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Thread Started by #smita221

What are the reasons and what should be the situations in which employer can stop the salary of an employee.
As one employee resigned from our company and he has not performing well since last two months, his salary is on hold and now for ff settlement company wants to stop his salary . Is this possible ?
Please reply soon
2nd December 2010 From India, Kanpur
dear smita,
if he was not performaing well, did you gave him warning letter or recognised it after his leaving the job.
He has given you his 8hrs a day, he would have been working since. what was his reporting boss doing at time when this person was not performing well.
This is not the reoson to stop someones payment, from an employer point of view its small amount but from an employee point of view its an big amount, infact may be bread earning money for himself or for parents or wife and children.
think about it again consult or wait for more response till you get the final decision.
2nd December 2010 From India, Mumbai
Dear Smita, Yaasmin is absolutely right. Please re-think about the issue and thn go for final decision. May be he is the bread earner. Regards, Neelam.
2nd December 2010 From Germany, Wolfratshausen
I agree in totality with the opinions posted here Stopping salary under the given circumstances, only reflects the poor mentality of the management. Warm regards.
2nd December 2010 From India, Delhi
It can be a skill/will issue or a training issue.
The person has worked for the 2 months and he should be paid for it.
From the business perspective, the compensation should always include a variable component which is given vis a vis performance
It can be a legal issue for the company if the employee is not paid.
2nd December 2010 From India, Mumbai
dear, please, no rights to stop the salary. because every employee selected by employer only. if his performance not well, give proper time to relieve the job pandian tirupur
2nd December 2010 From India, Madras
dear smita,
Yes, indian labour law do provide for same.
Employer is doing business , has invested capital and in return expects profit.
Data provided by you is insufficient to give you any reply .
If you get productivity of rs 100 than you can pay rs 3/- to rs 50/-
But be careful , do it with strict compliance . Else ........... ???
Sunil Agarkar
Advocate & consultant

2nd December 2010 From India, Vadodara
Please enlighten us about the "Indian Law" which provides for the "same". It will be a very useful piece of information for all HR practitioners.
Further what you have stated in your mail is a little confusing. Could you clarify your thoughts please?
Thank You,
Vasant Nair

3rd December 2010 From India, Mumbai
You cannot and should not hold anyone's salary. If someone has not been performing well, regular and proper steps should have been taken to help him attain the desired levels of performance.
Now since the concerned employee has resigned, you should release him as per terms of his appointment and settle his dues in Full & Final in good time. Legally and ethically you cannot hold salary he has earned for the period that he has worked.
Vasant Nair

3rd December 2010 From India, Mumbai
dear smitha
you cannot withhold the salary.
i have always followed one principle. if an employee resigns, if he is good, we will try to retain him. if he is unwilling to stay back or his performance is not good, then immediately i have relieved them. there is no use in having an unwilling horse. it becomes a burden than any productivity.
so instead of all the above please try this
3rd December 2010 From India, Bangalore
Dear Friends,
Please refer "Payment of wages Act" which gives the period in which employer has to pay any type of dues, ie. monthly salary, terminal dues & F&F compensation.Unless you have any reason permitted in Act you can not hold anybodies salary.
Hence first prepare ground and if can be permissible in Act then only you can hold his salary.
3rd December 2010 From India, Mumbai
No...its ridiculous to stop anyone's salary...
As some one rightly said each employee selected by employer himself......if anyone has issues with any employee, should take proper measures to handle him effectively...but there is no way you can stop his salary that too after his leaving from the company...what were you doing when he was on your rolls...
No no.. you cannot do that...please relieve him properly...otherwise you will end up taking his & his family curse...or if he is shrewd, he may drag you to labour court...beware.....
Thanks & Regards
3rd December 2010 From India, Hyderabad
Dear Yasmin,
How would you reply for this?
we recruited a head where as he/ she enjoyed all the two months without concentrating on the target to be achieved. Appointed head is bothered about much about her authority and other things and least bothered about the performance.
How about your suggestion in firing her and other options choosen by the person who starteed the post
3rd December 2010 From India, Warangal
It is possible to withold the salary,technically speaking, but it might be illegal and is most definitely unethical to do so.
Performance issues need to be pointed out in time to an employee and remedial actions need to be taken immediately. You might even go to the extent of demoting an employee and/or giving him a pay cut - but only while he is in your employment. To echo a sentiment which most of my friends have shown in this thread, witholding the salay and not giving the FnF to an employee who has resigned just displays the narrow mentality of the company management.
3rd December 2010 From India, Mumbai
Dear Phaniacp,
I am sorry if have hurt someones sentiments. BUT
we are not concerned about the firing purpose here.
we are here to solve the issue of holdong employees salary, someone has said already the employer has recruited him (this his means no one is capable enough int he management ot recruit the right person - may be), what was the immediate boss or management doing during the employees non performances time ?
Have the employee been provided with proper handover, training, support from co ordinates?
Always see the both sides of the coin.
3rd December 2010 From India, Mumbai
dear ms. smita,

please note, if your holding of salary while on duty was legal & not illlegal,

than holding of salary till the reason of holding is resolved stands.

