Navigating Final Dues and Equipment Return: Am I Legally Safe in My Resignation Process?

Dear HR experts and Legal Advisors,

I resigned from a company, giving one month's notice as per the appointment letter, with a request to relieve me early with a full and final settlement of my dues. Though the company has accepted my resignation, they have given an early relieving date, mentioning "as mutually discussed and agreed upon" (which I feel can lead to confusion regarding my settlement), but nothing is mentioned about the settlement of dues. They have also asked me to hand over the office equipment (company car as per my appointment letter, laptop, etc.), but I have asked them to first send me the calculation of dues for my checking, and based on my acceptance, strictly with respect to the appointment letter, enabling me to hand over, to which they are not responding. My final settlement of dues is more than the cost of handing over the equipment.

Legal Stand on Withholding Equipment

Is my stand legally correct by not handing over until receipt of the calculation of my dues? Can the company launch a complaint against me for keeping in possession of the office equipment? What precautions should I take to be legally safe in case I'm not?

Variable Pay Eligibility

Secondly, my CTC salary has two components: fixed and variable pay, and both figures are mentioned. As per the language of the appointment letter, the variable pay value will be paid to me annually based on mutually agreed targets, but till the completion of one year from my joining, the company has not made any agreement. Instead, there is an email in the middle of the year stating that the variable pay will be made after 5 quarters instead of annually. My resignation has come between the completion of one year and the completion of the 5th quarter, which is 2 months away. There is no mention about if anyone resigns before, they will not get the variable.

Can I assume that, in the absence of any further communication (till the completion of one year) on account of mutually agreed targets for variable pay, I am eligible to get the full variable component?

Please help me out of this situation.

The company has the right not to provide a breakup before settlement. You may file a complaint once you receive your F&F and then proceed to lodge a grievance if necessary.

The company also has the right to take action against any company property in your possession, as you have already been relieved from your position. Therefore, since you are no longer an employee, you are not entitled to the benefits that were provided during your employment.

If the company includes a statement such as "Variable will be paid based on individual and company performance," then it is at the discretion of the company whether to make the payment.

Regards,
Jaiprakash
AM-HR

The company has all the right to not provide a breakup before settlement. You may complain once you receive your F&F and then lodge a grievance, if any. The company has the right to initiate action regarding the property you possess because they have already relieved you. Hence, you are not an employee of the company and cannot avail the benefits that were provided during your employment.

If the company has included a statement like "Variable will be paid based on individual and company performance," then it is at the discretion of the company to pay or not.

You haven't mentioned the dates, so it's unclear if you are still with this company or have already been relieved. You mentioned that you have withheld the equipment like a car, laptop, etc., linking it to your final settlement. Do you have any specific reasons to doubt or suspect that the final settlement will not be done or will be unreasonably delayed if you return them to the company—any past experience with others, any past unpleasant experience yourself in other matters, etc.? Legally, I think your action is untenable—like Jaiprakash mentioned—unless you have very strong reasons [reason for my query above].

If you don't have any logical reasons for withholding the equipment except your suspicion that you will be given a raw deal [maybe you have had such past experience in another company], then maybe your action is also untenable on proprietary grounds.

CTC Components and Variable Pay

Coming to your CTC components, first of all, the company has every right to change the rules of the game as to when the variable component will be paid—giving advance notice, which they did ["there is an email in the middle of 1 year, stating that the variable pay will be made after 5 quarters against annual"].

As regards your comment ["There is no mention about if anyone resigns before, will not get variable"], I presume you are in a senior role/designation in the company [given that you have a company car, etc.]. Hence, you might be aware that one of the main reasons why any company—not just yours—links the variable pay to a date after some time—could be 12/15/18 months—is to ensure the employee stays for that period and is productive. How they arrive at that figure depends on the company's perceptions—not the employees'. This is apart from using it as a tool to motivate the employee to perform during his/her tenure.

Final Advice

I would suggest that you close the case from your end smoothly and move on with your career. Else, one possible consequence [basically the worst-case scenario] could be that this company could become a bad reference for you later on in your career—after all, "the world is a small place." It's up to you to decide if you can and want to handle it—if and when that situation arises.

Regards,
TS

Response to Final Settlement and Equipment Withholding

Dear TS,

Thanks for your response. Yes, I have already been relieved and am under notice pay.

