Can We Withhold Final Pay if an Employee Partially Serves Their Notice Period?

Dear Seniors,

Can we legally withhold any employees' Full and Final settlement if he is willing to pay for the notice period, or can we consider him absconding if he only partially serves the notice period? 🤔

If any employee is not serving the notice period as per the policy, then you can deduct the same from F & F.

If an employee is serving the notice period for a few days, then you can adjust the remaining with the pending leave he/she has in their account. In case of no leave balance, the same can be deducted from their F & F.

Thanks, Girish. My question is, can any company stop processing the exit formalities (F&F, clearance form, exit interview, P&F) if an employee is not serving the notice period? Can any employer do this legally under our compliance acts?

If an employee is not serving the notice period, in that case, the employer can deduct from F&F. No company can stop processing the exit formalities (F&F, clearance form, exit interview, P&F).

I do not know what the final settlements are in your organization. But in general, the position regarding terminal settlements is as below:

1. Gratuity: In case the employee leaving has completed 5 years of service or is otherwise eligible for gratuity, the same is payable within 30 days from the date of separation. In case of delay, the liability for payment of interest will apply.

2. PF: Employers have no control over PF matters. In case PF is in a Company trust, the trust is liable to transfer the same if an application for transfer is received. In case PF is recovered from the last salary, the same needs to be remitted within 15 days to the concerned.

3. Cash equivalent of the balance of Leave: Can be held back until settlement of dues. In fact, I agree with Pratima. Dues can be recovered from or the shortfall in the notice period can be adjusted from leaves due.

4. Regarding the shortfall in the notice period, some companies (including mine) have delegated powers to authorities competent to accept resignations, to waive off the shortfall in the notice period, purely as a goodwill gesture. However, it is entirely up to the authority to accept proposals from HR for the waiver of the shortfall in the notice period. I think it is used in cases where the ex-employee is gracefully submitting a resignation.

5. Cases of 'absconding' employees need to be treated on a different footing. Considering pending assignments, knowledge ware, or other knowledge tools held by him/her at the point of separation, such cases need to be treated as matters of indiscipline if required. In which case, concessions given as a matter of goodwill would not be available to them.

6. I also agree with Girish. Your old employees are your best ambassadors. So, bid them goodbye with grace. Quick and hassle-free settlements would always be mutually beneficial. Go the extra mile to facilitate his/her smooth exit.

7. Finally, have a checklist and your response to various modes of separation for the settlement of benefits. If you can draw a scheme and obtain the consent of critical opinion-makers in your hierarchy, you can bring many smiles to ex-employees.

Hi, Salam to all. I need help from professionals to explain the difference between compensation and benefits. What is compensated, and what are benefits? How can I define them?

Dear all,

All the views given by the experts are correct in some corner. Normally, we do as follows: If a person doesn't work fully during the notice period and requests to be relieved early, a) then we pay for the actual days worked and deduct the remaining days for which they didn't work from 30. Less PF, PT, and any other advances or loans, if any. b) Balance Leaves (PL Only) will be calculated on Gross (not from basic, in our company) less PT. Then both a) + b) will be added and remitted together. This will prevent other employees from requesting early relief, and management will also have sufficient time to find a replacement.

Please clarify if not found correct or satisfactory.

Regards, Arabindo

Hi,

The full and final settlement is a legal requirement for outgoing employees in all circumstances. Without the F & F, an employee's personal file can't be closed.

Regards,
Akhouri Nishant

If an employee has absconded from duty but still completes his full and final settlement, he will still be considered an absconding employee. Please advise.