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CS Professional · Labour Laws and Practice · Law of Wages

Kiran Steels pays Anil Rs 40,000 wages for a wage period. In that period it makes authorised deductions of Rs 14,000 for house accommodation, Rs 9,000 for recovery of an advance, Rs 4,000 for income-tax and Rs 5,000 for a co-operative society, totalling Rs 32,000. Under Section 18, what is the position?

Total deductions in a wage period may not exceed 50 per cent of wages, which is Rs 20,000 here. The excess of Rs 12,000 is not forfeited or void; Section 18(4) allows it to be recovered in the manner prescribed.

  1. AThe deductions are lawful in full, as each purpose is authorised
  2. BDeductions in the wage period cannot exceed Rs 20,000, and the excess Rs 12,000 may be recovered in the prescribed mannerCorrect
  3. CDeductions are capped at Rs 24,000 (60 per cent) and Rs 8,000 is void
  4. DThe whole Rs 32,000 is void because the 50 per cent limit was crossed

Explanation

Section 18(3) limits total deductions under sub-section (2) in a wage period to 50 per cent of wages, i.e. Rs 20,000 of Rs 40,000. Total deductions are Rs 32,000, so the excess is Rs 12,000. Section 18(4) says this excess may be recovered in the prescribed manner. It is not void, and 60 per cent is not the limit.

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