What Happens if an Employee Can't Pay Dues When Resigning? Let's Discuss Options

Dear All,

What will happen if an employee does not pay his dues (loan, retention amount, training expenses, service bond, etc.) at the time of resigning from the organization due to the inability to pay the amount? Can a company hold his Full & Final Settlement, or should they deduct the amount from his PF accumulation and complete his full and final settlement? As per my understanding, PF cannot be attached against any due payments.

Regards,
Anju

Anju,

I dislike mentioning it, but your company stands to receive a major non-conformance for social compliance. Any loans, advances, service bonds, etc., are indicators of "Bonded Labour."

Surya

Dear Anju,

If an employee is unable to pay his/her dues, then the company is liable to deduct that from his Full & Final Settlement. However, he can't have anything deducted from the PF, as that is managed by another entity and they are not supposed to withdraw any funds from there. Even if after adjusting with your Full & Final Settlement, there are still outstanding dues, the company may take legal action if they have all the necessary details in writing to support their claim.

Regards,

Amit Seth