Section 20: Deductions for absence from duty

Overview

This section of the Code on Wages, 2019 deals with the circumstances under which an employer can legally deduct money from an employee’s wages due to their absence from work. It aims to balance the employer’s need to maintain discipline and accountability with the employee’s right to fair wages.

Scope and Coverage

• This section applies to all employees covered under the Code on Wages, 2019, regardless of their wage level or type of employment (skilled, unskilled, manual, etc.).
• It applies to all establishments covered by the Code, including factories, shops, and other commercial establishments.
• There are no specific thresholds or exclusions regarding the type of absence covered; it applies to any absence from duty. However, the deduction must be reasonable and in accordance with established rules/policies.

Key Obligations and Rights

• Employer’s Duty: Employers are permitted to deduct wages only for the period an employee is absent from duty.
• Employer’s Limitation: The maximum deduction allowed is limited to the wages corresponding to the period of absence. An employer cannot deduct more than the wages for the days the employee was absent.
• Employee’s Right: Employees have the right to receive wages for the days they have worked. Deductions can only be made for actual periods of absence.
• Employee’s Right: Employees are entitled to know the establishment’s policy regarding absence and deductions.

Compliance and Penalties

Violating Section 20 of the Code on Wages can lead to penalties. Labour Inspectors can conduct inspections to ensure compliance. If an employer is found to have made illegal deductions (i.e., exceeding the permitted amount or deducting for reasons not allowed by law), they may face fines and be required to reimburse the deducted amount to the employee. Repeated violations can lead to more severe penalties, including imprisonment.

Practical Examples

• Example 1: Ramesh, a daily wage worker, was absent from work for 3 days due to illness. His daily wage is ₹500. The employer can deduct a maximum of ₹1500 (3 days x ₹500) from his wages.
• Example 2: Priya, a salaried employee, takes 2 days of leave with prior approval. Her monthly salary is ₹20,000. The employer can deduct an amount proportionate to 2 days’ salary from her monthly pay, calculated based on her daily wage rate. However, they cannot deduct any amount beyond what represents those two days of absence.