My specific reason for holding office equipment is related to the settlement of the variable pay, which I got a hint about before resignation. It will be nearly 40% (no backup). The company sent me my full and final settlement details last night, and as expected, the variable amount mentioned is a mere 15% (again no backup) of what I am supposed to get. They have mentioned that this is because of the company's bad performance.

I would like to present the statement, as mentioned in my appointment letter: "Your compensation on a CTC will be in two parts viz. Fixed pay of Rs.1800000/= and variable pay of Rs.700000/= based on achieved targets decided on mutual agreement."

(The salary breakup in the appointment letter also shows that fixed pay is to be paid monthly and variable pay, paid annually. Total Rs.2500000/=)

Now, having mentioned the clause in the appointment letter for variable pay, my main concern is, "Where are targets decided and where is the mutual agreement?" There should be some agreement between the employee and the employer, which the employer has to initiate and then mutually agree upon, which is definitely not there. I also came to know from my known resources in the company that the management is also concerned about this point (no backup document for holding or reducing variable pay).

Understanding the fact of the mail of 5 quarters, I am ready to wait until that time for the release of the full variable and not force them to release it now, but at least, I need the document along with my full and final settlement. That is the only reason (I feel is strong) to keep the official equipment in custody. (My last two months' salary and my variable are more than the cost of the office equipment I am holding.) All the above points have been communicated to them.

At least, I should know what the targets are and what has been mutually agreed. Do you think an employer can force anything on an employee? If yes, then I should surrender.

I had an earlier experience with another company where, after handing over all the office equipment promptly, my bonus (though not mentioned in the appointment letter, but only in mail) was not released for 6 months. Finally, my customers followed up with them for 3 days, and the company (shamefully) gave me my bonus.

Now, under the above circumstances, what do you suggest? I will go with your verdict. Shall I go legal or surrender?

Please suggest.

Thanking you.

Best Regards,
Anjan

Thanks for your reply. Now, since my full and final statement has come (yesterday night) along with variable pay of a much lesser amount (without a backup), I would like to know the meaning of the statement in my appointment letter "variable pay of Rs700,000/= to be paid annually based on achieved targets decided on mutual agreement."

The thing I am stressing on is "Where are the targets which were to be decided on mutual agreement." If they have not initiated or signed any such document/agreement in the past year (upon annual completion), why hold or reduce variable pay? Simply writing that the company has not performed well does not relieve them from their obligation. I am willing to wait until the completion of 15 months (as per the company's mail) to receive the full variable pay and hand over the office equipment. However, I require a document for the full release of variable pay along with the full and final settlement.

That is the reason I am holding onto the office equipment.

Do you still have the same opinion, or would you like to suggest something based on last night's development?

I am eager to understand your point of view at this point.

Thanks and Regards,

Anjan

Response to Legal or Surrender Dilemma

You asked: "Shall I go legal or surrender?" I would say—NEITHER.

I suggest putting in WRITING the reasons why you are holding the office equipment, with a 'read confirmation' if you are sending an email to ALL those concerned, with a cc: to the top guys. If you have already conveyed this to anyone verbally, you can mention that too—it could make your case stronger. Also, mention that they will be returned to the Company the moment there is clarity on if and when the dues are paid in full. Obviously, they wouldn't answer the 'if' part—since it will land them in trouble if you go legal. Coming to the 'when' part, you only need to wait for their reply.

Next, just keep sending regular—maybe weekly would do, but it's up to you—reminder emails to ALL of them that you are waiting for their response. Frankly, if I were them, I would see in which direction you are taking the whole issue—building up your case IN CASE IT GOES LEGAL.

Take my word—they will get to a compromise—my suggestion is not to insist on the full amount if it comes to that, since the reason they gave may be related to the recession—and it's a bit tough to prove if it really affected THIS company (unless it goes the legal way). And then learn from this—after all, that's what experience is all about, I guess.

This could take a bit more time than your patience may allow, but definitely less than if you REALLY go legal.

All the Best.

Regards,
TS

Dear TS, Thanks for your reply once again. I would like to inform you that there is no recession subject in this settlement. There were no targets (for the company's as well as individuals') nor are there any documents which the company can show, by hook or by crook, that have been signed or even mailed to others for any targets or subsequent agreement. In normal circumstances, in most companies, a circular comes (with whatever subject may be) to the concerned employees of the company, which, in case it is not responded to by employee/s, is assumed to be agreed upon by the concerned employee/s, but even this is not the case here.

