Two things emerge from your post. One is about security deposit and another is refusal of the employee to pay this deposit.
First question is why you would like to take security deposit? After all Rs 2,000/- is not that great amount. So why need was felt to charge this small amount? What is achieved out of this concept?
The second question is when did you communicate to the employee about the security deposit? Was it before 17th July or after? Did you clarify about the policy of security deposit at the time of his selection? If yes, then he should not grumble about it.
What he is says about charging meagre amount as security deposit is true. This is a novel concept. Nevertheless, if this was communicated to him and if the rule was applied to all the employees then he should not have any objection. I recommend you putting your foot down. For the sake of one employee, rules need not be bent. Waiver of this condition could demotivate the employees who have paid security deposit.
I perceive real issue to be different. I feel that he could be little nervous about your organisation's culture. Therefore, raising objection against security deposit and giving threat to quit the employment could be nothing but a manoeuvre to prepare ground for his exit. Please look from this angle also. Of course this is my perception and it may or may not be true.
hello Dinesh sir,
Deduction of security deposit Rs. 2000/- every month and employee will get Rs. 24000/- at the completion of 1 year tenure. It is decided by management and in practice by 3 years. this is to stop employee retention and employee stay to organisation at least one year.
All policies are mentioned in details in employee handbook of our organisation which I had mailed him on the day of joining.
Today I got the news that he got another job and due to that he is creating all this issues.
Now management had decided to terminate him with immediate effect.
Well if you are deducting Rs 2,000/- per month then average candidate is bound to raise objection. In fact in your post also you did not clarify that deductions will recur for an year. Therefore, the issue arose because of incomplete communication or non-communication. Why you did not clarify rules of employment before the issue of the offer letter? You have complete freedom to design the on how to run a company but job candidates also have freedom to accept or reject those rules. If you keep job candidates in dark and spring surprises after joining, there is bound to be resistance.
Anyway, he also wishes to discontinue employment therefore, termination from your side does not have much bearing. However, as a lesson hereafter, before issue of the offer letter, clarify to the candidate what would be his salary break up and what would be his take-home salary.
In my view, deduction towards security deposit from wages amounts to unauthorised deduction under the provisions of POW Act 1936.
POW Act 1936 applies to employee drawing wages up to Rs. 18000/- per month. You should have fair policy to retain the employee. Your policy is compelling the employee to stay with you which is against the fundamental right.
I fully agree with Mr.Keshav. You can not have a company policies which are out of tune with the law of the land.
There are some companies who make employees sign a bond of a certain amount & if employee leaves before the contractual period, then he / she is bound to pay the sum to the company. But it happens where you are giving some specific training in some skills to the employee & want to retain him so that you can recover such training costs.
If challenged in court, your company policy is bound to receive an adverse judgement as it amounts to unfair practices & can be termed as "Bonded Labour ".
The policy of deducting Rs 2000/- towards security deposit every month and returning the same after completion of one year as a retention measure can be debatable. Let us not question the wisdom of the policy makers as the same appears to have been successfully practiced for past three years. The real question is whether the company has the system of communicating the same well before accepting the offer or not. In the instant case, company had informed this policy and the candidate had accepted the same at the time of accepting /joining. Therefore his turnaround is unacceptable and company's action of termination is justified.
The question of legality like whether the Payment of Wages Act is applicable or whether it is unauthorised dedication will differ from individual to individual and can be examined but to jump to conclusion will not be appropriate.
Similarly, the view that the HR should raise voice against the policy by putting his foot down is impractical and unwise particularly when the same has worked well except for the instant employee.