Hi all,
I need to form a policy in which we want to deduct some amount of employee's salary per month and this amount will be given to the employee if he serves the notice period when he leaves the company. We want to give his deducted amount +some more benefits/amount.
Can anyone provide me this kind of policy format plz.

25th June 2009 From India, Delhi

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As far as I'm concerned, it is not legal and any one can sue the company on this basis.
May be you can form a policy to submit some sort of amount as a security deposit or bond which shall be returned on leaving the organization with proper procedure, i.e., serving the notice period.
That will save your neck in case of any mishap
25th June 2009 From India, Mumbai
Hi Swapnil,
Yes you are right, I m also asking about a policy to submit some sort of amount as a security deposit or bond which will be returned on leaving the company properly becoz in this company people don't do that and many organizations are doing this, it's not illegal.
25th June 2009 From India, Delhi
Hi Rajni,
May I understand the notion behind this kind of thought process by your company?
Usually, now a days the companies do keep a clause to the employee for a notice period failing which the employee has to give his salary for 1 -2 months in order to buy out the notice period.
As far the formating of the salary is concerned, it can be always added by a retention bonus,else a format of fixed & variable components can be designed.
But the point mentioned by you -"some amount of employee's salary per month and this amount will be given to the employee if he serves the notice period when he leaves the company"....cant be implemented.
Thanks & Regards
25th June 2009 From India, Hyderabad
Dear Rajni,
Payment of wages Act does not allow any Employer to dedcut such amount againt notice period. As a HR Person should find out why company want such ded. I guess this suggestion might be from management side.
May i suggest you pl apply Good Hr practices in your organization so that employee should stay with the organization. Still if employee leaves the organization they should be releived with shake hand.
HR person is there to support the employees not to control the employee.
25th June 2009 From India, Chandigarh
Hi Deepa,
Actually we have 2 months of notice period and the employees leave the company without any information next day of the salary. They are not concerned about their relieving letter/exp. certificate and proper F & F. This is a bad practice running here and we want to remove this practice. Beside this we also want to give some benefits to the employees on the deducted amount for employee satisfaction, that is why I need some legal and good format so that we can sort out this problem.
25th June 2009 From India, Delhi
In such a case you can structure salary keeping a component as bonus (which is other than your regular take home) which is generally payable after completion of 6 months of past 6 months performance. This motivates employees if they stay with company. This is payable in case they leave the company with proper F&F and notice for the period they served.

Sheetal Sehgal
25th June 2009 From India, New Delhi
Hi Rajani,
The idea is good but you are also supposed to take care of legal part. In the given circumstances you can structure some incentive scheme and the same will be paid after completion of one year. In addition to the incentive you can also have LTA part and the same will be after completion of one year. Between 2 LTAs the gap should be one year. You will also structure the leave policy in such a way that a minimum of one year eligible leave should be ( Ex: each employee will get around 15 - 18 Earned leaves per annum) in to his credit. You can also think about variable pay which will be paid at the end of the financial year.Ensure that there are no loans sanctioned from company side, for any personal loan tie-up with banks.
The above points may support you in your process.
Thanks and regards - kameswarao
25th June 2009 From India, Hyderabad
Hi Rajni,

Your problem can be looked at from a different angle.

Say 5% of employee salary is kept as severance pay. At the end of one year you have 5 % of employee's CTC which is payable only if he leaves any time after completing 1 year. If he resigns before completing minimum time as defined by the policy then you may not give this amount at the time of resignation. But this you may not show as a part of CTC. You show 95% as CTC, 5% as severance pay which is over and above the CTC.

The policy could read something like:

If an employee serves the company for minimum 1 year then upon completion of one year he is entitled to 5% of his current CTC as severance pay ,however this amount is made payable only if the employee resigns. This amount is multiplied by number of years completed in service. if an employee resigns after X number of years then the employee is entitled to X multiplied by 5% of current CTC at that time.

CTC is structured in such fashion to retain employees and amuse them during and also at the end of employment. The wording and concept in the policy should be presented in a manner acceptable to all.


25th June 2009 From Korea, Seoul
Hi Rajni I think sheetal is right. you can keep a component in a salary as a bonus and later on you can give it to your employee once he serves a proper notice period. Regards Akshu
25th June 2009 From India, Chandigarh

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