Boost Payroll Efficiency with Digital Signature Legitimateness for Payroll Deduction Authorization in India

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the voluntary deductions have to now fall into a specific statutory category which is somewhat helpful although not entirely as i'll describe in a moment this law changed about almost 10 years ago nine years ago now the the law was more general and less specific at that point in time it didn't have these specific categories it just referred to voluntary deductions for the employee's benefit with a little bit more wording but now the statute lists a bunch of specific authorized deductions or authorizable deductions which was really i think designed to make it clear that there were certain things that employers could deduct as long as the employee agreed wasn't necessarily intended to tie employers hands but in another way it kind of does because it now says if you don't fall into one of these statutory categories it can't be done so there's a little bit less gray area now but it does still have to be for the employee's benefit rather than the employer's benefit although if there's some benefit to the employer that's incidental to the employee's benefit or that goes along with the employee's benefit that that doesn't necessarily make it an impermissible deduction and the employee must authorize the deduction in writing in advance without revoking without revoking meaning that anytime an employee agrees to have a deduction for one of these categories of benefits they have the right to revoke that authorization at any time that's not to say they can show up after payroll has been run and suddenly say don't deduct this from today or tomorrow's pay there are guidelines that say that the employer has to um honor the revocation within eight weeks or four pay periods whichever is soonest so you do have some time once it's revoked but you can't just say no once you authorize it we're going to do it as long as we like so here are the categories i'm not going to read all of these but some of them are pretty standard and obvious insurance premiums pension or health and welfare benefits so your health insurance if you had life insurance or disability long-term disability insurance or something that the employee is paying for through their paycheck that's acceptable contributions to a bona fide charitable organization the united way for example is okay on here you see dues or assessments to a labor organization so union dues can be taken out and paid to the union and then there's other categories that are more specific some of these actually arguably are already covered by the allowed by law deduction because there are things like flexible spending account that are taxed favored pre-tax that is deductions and the like but just to avoid too much confusion they've added those to this list so if you have employees deducting money from their pay for daycare expenses potentially in a pre-tax plan or doing any of the other things on this list with a written authorization then it is okay some of the items that were specifically added intentionally to [Music] clarify that these types of deductions were okay back in 2012 where for example the cafeteria and vending machine purchases made it the employer's place of business and purchase made it gift shops operated by the employer but only where the employer is a hospital college or university these were settings where it was typical to have people on site long enough and often enough that they would need to make repeated transactions and maybe it's just easiest to give them a card that they can swipe for example and then have that come out of their pay but there are limits on how much they can you know use at any time or at least they have the right to set limits on that so some of these go into more detail and you should check the regulations further if you're not familiar with using these types of deductions but this is the first step in deciding whether a voluntary deduction can be made so i said it has to fit into one of these listed categories the interesting thing is the last of the listed categories specifically says and similar payments for the benefit of the employee so raise the big question what is a similar payment to any of these listed since many of them are already rather specific similar payments um have some parameters again they're not specified per se but the first thing to note is mere convenience is not enough to qualify as a benefit to the employee they have to provide financial or other support for the employee the employees family or a charitable organization and they must fall into one of these categories health and welfare benefits pension and savings benefits charitable benefits representational benefits which really just means union benefits or union fees or dues transportation benefits and food and lodging benefit i am not really able to tell you too many things that would specifically qualify as a similar payment that are not already on the list of voluntary deductions basically if you can't read one of the specifically enumerated deductions in a way to include what you're thinking about deduction deducting and the law doesn't otherwise require it then it's certainly questionable whether it would qualify as a similar payment in other words if what you really just need to do is figure out exactly what a pension or health and welfare benefit includes that's one thing dues or assessments to a labor organization might come in different shapes or forms they may be okay as similar payment but if it's something else entirely that's not on this list then i think you would be reluctant to consider it a similar payment