Managing LTA and Medical Allowance in Employee Full and Final Settlement

Dear all,

Please help in solving the below issue. One employee in our company worked for 11 months and resigned. Now he is claiming his LTA and Medical Allowance in his full and final settlement. The problem is we have a rule that LTA can only be claimed after the completion of 1 year, whereas this person resigned after 11 months. In the appointment letter, we have asked for 3 months' notice or payment in lieu of notice. The person has not given any notice and he wants immediate release.

Please tell me, should we stop his LTA and Medical Allowance and cover it under the shortfall of the notice period? Can we even stop the PF amount? I don't know anything; please help.

Hi,

As you have mentioned that the employee has left the organization with immediate effect, you can recover the amount in lieu of the notice period. Could you let me know whether the LTA and Medical are a part of his CTC or not? If yes, while doing the full final settlement, you have to give the unclaimed amount as taxable salary. (As per your company policy, the employee has to claim LTA after completing 1 year, but he has resigned, so settle it with F&F.)

AMATYA

Dear Amatya,

Thank you for your reply.

If the employee is not ready to pay the amount in lieu of the notice period, can we adjust his LTA and Medical amount for that? I mean, can we adjust the LTA and Medical amount that we have with the amount he has to pay? LTA and Medical are mentioned as part of CTC.

Regards,
Neelima

Dear Neelima,

You can recover the amount from that part which is payable to him. LTA and Medical are payable to him along with salary, so you can adjust it with the shortfall of the notice period.

AMATYA