Navigating Final Settlements: How Should HR Handle These Employee Exit Scenarios?

Hi!

I had 3 questions regarding the payment of full and final settlement to an exiting employee.

(1) Suppose the employee resigns on 1st March and has a notice period of 2 months to serve, the relieving date shall be 30th April. Would the salary for these 2 months be paid as a full and final settlement, or would the salary for March be transferred to the salary account and the salary for April be paid as a full and final settlement?

(2) If the employee resigns on 1st March and the relieving date is 30th April, but the employee sends an email mentioning that he/she will not be coming to the office from 1st April onwards, is this considered as an absconding case? [The HR here has already sent an acceptance mentioning the relieving date as 30th April per the notice period to be served as mentioned in the appointment letter]

(3) If the employee resigns as per case (2) and stops coming to the office from 1st April, is it legal for the company to do a salary reversal if the payment for March has been made to the salary account?

I would request members to let me have their answers on the above.

Regards, Nikita

Dear Nikita,

If an employee resigned on 1st March and their relieving date is 30th April, the full salary would be received in the full and final settlement. However, if there is a special case or in good faith the company can transfer the salary in March. But, if the person leaves the organization after 30th March, it's a revenue leakage case, so please be cautious.

In the second case, if there is a recovery, it is not an absconding case if the information has been provided earlier.

Employers can reverse salary depending on the banking system.

For any assistance, feel free to call.

Amit
9311742899

Hi Amit,

Thanks for the reply. This surely helps.

I had one more query - hope you wouldn't mind answering. In point #2, the person had earlier agreed to stay until the end of the notice period, i.e., 30th April, but kept pestering the manager to be relieved earlier. The manager denied the request since the individual was crucial to the project. If, all of a sudden on 1st April, after receiving the salary for March, the person sends an email stating that they will not be coming to the office from 1st April because the company did not consider the request for early relief, could this be considered a case of absconding?

Dear Nikita,

Please find my comments in blue color.

I had 3 questions regarding payment of full & final settlement to an exiting employee.

(1) Say the employee resigns on 1st March and has a notice period of 2 months to serve, the relieving date shall be 30th April. Would the salary for these 2 months be paid as a full & final settlement OR would the salary for March be transferred to the salary account and the salary for April be paid as a full & final settlement. - It depends on company policy but do you think the employee will be able to survive without a salary for consecutive 2 months. Try to support employees (including those who have resigned or left); it will help to raise the morale of existing and "would-be" employees.

(2) If the employee resigns on 1st March and the relieving date is 30th April, but the employee sends an email mentioning that he/she will not be coming to the office from 1st April onwards, is this considered as an absconding case? [The HR here has already sent an acceptance mentioning the relieving date as 30th April per the notice period to be served as mentioned in the appointment letter] - Do you have any clause for separation that either party has to pay X amount in case they fail to observe the Notice Period?

(3) If the employee resigns as per case (2) and stops coming to the office from 1st April, is it legal for the company to do a salary reversal if the payment for March has been made to the salary account? - Salary reversal is not possible; for that, you can check with your existing Payroll - Bank.

I would request members to let me have their answers on the above.

Regards,
Nikita

Dear Nikita,

In response to your query, I hope this is helpful.

Case 1: The salary for March would be paid as normal, and the salary for April would be included in the Full and Final settlement (F&F).

Case 2: Yes, this will indeed be considered as an absconding case and a breach of contract, and suitable legal action can be taken against the employee.

Case 3: Yes, your company can reverse his salary for the breach of contract if you have good relations with the bank. However, in most cases, banks seldom involve themselves in such matters as they fear being unnecessarily dragged into a legal case if the matter goes to court.

Your additional question:

Case 4: Yes, as mentioned in Case 2, it is an absconding case.

Regards,
UKmitra

Dear Nikita,

Kindly find my opinion on the cases you mentioned:

Case 1 - If the employee resigns on 1st March and has a notice period of 2 months to serve, the relieving date shall be 30th April. Would the salary for these 2 months be paid as a full & final settlement OR would the salary for March be transferred to the salary account and the salary for April be paid as a full & final settlement? Since the employee has served the Notice Period as per Policy, he is entitled to get the salary for both the months.

Case 2 - If the employee resigns on 1st March and the relieving date is 30th April, but the employee sends an email mentioning that he/she will not be coming to the office from 1st April onwards, is this considered as an absconding case? The HR here has already sent an acceptance mentioning the relieving date as 30th April per the notice period to be served as mentioned in the appointment letter. It's not an absconding case, since the employee had intimated earlier. However, the Company has the right to recover, since the employee has not served his full notice period.

Case 3 - If the employee resigns as per case (2) and stops coming to the office from 1st April, is it legal for the company to do a salary reversal if the payment for March has been made to the salary account? It depends upon the banking system. However, there are other ways to recover, like holding the Relieving Letter or Experience Letter, since the Company (the employee is going to join) would not give him necessary joining documents until the employee has submitted Relieving & Experience Letter from the previous employer, or through the Background Check-up. So the Company can use these documents as a tool to recover.

Seniors, Kindly Correct, if there is some mistake.

Regards,
Anu Singhal