate of contribution payable differ from State to State
You can form a Welfare Fund Trust as per law and proceed.
Regards
P.S.Lakshmanan
S. G. Management Services
(PAN INDIA Consultant – Labour Law Compliance,
PF, ESI, P Tax, Benefit Management &
POSH COMPLIANCE) - KOLKATA
From India, Kolkata
Your good gesture to extend welfare facilities to your employees is highly appreciable. The employer is always at liberty to extend any additional facilities for his employees apart form what has been prescribed under different labour law.
However, you cannot deduct any contribution from the workers/employees wages.salaries on this score which is illegal, What are the deductions legally the employer can make from the wages/salaries are clearly spelt out in The Payment of Wages Act.
I appreciate our friend Prabhat Ranjanji for his elaborate posting in this forum, particularly, the heads of deductions under The Payment of Wages Act.
As rightly pointed out by Prabhatji, there are 13 States including HP which have so far not enacted any Welfare Fund Act. The following are the 13 States
Assam, Bihar, Himachal Pradesh. J&K. Jharkhand, Meghalaya .Orissa Pondicherry, Rajasthan Sikkim Tripura, UT of Chandigarh and Uttarakhand
In the State of Uttar Pradesh even though The Uttar Pradesh Labour Welfare Fund Act, 1965 is in existence, as of now no contribution is payable either by the employer or employees. The Govt take care of the welfare activities.
The remaining States have their own Labour Welfare Fund Act and the rate of contribution payable differ from State to State
You can form a Welfare Fund Trust as per law and proceed.
Regards
P.S.Lakshmanan
S. G. Management Services
(PAN INDIA Consultant – Labour Law Compliance,
PF, ESI, P Tax, Benefit Management &
POSH COMPLIANCE) - KOLKATA
From India, Kolkata
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