reason can be mensioned in ff and need be mensioned the hold amount and when it will be released.

follow your management's direction...

also please REMEMBER person leaving our company is our marketing agent, he creates our BRAND image, outgoing person must be satisfied ( even if you have not paid him hold salary in FF). keep your documents clear and dont worry about court matters, your brand image and cultural image YOU as HR person creates is more important. washout all ill feelings of out going employee during exit interview.

REMEMBER real brand creator is HR department and not MRKT dept. one unsatisfied employee will damage the brand image, and it will be dificult to get a good employee in future. think 10 times before putting in action.

following are my statements :

if a production manager makes a mistake, batch is spoiled,

if a materials manager makes a mistake, production will delay,

if a marketing/ sales manager makes mistake, sales will reduce or payment will delay,

if finance manager makes mistake, fund flow will reduce,


if HR manager makes mistake, company may closed down ( try doing mistake, if you want to check the statement)

HR department is catalyst, it effects the direction of success.

Sunil Agarkar


3rd December 2010 From India, Vadodara
Dear Smita,
All the members have posted considerable suggestions. Management can not stop the 2 months pay, just because of non-performance, since it further require:
1. The Training was provided?
2. Role fitment may not be there
3. Did Management give him verbal/written warning and maintained in record?
4. was the employee given sufficient time to perform?
5. was the performance evaluated after the given time?
Finally, since he had been in employment for those months, he must been paid off..... here also it is illegal to hold the salary for 2 months.
I advice your Management to clear his F&F settlement amount at real basis to avoid future problems asap.
3rd December 2010 From India, New Delhi
Dear Smita,
(1) Except in the case of unauthorised absence, the salary of an employee cannot be withheld. Even in the case of unauthorised absence, only that part of the salary can be withheld, which pertains to the period of unauthorised absence till the period is regularised as leave due or dies-non, as the case may be. Salary for duty period cannot be withheld in any case.

(2) For bad performance, if considered necessary, you can initiate disciplinary proceeding against the employee and decide on imposition of the prescrbied penalty only, but cannot withhold salary on that plea. The salary of duty period will have to be paid, as usual, as a full and final settlement on resignation after deducting other genuine dues against the employee.

PS Dhingra
Management & Vigilance Consultant
Dhingra Group of Consultants
New Delhi

3rd December 2010 From India, Delhi
Dear Ms Smitha & All

Let this be the final understanding on this:

1. Company appoints a person knowingly well that he is capable and meets its requirements and fixes the salary

2. The terms and conditions are explicitly indicated in the appointment letter and "salary" is not an incentive based on performance and there cannot be any condition to withold salary

3. Witholding salary is a clear violation of the rules and is an unethical practice

4. If the person is not performing well, the concerned manager is responsible for he is not awake to the non-performance of the individual and he could have taken action of either advising, counselling, training and finally if not suitable call the person to improve or warn him that he will be forced to quit

5. First of all you cannot put a condition that the salary will be paid only if you perform. Even if you put (let us say), it cannot be called salary but it would be incentive based on performance. Incentive alone is not salary.

6. When there is no such condition in the employment letter, question of witholding does not arise. if you do, it is unethical and violation of law.

7. If you deduct, it is questionable and becomes unpaid dues and such amounts may have to be deposited with government (Labour Welfare Fund) with suitable reasons. Company cannot keep it.

8. Finally, why punish the employee when the company/manager did not wake up at the right time ?

9. If employee is not performing well, there are many ways to get rid off from him (after following the applicable laws).

Hence arrange to release the salary and then think of getting rid off from him or retain him after training him.

Hope the matter is clear.



3rd December 2010
Dear Smitha,

We are all humans and if one of us proves to be inefficient in a particular months; then as an HR, we need to look to reasons for the same!!

