What is the procedure of full and final settlement of sales employee as they have incentives based on sales done every month? - CiteHR
Umakanthan53
Labour Law & Hr Consultant
Madhu.T.K
Industrial Relations And Labour Laws

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Dear All, Need your expert advice.
What is the procedure of full and final settlement of sales guys? As sales guys have sales and payment collection targets and we give incentives based on sales done every month irrespective of the payment collection. Is it advisable to delay the FnF process till all collection is made? or making part payment of FNF amount ? We have faced challenges in past where company paid full and final amount and employee didn't cooperate with payment collection, though it was communicated to him in advance but it was not documented. and the company m working with don't believe in harassing or delaying employees salary. We just want to know what is the legal way to prevent such situation?
Thanks in advance

In such scenarios, it is better to release the fixed part of the salary first and then release the incentive once the same is actually earned by him.
Dear Manorama Singh,
As the very term would suggest, after " Full and Final Settlement " the Employer-employee relationship ceases to exist. As such you cannot hold an employee responsible for any pending sales collection. Here the employee acts as an agent of the management in the credit sales as per the norms given to him. After his formal exit from employment, he doesn't have the locus standi to collect the pending amount from the customers. You have yourself admitted that incentive has been paid based on sales and not on collection of sale dues. Therefore, it is my personal opinion that full and final settlement cannot be delayed in respect of outgoing employees as the incentive is based on the quantum of sales only.

In private organisations, the salary of sales person will be split into two, viz, a fixed component and a variable component. The latter will always be payable subject to performance of the employee or will be linked to sales and collection. Since the amount cannot be quantified in the same wage month, the variable pay of one month, say October 2019, will be paid along with salary of November, payable in December. I think the problem of Manorama Singh is this.
Dear Seniors,
Thank you so much for your valuable advice.

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