Can My Employer Deduct Notice from Gross Salary? Seeking Advice on F&F Settlement Delay

My appointment letter states 90 days' salary in lieu of notice in the event of resignation. In case of illness, the employer can terminate by providing the base salary. In case of misconduct, the employer can terminate without giving notice or base salary.

Question Regarding Notice Recovery

The question is: Can the employer recover the notice on the gross salary, even though gross is not mentioned in the letter, and I am not accepting this? There is also a delay in my Full and Final (F&F) settlement due to this. Can I send a legal notice because of this?

Please advise.

Thanks in anticipation.

Legality of Notice Period in Employment Contracts

The legality of the notice period in the contract of employment depends on the status of the employee. If you were in a managerial capacity (not merely due to your designation but based on the functions you have been discharging), you will have to follow the terms of the contract. Therefore, before proceeding, we should know your functional responsibilities. However, putting different interpretations for salary in the contract will make the contract weak.

Regards,
Madhu.T.K

Notice Period Buyout and Legal Implications

Notice period buyout is generally on a gross basis. That is the general practice. In this case, the base salary is specifically mentioned in the case of illness. The assumption is that it is gross in other cases. Obviously, if the letter specifies a particular condition and you have accepted it, then it applies to you and has a legal binding effect.

On what basis will you send a legal notice? If you do, the company will simply hand it over to their lawyers and not bother to give your F&F. Lawyers will take their own sweet time and will find hundreds of ways to deny your claim.

Regards

Whatever clauses are mentioned in the appointment letter were given to you well in advance, i.e., at the time of joining the company, and you must have accepted the terms by duly signing them. You did not raise your voice at that time or clarify or rectify the clauses of the appointment letter. Now, as you are leaving the company, you are raising concerns.

As mentioned by Banerjee, even if you take legal steps, the judgment will take its own due course of time, and you will be held up until then. The choice is yours.

Regards.

Compliance with Laws and Grievance Filing

Laws are for compliance, and if we take them lightly, saying it will take a long time to find a solution, we will not find one. If we settle simply on the time factors involved in litigation, then why should there be law?

In my opinion, based on the facts, the employee should file their grievance before the competent authority. First, by approaching the HR/IR department of the company, and then by representing before the conciliation machinery. The primary thing to determine is whether the employee was working in a managerial capacity or not. In the latter case, the Industrial Disputes Act will supersede the contract of employment.

Regards,
Madhu.T.K

I was working as an Assistant Manager in the role of bill verification for our contractors in a construction company. I filed my grievance with the HR department, but they are insisting on gross misconduct. In my opinion, in the event of termination due to misconduct, the company will not provide me with notice or base salary. Therefore, based on this clause, it is clear that if termination occurs without reason, they will provide notice or base salary. Thus, if they offer base salary upon termination, my recovery will also be based on the base salary due to equality laws.

Please advise.

Regards,
Robin

Termination Clause and Base Salary

This is also mentioned that in the event of termination for misconduct, the company will not give me notice or base salary. From this clause, it is clear that if termination is done without reason, they will give notice or base salary. Therefore, if they give base salary on termination, my recovery will also be based on the base salary due to equality law.

Please advise...

Regards, Robin.

Understanding Employment Termination and Notice Pay

Actually, equality in law is a fiction and rarely happens. The doctrine of natural justice does not cover it either. From what you have been told (access to the original letter would help, but it is not advisable on an open forum), they have stated that in the event of resignation, you have to provide notice or receive salary in lieu of notice pay. In the case of termination in the normal course, salary for the notice period is applicable, and in the case of termination due to sickness, they will pay the base salary only (note, it's not basic + DA). In the event of termination for misconduct, no salary or notice pay is payable. Therefore, the salary at the base pay only applies in the case of termination due to sickness. In all other cases, it will be at the gross pay rate. At least that's how I interpret it based on the limited data available.

In this case, no appeal is available to you as there is no governing law. Therefore, you may have to agree with what the HR department says and complete your exit formalities.

Termination on Grounds of Misconduct

The question of termination on the grounds of misconduct does not arise because such termination is not maintainable if it is done without conducting an inquiry. Moreover, since you have resigned, the matter cannot be otherwise. Here, the contradiction is that from the employer's part, it is basic salary and from the employees' part, it is gross. This interpretation is invalid and cannot be accepted. One should have accepted the offer at the time of joining a company, but if the terms of the offer or contract itself are found to be wrong at a later stage, it can be challenged.

Role of an Assistant Manager

An Assistant Manager, having been given functional rights of supervising the work of others, will not come under the purview of the Industrial Disputes (ID) Act. However, if the designation is only a fancy one, and at the same time, the employee does not have any managerial powers such as the authority to sanction leave for subordinates, conduct performance appraisals, or initiate disciplinary actions, then they will come under the definition of a workman as per the ID Act. In this case, the situation will be different, and the contract of employment cannot be taken as the primary document showing the relation between the employer and the employee.

Regards,
Madhu.T.K