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Hi Team,
Please clarify if there is a legal clause to withhold or deduct the salary of an employee if he/she resigns from the organization and is having negative leave balance at the time of relieving.
Thanks
Yeswanth
20th June 2015 From India, Hyderabad

Dinesh Divekar
Business Mentor, Consultant And Trainer
Saswatabanerjee
Partner - Risk Management
Sushilkluthra@gmail.com
Consultant In Legal Matters
Sreenarayanan C
Works Manager
Yeswanth
Hr Manager
+3 Others

Dear Yeswanth,

Your query on "Negative Leave Balance" is intriguing. Let us consider two situation when salary is not paid:

a) Situation I: - Employee proceeds on leave without proper approval from the Manager/HOD. On return, if the absence is not regularised then (whether some additional punishment awarded or not), forfeits his/her pay. This deduction is on account of "Leave Without Pay" (LWP). HR department while processing monthly salary, deducts the salary for the absent days.

b) Situation II: - Employee has pressing personal/domestic commitments. Approval by the Manager/HOD is not a problem but he/she does not have balance leave. Against this backdrop, he/she applies for LWP. HR department while processing monthly salary, deducts the salary for the absent days.

In either situation, question of negative leave balance does not arise since the deductions owing to absence are made while processing the monthly salary. However, from your query, one gets a feeling that, you have maintained employee's leave account that is similar to Current Account that companies open with their bank. At times banks permit overdraft facility since it is a company account. Does your leave policy permits such overdraft of leave?

Thanks,

Dinesh Divekar

Hi Team,

Please clarify if there is a legal clause to withhold or deduct the salary of an employee if he/she resigns from the organization and is having negative leave balance at the time of relieving.

Thanks

Yeswanth[/QUOTE]
21st June 2015 From India, Bangalore
You can not withhold anyone's settlement.
You can however, deduct any amount that is due from the employee (notice me period not completed, for example). So you can deduct the amount for excess leave taken.
In any case, how with withhold help or be resolved ? How can he rectify the situation ? Since he can't, it would amount to unjust refusal by the employer to pay his dues. Think about it from a moral view point too. You should not be taking shelter of any legal provision to quietly pocket someone's dues by withholding in a manner that it never gets paid. To my knowledge, withholding means holding back till something is resolved, that means it is designed to be paid afterwards.

21st June 2015 From India, Mumbai
nathrao 1421
Saswata,
Companies credit casual leave in the month of July for employees.
Let us say 15 days credited in Jul15 which is valid till 30Jun 2016.
Proportionately 15/12 days per month=1.25 days of C/L per month.
Let us say a person avails 10 days leave in next three months and then quits.
Will company do any deduction from final settlement regarding excess casual leave availed by employee??
If done is it legal??
21st June 2015 From India, Pune
I do not know which state the poster is or whether it's office or factory. So my answers are hobbled by that. I am making some assumptions here
Most of the state laws as well as factory act provides that you need to credit leaves on jan 1 of each year. This is credited based on the number of days worked in the previous calendar year.
There is no leave allowed as per law in the first calendar year of working, or in the second calendar year if in the first year he has worked less then three months. (Ofcoure this varies by state)
I assume in this case the company on humanitarian grounds allowed him paid leaves in anticipation of adjusting it in the next year. Then the employee resigned (or may be absconded). In such a case, the company is very much within its rights to deduct the salary for those days.
As you rightly pointed out elsewhere the replies we give are based on assumptions where adequate information is not available

22nd June 2015 From India, Mumbai
The applicable laws are very clear on this. Where an employee at the time of relieving has dues payable to the Company then the dues are adjustable for recovery from such amount payable towards salary, incentives, allowances etc.
Here, negative balance is understood as leave given in advance in good faith for compelling reasons put forth by employee.
23rd June 2015 From India, Mumbai
Out of my knowledge Casual Leave is for one year and if availed there is no provision for withholding salary unless there is a mention in their appointment letter or any circulars issued to them or that they can avail only 1.25 CL per month.
23rd June 2015 From India, Bangalore
Saswata, What if it is a company. Can you please clarify on Rao’s question. Regards Yeswanth
23rd June 2015 From India, Hyderabad
Under section 26(2)(f) of the Payment of Wages Act deduction or adjustment of overpayment of Wages can be done by the employer and thus at the time of relieving such recovery can be made. Similarly under Shops and Establishment Acts e.g. Delhi Act section 20(2)(vi) overpayment of Wages can be recovered in the manner specified. Which Act is applicable may be seen by the employer. Negative leave balance may be treated as overpayment of Wages. Now what is the category of leave the employee has drawn excess may be specified by the queriest.
Thanks
Sushil
24th June 2015 From India, New Delhi
nathrao 1421
Dear Sushil,
My question as below:
Will company do any deduction from final settlement regarding excess casual leave availed by employee??
If done is it legal??
Was put up in earlier post,precisely to get such a clear answer which you given and that too quoting relevant sections of law.
Shri Saswata had also opined the same about recovery being permissible.
I too was aware of the law concerned and have seen this type of excess casual leave taken being recovered at time of final settlement.
It shows the importance of people needing to read bare acts and familiarising themselves with important and frequently used provisions.
The principle the way to knowledge is:read ,read and learn is well known
Thanks
24th June 2015 From India, Pune

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