If an employee doesn't perform well, we need to conduct a couselling session and enquire about the reasons for non-performance; the reasons could be family issues, work environment etc. After, considering the reasons, we prepare an action plan and ask the employee to follow it. This is followed by periodic performance mapping and counselling session. However, if at such a point, instead if we stop the salary of the employees, with doing a root cause analysis, trust me, the employee will be demotivated, he will loose his trust and faith in the organization and will never perform!!

Well, the flipside is that he has worked for your organization and under no circumstances, u can hold his salary!! if u do so, u are provoking the employee to go legal against your organization!!

The rest have been precisely mentioned by other members!!


Rahul Chhabra
3rd December 2010 From India, Delhi
Salary can be stopped if the employee is unauthorized absence from duty or overstayal of leave or absence after expiry of leave. regards basant
3rd December 2010 From India
Dear Smitha,
I completely agree with Yasmin, No Employer has the rights to stop the payment of the employee for the day attended until & unless employee leaves the job without notice period at the same time, its the duty of the employees reporting manager to monitor the performance, If the reporting manager has not monitored for 2mths then it is the lack of non performance of reporting manager too.
You cant stop the payment of an employee for non performance
3rd December 2010 From India, Mumbai
  • Person appointed is 'Head'. I am assuming it is a managerial position with responsibility and authority.
  • He / She needs to be properly told about exact nature of job, exact deliverables in writing. In case this is not done you have no right to blame a person. He /She will also have a excuse that I was not at all aware of my deliverables, they were not quantified.
  • You also have to be reasonable about time given to a newcomer to reach quantifiable targets. Are you sure, two months time is enough to achieve targets ?
  • Compensation / Salary for such jobs can be structured in a such a way that, person gets certain amount of salary / incentive only if targets are achieved.
  • In case a person is not contributing and in case is not on target in-spite of clear understanding, he / she needs to be counseled and cautioned in clear terms by his / her bosses. You may even hold his salary since he / she is occupying a managerial post. But such action at the end of the month is not proper. In the beginning of the month itself bosses needs to clearly communicate to him / her that this is your target for this month and in case you fall short, this is a action we propose, including holding or deducting salary.
  • After giving reasonable time, reasonable caution, reasonable counseling, reasonable support and reasonable stick, management can even think of sacking such manager, again by giving clear notice and clear justification.
  • All I have explained above is for 'Manager' in case of staff or worker you have to give more time and you can not be that ruthless. You will have to follow legal procedure as well.

3rd December 2010 From India, Pune
Thanks 1615 and vkokamthankar, as I am studying MBA and contributing my views for the solution of a problem stated here at citehr, you peoples support and positive response makes me feel that i am going right way to become a succesfull manager.
As per my view - A sucessfull manager should always see both sides of coins - he/she should thrive to achiove organisation goals and motivate its staff to contribute for the same and should be supported to enhance thier performances and always maintain the system of rewards and recognisations.
A new joined employees has to be trained and supported most, and that employees morever look for the help from their immediate bosses.
In my organisation, my reporting boss is very supportive, earlier I was working as admin executive but here i am working as operations executive cum secretary to sr. vp but I have learned a lot in last five months and my competency in this new job have increased only due to my boss support and training.
3rd December 2010 From India, Mumbai
Salary can be withheld for reasons connected with relieving, assets not handed over, terms of employment violated or fraud. In case of non performance, the same should have been taken up during employment. However if u had issued warning and he has not delivered it would be a different matter. But there must be specific delivery issues that caused a loss, or if he didn't work during the specified period.
3rd December 2010 From India, Mumbai
No , we can not stop salary of any employee on the bases of his poor performance. You should warn him when he was connected with your organisation. You can stop one month salary if he does not give you one month notice before leaving job. If you will stop his salary he can knock the door of court and trade union.
Sandeep Kumar
Mob- 09728198455
3rd December 2010 From India, Delhi
The employer is enjoined to pay wages for work done and or for fulfilling the contract of employment.Duties generally, including ancillary duties, additional duties, normal duties, emergency duties, which have to be done by the employees and payment of wages therefor. Where the contract of employment is not fulfilled or work is not done as prescribed, the principle of ‘no work no pay’ is brought into play.
3rd December 2010 From India, Mumbai
i think yaasmin is right. he is not doing well for company now but he serviced last two month for company. so please pay money to him because think about his family. what happening without money on his family.
3rd December 2010 From India, Delhi
It clearly appears that employee was performing well before 2 months. i.e. he has abilities and will to do the job but probably he has encountered some problem, whether it may be personal or professional.
Now it's totally upto you whether you want to eradicate the "Problem" or "Employee", which will in turn reflect your management approach to handle the issues. Rules and Laws are and will always be there for those who do not understand Humane approach.....
3rd December 2010 From India, Mumbai
Stop salary now is i think of no use...better to analyse performance of employee on weekly and monthly basis even though he is not ready to improve then give him a warning letter and finally to serve papers.
There is no specific rules or conditions to stop employee salary.
3rd December 2010 From India, Delhi
Dear Nayan, Could you please elaborate on "techically speaking it is possible to withold salary".. Vasant Nair
4th December 2010 From India, Mumbai
Dear Smita,
The Opinion posted by Yasmeen is absolutely right. I am not sure that if there is any law in India to stop someone's salary..
But the main question is... What his reporting Manager was doing?
It's the responsibility of Team leader or manager to take care of his/her team's performance. And if someone is not performing then it's manger/team leader's duty to give him support from every possible manner to improve.If he is unable to support his team member then he/she(Manager) is also not doing his/her work completely.
Krishna Singh
4th December 2010 From India, Delhi
Any provision in ID Act or Standing order to stop salary of an employee for poor performance. Regards Manish
4th December 2010 From India, Bangalore
Dear Smita, Are you still referring to the posts. Have you taken any opinion in consideration with the suggestions and opinions posted here ?
4th December 2010 From India, Mumbai
The employer cannot hold salary for not performing well, for that there are number of ways to make him realise. May be there are lot of other reasons for holding his salary except for non-performance. As he has resigned, probably it would get paid in his f/f settlement, quite obvious, need to deduct certain recoveries which could not be done otherwise.Once again, it is not clear in many aspects, this could be a short service hence not a big amount payable to him in F/f, hence hold salary.