Since I am aware that the company's business this year is much more than last year, they are simply unable to deliver it within the timelines given by the customer, so revenue generation is comparatively less. However, at the same time, I am ready to wait. I am looking for my full settlement of my variable pay, at least for its documentation along with the settlement which they are ready to make now. "Read confirmation" will totally depend upon their choice. I can opt for "delivered." Is that okay?

I will not insist on full settlement of the variable pay, but I liked your option of "if and when" and am going ahead with the same.

Thank you so much. I will surely send you an update on the next development, hopefully concluding part!

Best Regards, Anjan

The situation is entering into a new phase.

My Mail to My Employer

Dear Sir,

In regards to my variable pay, the figure given by the office of Rs.1.0 lakh (without any backup of mutual agreement on targets to be achieved, as per my appointment order), is technically or logically not correct. The following are the reasons for it:

1. When I joined the company, the office had interviewed me with an Rs.25 lakh CTC per annum and a company-maintained car was agreed upon.
2. Later, the office proposed, with my agreement, that 18 lakhs would be fixed salary and 7 lakhs based on mutually agreed targets to be achieved.
3. I had been regularly asking the office about the targets, but never received any quantified reply. Had I received anything for the targets, I could have planned things accordingly. In the initial stages of the start of our branch office, Mr. Sharma left the organization without contributing to Business Development.
4. As a responsible employee, I made my own targets within the limits of my role in Business Development and based on the availability of the team in the branch office, contributed to a business of nearly Rs.120.0 crores in just around a year.
5. Till my last working day in the company, I have not seen any document or mail that quantifies any figure for targets forwarded to me for mutual agreement and acceptance.
6. No organization can hold a person responsible for any failure that is not related to his work or job profile. If they do, there should be strict guidelines at the time of joining the company so that an employee is aware of what is to be agreed upon and what is not.
7. My appointment order clearly states that Rs.7.00 lakhs is a variable pay and is part of my CTC, to be paid annually (365 days) based on mutually agreed targets. Based on the above points, I, by default, become eligible for my entire variable for 389 days (my employment period in the company) for Rs.746027.00.

Since there is a mail from the Director stating that the variable pay will be paid on 31st March 2011, I need documentary confirmation on Rs.746027.00 as mentioned in point no.7, with clarity on the date of its receiving separately (if not given with full and final settlement of fixed pay and other office expenses), along with my full and final settlement enabling me to hand over the office equipment.

Their Reply to the Above Mail

Dear Anjan,

Let us be frank. In case you insist on such a thing, the same will go legal and will become messy. I got in touch with you to sort out issues. In case you want to get into the legal mode, please let me know, and I will move out and let the natural course of action take place.

You should remember that you have signed and accepted the appointment letter, and it was your responsibility to write to HR (not anyone else) to clarify any details in your appointment letter that you did not understand. As I have told you, you are the only one who is getting variable pay. In case anything is mentioned as per the company policy, you could have easily found out about it before accepting the letter.

The car is registered in the company's name, and there is no letter handing it to you (wrong, it is mentioned in the appointment letter itself). In case the company decides to lodge an FIR and gives your address, it will become messy. I would not be surprised if an ad is put in the papers with your name and photo about moving out with company property. Will that be good? I do not think so.

We had discussed, and we had agreed on certain modalities (he means to say accept the dues "under protest"). In case you still insist on the contents of the email, let me know, and I will just get out of the same and let it go legal. I can also assure you that the case will be in Hyderabad since you are employed by a Hyderabad company, and you will have to unnecessarily come here every day from Chandigarh. What I had suggested was the best way forward, but it is your call.

Thanks

The above mail is yet to be replied from my end, but can you make out what the intentions are or if it is just a threat? Although through SMS, I have replied to them, "do whatever you like, but I will go absolute document, and if required, I will also make sure that the organization also earns a bad name." They have replied to me that they will talk to me tomorrow.

In the meantime, I need your inputs based on the above mails.

Awaiting

Regards,
Anjan

I just saw this now—in fact, I haven't had the time to look into the other threads for the past two weeks. I am not sure of the current status. However, I find one point in their reply email a bit unsettling—did you email or put into writing at any point to their HR or anyone else about the issue of targets, etc.? If not, you could be on a sticky wicket. Please send me a private message when you need a time-bound response from me if you don't hear from me within a day.

Regards,
TS