Is Compensation Included in Final Settlement? Seeking Guidance on Labour Act Rules

Compensation Eligibility Query

I have a query about compensation. I want to know the eligibility of compensation. I am working in a manufacturing company in Delhi. One of our staff employees joined our organization one year ago with a gross salary of 15k. Now, he wants to resign. So, I want to know if compensation would be included in his full and final settlement according to the Compensation/Labour Act. If yes, what would be the basic formula to calculate the same?

Please, seniors, share your knowledge.

Thanks & Regards,
Abhishek Bhardwaj

Dear Abhishek,

In the case of resignation, the employee is responsible for paying for the notice period if he does not serve it. You are not required to pay anything (such as Notice Pay or Retrenchment Compensation) except for the leave pay that is credited to him and his normal salary for the period he served until his last day of work.

Thanks & Regards,
[Name Removed For Privacy Reasons]

Eligibility for Compensation Upon Resignation

A person with one year of service who opts to resign is not eligible to claim any compensation from their employer. They are quitting of their own volition. Hence, there will be no employer's liability on this issue.

Circumstances for Compensation

Compensation arises only in the following circumstances:
- Retrenchment by the employer;
- Retirement on superannuation;
- Death of an employee while in service;
- Disablement due to an accident arising out of and in the course of employment.

The above cases are covered under the ID Act, WC Act, ESI Act, Gratuity Act, etc. You may refer to the relevant provisions in those laws.