Boss2966
Industrial Relations
Miss Rai
Human Resource Management
+1 Other

Dear Sir,
Please just Guide me with your views on Employee 1 month salary as a RETENTION MONEY
As we are aware that in the real estate industry the attrition rates are very high. And due to this the management has decided to hold one month salary as a retention money. Up to what extent this decision is correct on the part of employees as the management wants to implement this decision on sudden basis without prior information. What percentage can be deducted from the employees salary as a retention money as per the labour law or any other law?
Regards
Soni Rai
Asstt. HR Manager
23rd March 2012 From India, Delhi
Dear Ms. Soni,
Law never say to hold or deduct a salary of an employee who worked for complete month and completed working hours in that particular month until and unless there is a case of resignation (in which salary is disbursed in FnF settlement) or a person has been involved in some financial fraudulent.
Thanks & Regards
Vivek Pathak
23rd March 2012
Dear Mr. Vivek Pathak,
Thanks for the reply.
In my org the mgmt wants to deduct 1 month salary of the employee as a company security so that the employee doesn't leave the org without serving the notice period of 1-3 months even if they get better opportunity outside.
Will it be the justified to deduct the employee salary for a month. In my orgnz the employee receives salary generally on 12th to 15th of the next month. This means the employer is holding the employees salary for 15 days but they want to introduce another policy of deducting a retention money salary. Being a HR I dont believe in this concept as the employees have their own income and liabilities they will not agree on this point and the negativity will increase between the management and the employees.
So what is the way out to convince my management not to implement such a policy...
Please reply immediately.
Thanks & Regards,
Miss Rai
23rd March 2012 From India, Delhi
Dear Miss Rai
The Law never tells anything about the retention of salary of any employees. What is the terms and conditions you have given to your employees? It only will be taken into consideration.
If you want to have some security money from employee, then while joining itself you must have asked the employees to deposit the security money, and it will be returned with ____ % interest while they leave after ____ months/years and on retirement.
Hope you have understood what I want to convey here.
23rd March 2012 From India, Kumbakonam
Ms. Soni,
If your Organization is concerned about the retention of employees the they can add aclause in the Appointment Letter mentioning 1-3 Months Notice Period from the date of resignation failing which the 1-3 months salary shall be deducted from the FnF settlement.
Secondly, company is legally bound to pay the monthly salary on or before 7th of every next month (3 days grace can be given with proper justification).
Thanks & Regards
Vivek Pathak
23rd March 2012
Thankyou Mr. Bhaskar for your reply.
Whatever you said it means an employer can retain 1 month salary of the employees with the condition of returning the money including the interest at the time of separation. Can u also please suggest me what %age can be deducted from the employee salary per month. and what percentage of interest can be added in the amount.
But In my organization the employee receives salary generally on 12th to 15th of the next month. This means the employer is holding the employees salary for 15 days but they want to introduce another policy of deducting a retention money salary. Being a HR I dont believe in this concept as the employees have their own income and liabilities they will not agree on this point and the negativity will increase between the management and the employees.
Regards
Soni Rai
23rd March 2012 From India, Delhi
Dear Mr Pathak,
The notice period is already mentioned in the appointment letter. One drawback is that in my current organization the mgmt is not giving the leave benefits, Travel Benefits to the employees and we HR Personnel have recommended to provide these benefits to the employees . The employer is not ready to give even a single leave in case of emergency to the employees so the employee also leave the organization in a unprofessional manner. Employees are leaving the orgnz because of the policies in the company.
Employee have a very negative approach towards deducting a single penny from their salary.
Management are still using the traditional methods to run the organization.
Please suggest the overall process to convince the management in the positive manner in related to benefits in the company.
Regards,
Soni Rai
23rd March 2012 From India, Delhi
Dear Ms. Soni Rai

No company is having any right to withheld any employee's salary beyond 7th of next month (if the strength of employees is less than 1000) and beyond 10th of next month (if the strength of employees is more than 1000) as per Payment of Wages Act. (i.e., the Wage period + 7 / 10 days) In case the Payment period is from 16 - 15 cycle, then the employees must be paid before 22/25 of the month. This 7/10 days grace period is given for calculation/preparation of the Salary of employees.

It can be implemented only for those newly appointed, as the new joinee has to deposit one month salary to Accounts department, before joining the company, as Security Deposit to the company and it can be returned with interest. The interest rate may be 1 or 2% more than the prevailing market interest rates.

In addition to the above please insist your management to implement Leave Policy, Leave Travel Concession/Assistance Policy, Promotion Policy, Superannuation Benefit Policy, appraisal system, etc.

Only satisfied employees can give good increased productivity and profit to the organisation.
23rd March 2012 From India, Kumbakonam
Dear Mr Bhaskar,
Thank you for taking time to reply me.
What the best we can do in favor of the org so that the employee do not leave the org in an unprofessional manner including the favor of the employee in the present situation.
Regards
Soni
23rd March 2012 From India, Delhi
Dear Soni
The best way to stop attrition in your organisation is to implement the Leave Policy, Promotion Policy, LTA/LTC Policy, Appraisal System/Salary Revision Procedure, Superannuation benefit Policy, Working day/Holiday policy, etc. Lest you cannot stop the creamy people from running away from your company.
23rd March 2012 From India, Kumbakonam
Dear Mr. Bhaskar,
Thanks for all ur valuable advise.
Our employer is going to register under PF Act so I am going to submit a Challan in favour of the Regional PF Commissioner (Including the Employer and Employee contribution 25.61%). This is the first challan I am going to deposit and we have not yet received the establishment code no. nor even the employee code No. Does the challan goes to the favour of the REGIONAL PF COMMISSIONER or it should be in favour of the PF Organization. We are taking the help of the consultant in registering the PF & ESI.
Please guide me as the above matter is very urgent...
Regards,
Soni Rai
23rd March 2012 From India, Delhi
Dear Soni
Please take guidance from your consultant who can guide correctly as he is dealing the same in your area.
Alongwith PF & ESI Please go ahead with Leave Policy. (Plan atleast 16 leave and 10 Holidays (Paid) .
Create Superannuation Fund for each staff starting simple RD and start depositing monthly some amount on that. If they go on superannuation (Retirement at the age prescribed by your policy), then this amount will be given to the concerned employee for his dedicated service. In case any staff resigning then it will not be given to them.
24th March 2012 From India, Kumbakonam
Miss Rai
With the kind of service conditions your company provides and further making it unattractive with proposals of retention money and 3 months notice period, I wonder, leave alone retaining an employee, whether the company would attrcat any.
B.Saikumar
24th March 2012 From India, Mumbai
Dear Mr. Bhaskar,
Yes surely i will take the guidance of the consultant for the leave issues but please tell me that the DD which I am going to deposit for the employee and employer contribution is in the favour of Regional PF Commissioner (Registration under PF Act). Our employer have not yet recieve the establishment code nor the employee PF Code then how we can submit the challan....
Rgds,
Soni
24th March 2012 From India, Delhi
Dear Sir,
Please tell me that the DD which I am going to deposit for the employee and employer contribution is in the favour of Regional PF Commissioner (Registration under PF Act). Our employer have not yet recieve the establishment code nor the employee PF Code then how we can submit the challan....
Rgds,
Soni

24th March 2012 From India, Delhi
Is it legal for any organisation to retain some part of the salary as retention amount and give the amount to the employee on successful completion of the probation period.
3rd September 2015 From India, Pune
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