The following recoveries can be one of the reason:

1. Notice pay recovery ( 1 to 3 months) as per appt.letter

2. Penalty payable under some training bond

3. Breach of any secrecy agreement( penalty clause)

4. Any payment made in excess in the past like

- medical reimbursement claimed over the eligible limit

- leave salary

- any personal payment not done like electricity bill,gas etc. in case the individual is staying in the company accommodation

- imprest amount (suspence) taken from the company to meet certain official expenditure being not settled even after several


It is always convenient for the employer to hold salary and recover the same instead of asking the individual to pay back.

But at the same time it is the duty of the employer to give the reason for holding the salary so that the individual is clear about it and in case may opt the other way if desires.

If none of the reason is applicable, then it is unethical/unfair labour practice on the part of management and may go into legal complication.

4th December 2010 From India, Mumbai
Dear Friend,
You cannot stop any employee salary at any case, if he is not performing well you can take the disciplinary action again him, warning letter, ......and lastly termination letter.But stopping the salary is not appropriate.
At the time of full and final if the individual during his period of work damage some assets of the company and you have clearly given the instructions in writing then in that case you can deduct that amount from his full and final and make the balance payment to him.
Thank you
Sushil Kumar
4th December 2010 From India, New Delhi
dear winnehr, Please be specific in complaining, please also describe what is mis guiding sentence ????????
4th December 2010 From India, Vadodara
Dear Smita

I second yaasmin and others but not with With Mr.Sunil Agarkar's suggestion because LAW should be applied when it is NEEDED only.

Perhaps your organisation doesn't know how to bring changes in non performing employees. If an employee was not performing as per your organisation's expectation or not meeting his targets,

1) what measures had your organisation adopted to bring desired changes in him?

2) Did you study Where he went wrong? Is he having any personal problems, as you are aware that at certain circumstance, employees doesn't perform well or able to give their 101% due to personal problems. Does your organisation follows Employee Counseling strategies?

3) Is he a part of team? if he is then how is the over all performance of the team members?

4) Is he having any issues with his manager, the one whom he is reporting?

Probably that employee might have left your organisation due to frustration or he might not be comfortable with your team or boss and many more. It can also be one the reason.

A coin has two sides. Please do carry out indept analysis but its not a good ethic to hold salary unless there is a GENUINE REASON.

Have a nice weekend.

