Labour Law & Hr Consultant
Consultant In Legal Matters
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Mohd Razi Siddiqui
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Dear All,
If any company terminates an employee because of his absent without prior information to the company then in this case what would be the procedure of Full and final settlement of this employee:.Will company give him basic pay as per Notice period mentioned in his appointment letter or not?
2. Will company is bound to do Full and final settlement of this employee or not?
3. what components of salary is counted in F & F?
Please give me information as per labour laws.
Thanks & Regards,


I am working in a limited company since Dec 2010. From Nov 2012 company unable to pay salary on time. I got salary of Nov 2013 in last week of Jun 2014. I had taken maternity leave from Dec 2013 to Feb 2014. Company didn't paid salary for these months till date. I joined company after maternity leave on time. After that I took frequently leaves for baby care as I didn't have full work. On 9/6/2014 I went to hr for salary advance. She told me, send mail & search another job, coz company's condition is bad & we will not have this type of work in future what you are doing here. Next day I went on leave. On 30/6/2014, she told me today is your last day. I told her I want to discuss this issue with my reporting person. On 7/7/2014, she told me, either put your resignation or we terminate you. We deposit 2 months salary in 3/4 days. I refused. First clear my balance salary of 6 months, after that I will give. Now I am coming to the office. Even they didn't deposit PF for last 2 years & income tax for this year. What should I do?

Hello Shiklha
Full and final settlement is to be done when there is termination of service of an employee and subject to the terms of employment in the appointment letter, the employer has to pay full wages or gross salary equivalent to the notice period.which he would have drawn, had he been in the service., have to be paid.
HR & IR Advisor

No labour Act defined notice pay.They define only wages and each Act defines wages in a different way keeping in view the objectives of the Act concerned. Thus the definition of basic wages under P.F Act is different from that under ESI Act.Therefore you need to rely on an Act that deals with rights and obligations of an employee in general.Thus the Payment of wages Act is one such Act.Therefore if the employee in question is one covered by the Payment of wages Act( if his salary is Rs18000/- or below), then he can file an application before the authority u/P.W.Act for recovery of wages.Then what constitutes wages under the said Act is the question. Sec.2(vi) defines wages as including all remuneration by way of salary, allowances or otherwise payable for the work done by an employee and includes among others any sum which by reason of the termination of employment of the person employed is payable under any law. contract or instrument etc.In the instant case, the notice pay payable by the employer is the sum payable under the contract and hence forms part of the wages defined above.

Please go trough the provisions of the Payment of Wages Act before taking a decision and convince yourself first.What the seniors provide here shall not be construed as some legal opinion to be acted up on but only as a reference or guidance or direction to the member posting a query towards finding an answer to his query/problem


In-House HR & IR Advisor

Dear Mr.Saikumar, I think the questioner asks about the full and final settlement of dues if any to an employee on his termination on the disciplinery ground of unauthorized absence.
True, Mr.Umaknthan.but the member did not say that the termination was brought about by way of disciplinary action and the post conveys the impression that the employee stopped coming to office/work which compelled the employer to terminate his services in the manner of termination simpliciter and that's why the querying member sought to know as to what components of salary are to be taken into consideration for paying him notice pay. Since the termination was already brought about by the employer,it is futile to suggest that the employer shall initiate disciplinary action now.
In-House HR & IR Advisor

Dear Mr.Saikumar,
Your answer given under the perceptions of the termination to be a discharge simpliciter and resorted to already is correct. But, since the Questioner framed her very question in simple present tense and specifically asked for payment of notice pay on unilateral termination of the contract of employment for the unauthorized absence of the employee, I hve a doubt whether the management is planning to terminate him under the garb of discharge simpliciter to avoid the lengthy disciplinery process.

Mr.Umakntan, thanks for raising the issue. I read the post again and yes, as you said, the member posting the query framed the question in simple present tense.In that event, if the employee is a workman, it is open to him to question the termination on the ground of it being punitive in the appropriate forum (conciliation and subsequently in the labour court) and it is for the employer to prove bonafides of his action.If the employee is a non-workman,he has civil remedy which he is unlikely to pursue as in majority of cases. Thus it is prudent for the employer to conduct disciplinary process for unauthorised absence and impose appropriate penalty and a penalty of dismissal may not be appropriate in every case of unauthorized absence and therefore your apprehensions may be true also.The members leave so many gaps in the information,leaving it open to the responding members to fill in those gaps by stretching their knowledge and experience.In the instant case I therefore confined myself to the limited question asked by the member as to what components of salary/wages shall count for notice pay without entering the domain of decision making of the employer in respect of the termination since the reply was not sought on termination.I have answered the limited question with reference to Payment of Wages Act as the member sought to know the reply within the frame work of labour laws. Is it O.K? If there is any other dimension to the this limited query which I missed, please enlighten me for my knowledge sake and that of the members.


HR & IR Advisor


Your answer to that part of the question relating to notice pay in the event of full and final settlement is highly commendable as it logically connects the matter to the intricate point of the provisions of Sec.2(vi) of the Payment of Wages Act,1936 in addition to the terms of unilateral termination of the contract of employment by the employer. I have nothing to add other than placing my heartiest appreciation to you on record for the beautiful interpretation based on perfect cross-reference.
If any company terminates an Employee On Grounds Of Discipline ( Code Of Conduct) Can We Hold His Full And Final Settlements like Salary And Other Payments Along With His Relieving Letter and Issue a Termination Letter.
Will There Be Any Legal Issues Against this.Please Advice as per Labour laws.

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