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Asso.prof.(commerce & Management) Pg
Srinath Sai Ram
Hr Manager
Rajesh Kumar Dubey
Manager - Hr
Raajesharya
Founder And Mentor @ Ethical Business Strategists

Dear All, Please advise if someone leaves during the notice period, then what component of salary can be held by company. Is it only the Basic or the Gross salary in lieu of balance notice period ? Any Legal notification regarding the same.
Thanks
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Dear Member,
You are asking a very relevant question which relates in Full and Final Settlement. As per your post and first observation it seems that you are working in Germany. In that case some employment conditions may vary in respect of India.
Yet generally, when any person leaves the organization in short span and not served his notice period as mentioned in appointment conditions which was issued by the employer and signed by him. Notice Pay amount may be recovered from his balance dues which are payable to him.
In appointment letter it must be clearly mentioned that Which part of Salary will be recoverable by either party. If not paid or recovered, both party may file civil suit for not performing / Specific performance of contract.
Generally, in India, it can not be recovered from Gratuity payable to him by the employer.
Generally F & F settlement includes, salary & arrears if any for the worked/leave period, EPF, Gratuity, leave encashment, unpaid/accrued bonus, other claims like conveyance, medical reimbursement, other allow if any, Under Indian laws recoveries from either from EPF or Gratuity is not permissible. What is left is other accruals. In the present query it appears there is nothing left to recover. In the circumstances, it's left to the discretion of the employer as to how to handle the issue.
Please Refer to Termination Clause as Mentioned in the Appointment Letter.If it mentioned as "salary", then Gross Salary to be deducted.If it is mentioned as "Basic Salary", then Basic Salary to be deducted.Please read your Company Appointment Letter with specific reference to Termination Clause.Please do not assume things.Strictly follow Appointment Letter clause which is mutually agreed & accepted by Employer & Employee.
As a best practice, all the terms of employment and terminations should be well prescribed in the company HR Manual. You should refer to what T&C you signed off while joining. In the absence of anything, daily salary rate should be applied.
Companies follow different policies for number of days in year, total vs working, which range between 210-365, so you will have to refer to your internal policies.
In general, all the components of salary which are paid to an employee directly are considered for deduction. In other words, contribution to health insurance, subscriptions to professional institutions, etc. are not considered for recovery.
In layman's words, the following formula should work for computation of recovery of notice pay -
{(Basic salary + Allowances + reimbursements forming part of gross salary) / (Total pay days in a financial year)} * (Number of days of recovery)
I hope it helps.
Best!
Rajesh
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