With profound regards


+974 33682361
4th December 2010 From India, Chennai
Hi Smitha,
May i know what is the Notice Period in your Organization?
How many months employee on Roll?
if notice period is one Month you can hold only one month salary. how could arrived 2 months salary on hold..?
your question is not clear. Please explain exact scenario.
Thanks and Regards
Sr. Executive HR
4th December 2010 From India, Bangalore
Dear Phaneendra
sorry for interruption. i know its a bad ethic. i would love to reply to your query but i am really not comfortable with your English(communication skills) as you need to fine tune it with immediate effect so that you can be a GOOD COMMUNICATOR and leave good impression about yourself.
With profound regards
+974 33682361
4th December 2010 From India, Chennai
Hi Yasmeen,
I agree with you in all aspects. You have been motivated by some one to achieve what you wanted, infact. A GOOD BOSS(matured/skilled/resourceful/disciplined/Down to earth personality & more) is ladder for individual's success graph.
Everyone should get an opportunity to work with a BOSS possessing qualities mentioned above.
If you are motivated in a right manner you will taste success, else you will derail yourself.
with profound regards

+974 33682361
4th December 2010 From India, Chennai
Needs more information for a correct reply. Was the employee on loss of pay? Had no leaves and was absconding from work or absenting from duty without due permission from the superiors?. The phrase "Not performing well" should be clearly explained. Were there any allegations - frequently recorded against the employee's bad behaviour. Any in-disciplinary action for misconduct, theft or a huge loss to the company in question by giving wrong commitments pending? Reasons for resigning? Terms and conditions of his appointment and the company's policies, rules and regulations at work needs to be looked into.
4th December 2010 From India, Hyderabad
Dear Kewal Anand.
I think you are now quite grown up to write a passage about the road safety yourself. I am just shocked that you have made such a silly request at the forum.
This post reflect on your personality. It is a pity that you are representing the HR community and bringing shame to the community.
This also reflect on the quality of work you would be performing. The Company who has employed you is in a total loss to have an HR executive like you.
Can you realize that your this post can put your job in jeopardy! If you employer or any of your Managers or colleague reads this post he will think twice to retain you. And if I would had been your boss, i would had fired you right away.
4th December 2010 From India, Chandigarh
Dear All,
This is very much enlighten subject to all the HR personnel.
No act says to stop the wage/salary of an employee whether he does his given performance 100%or below.It is to be paid compulsory on prorata basis for his workind days.
Pertaining to his low performance HR personnel could have already given a notice and call the explanation for his low performance.
With Regards,
General Manager-HR.
4th December 2010 From India, Madras

Why dont you read the Industrial Disputes' Act,1947 & the Standing Orders Act, and discover the answer for yourself.

In case you still want an answer from us, please do ask.

Best Wishes,

Vasant Nair

4th December 2010 From India, Mumbai
Dear Madam,
Once a employee has resigned form the company in a proper manner, there should not be any question arise, how to stop his or her salary under which situation? And there is no right to stop the payment of FF settlement. Its showing a poor mentality of a poor management. Think about it.
Warm Regards
5th December 2010 From India
Hi All
What is the remedial action can be taken against the employer who stops employee salary even after giving him the relieving order. I wish to know the legal course of action which can be initiated against the employer and also the relevant acts.
5th December 2010 From India, Madras
Dear Smita,
There is no act, which say to to stop the salary of an Employee, Because he is recruited to work for the company and he is under the supervison of his superiors when they fail o take the work then how one can stop his salary. If an employee is present inthe shift he employeer has to pay.
Employer only can stop his salary only when an employee found of stolen the given some of Amount. only in this case any one can stop his salary, otherwise they have to pay the salary.... if the management is not good and have no management skills or very poor at managing the office environment....
Go ahead and do it ....... no law say not to pay his/her salary after getting the work done.
All the Best
5th December 2010 From India, Delhi
Payment of salary is the employee's legitimate right for the time he has spent under the employment of an establishment. You can stop it only if it is provided under the law. Completion of formalities as provided under the law/s for holding salary is also a basic requirement, if you do not do it you loose the right to hold it.
I suggest you better consult a lawyer to solve the issue.
6th December 2010 From Pakistan, Karachi
When an employee performs badly, this is what we do:

Put the employee on a performance review. ie give him a clear task with clear objectives and clear deadlines. It can be a 4 weeks assignment. There should be a manager who is assigned to him to guide him. Every week his progress should be monitored and he should be given a clear feedback. The employee should be told that if the performance review results are not satisfactory he may be asked to leave. The task is not given with the idea of put him in difficult situation. It is to confirm whether employee can work well when he is closely monitored and guided. At the end of the 4 weeks you can decide whether the employee is up to your expectation and take a decision on whether to retain him or termiante him.

Though it is company's responsibility to make sure whether the employee fits in the role, it is also the duty of the employee to represent the facts on his resume correctly and do basic research on the role he is going to be in and his suitability in the role. It is not possible to assess an employee fully in couple of hours of interview sessions.

In any situation his salary cannot be hold back by the company.

6th December 2010 From India, Madras

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