Is Holding Salaries During a 3-Month Notice Period Fair? Seeking Clarification from HR Peers

Hi seniors, I have a small problem in my organization; it's happening because of the 3-month notice period. Initially, my company followed a 1-month notice for all employees, and we held their last month's salary when they submitted their resignation. This amount was settled in the full and final settlement after the completion of the notice period. Recently, we have changed the notice period to 3 months for newly joining employees. When employees on a 3-month notice period resign, we retain their salary for the entire notice period and release it only upon completion of the notice. Payment is made after they are relieved, in the full and final settlement.

Can anybody please clarify whether we are following the correct procedure?

Thanks,
Ranjith

Hi Ranjith, it depends on your company policies. In general, if the notice period is 3 months, then there can be the following options:

1. You can release his/her salary upon serving each month. In case he/she fails to serve the notice period within the 3-month duration, you can withhold their PF and experience letters. This facilitates the repayment of the unserved notice period by the employee.

2. If your employee is unable to serve the notice period, you can provide the option to pay 3 months' salary to the company and get them relieved immediately. You can also provide the experience letter and PF.

3. He/she can compensate for their paid leave balance and serve the remaining notice period.

Regards,
Revathi.

I would request you to please go to the Cite Search Option for the answer to your question, as we have already discussed this issue several times here, and many people have contributed to it. Also, you can visit this https://www.citehr.com/344662-notice-period.html for your answers.