Are Companies Required to Pay Full and Final Salary to Absconded or Terminated Employees?

Hi, please let me know if any company is liable to pay Full and Final (F&F) salary to an employee who has absconded or been terminated by the company with immediate effect.

Regards,
Hetal

Company Liability for Full and Final Settlement

The company is liable to settle the Full and Final (F&F) settlement if the employee is terminated. The F&F includes whatever is due to the employee, so it has to be cleared. For absconding employees, the F&F can be settled once the employee clears the notice period pay, etc.

Regards,
Gia

Thank you so much for your quick reply. But what if employees do not clear the notice period? In that case, is the company eligible to settle F&F?

The employer is liable to clear all the dues of the employee, whether the service is terminated by the employee or the employer. If an employee is absconding, then deduct the notice pay mentioned in the employment contract and then release the payment. The employer cannot hold the payment of employees.

Hope this helps you.

Regards

Hi, I agree with the inputs suggested by Abedeen. Just to add, in the case of involuntary separation (termination), the company may have to settle the notice pay if the employee is confirmed, regardless of the reason for termination.

- Gia

If it is termination, then clear the F&F as per procedure and make the payment of notice pay. If the person has been absconding, then deduct the notice period and check if he can continue in the role or not.

Regards,
Ashutosh Thakre

I feel that if the company clears all the dues of the employee, whether the service is terminated by the employee or employer, and it deducts only the notice pay amount from absconded employees, it would definitely send a negative message to all other employees who work in the same organization. It may imply that an employee can leave at any time they wish, even without following the company's policy.

HR personnel will not be able to identify the reasons why people have left. Employees may start thinking, "Why should I follow the company's exit policy when it does not seem to make any difference?"

Regards,
M. Kannan

Your query pertains to termination by the employer with immediate effect. In this case, full and final settlement should be cleared within one business day from the date of separation. If the termination is due to a breach of the code of conduct, bribery, solicitation, discriminatory harassment, etc., then it may be delayed due to legal implications.

Thank you.

Full and Final Settlement for Terminated or Absconding Employees

If the company terminates an employee, then the company has to process the Full and Final settlement (F&F). They have to pay the salary for the period the person has worked and the notice period salary as mentioned in the Appointment letter. However, if the termination is due to disciplinary issues or a breach of the code, as mentioned by Mr. Mahesh, the company may only pay the salary for the period worked and not the notice salary, depending on the terms and conditions outlined in the HR policy.

Handling Absconding Employees

In the case of a person absconding, the company is not liable to pay the notice period salary, and the company can take action against the candidate for not serving the notice period. As pointed out by Mr. Kannan, I agree with his view. If a person absconds, then HR cannot process the F&F, and the company must take action as per their policy. Usually, the company does not need to pay anything to an absconding employee. Even if a candidate has a one-month notice period and absconds before receiving the salary for the last month worked, the company is not obliged to pay anything to the employee.

Nowadays, most companies have a notice period of 2-3 months, and in such cases, the only scenario where the company might have to pay the absconding employee is if the company had not paid the salary for the last few months and the employee's salary with the company exceeds the notice period salary.

Regards,
Neeraj

Voluntary Abandonment vs. Termination

1. Voluntary abandonment of employment and termination are not synonymous.

2. Regardless of the nature of separation, settlement of final dues is a must.

3. Depending upon the terms of employment, recovery of pay in lieu of the shortfall in notice pay is possible in voluntary abandonment.

4. Likewise, the payment of notice pay in the case of termination (besides other legal prerequisites of termination).

Handover and Exit Formalities

5. Completion of handover/exit formalities can be a precondition to the F&F settlement. But this must be communicated to the exiting employee and not assumed. You can hold the settlement until this is fulfilled (subject to provisions of unclaimed dues under the Labor Welfare Fund Act of your state, if applicable). However, your intention to settle must be communicated.

6. If dues are payable by the employee, you will have to demand the same.

Cheers

Terminated and absconded employees are also eligible for F&F settlement by the employer. However, it will take some time to get a final conclusion from authorized officials. Moreover, if the terminated or absconded employee personally meets them and requests for relieving, it can have a positive impact, and they will try to be in your favor if the management has strongly decided to let you go from the company.

If the employee absconded for any reason, the company is liable to settle all pending amounts. If the employee is terminated due to disciplinary action, the company should provide an extra one/two/three months' salary based on their designations.

Thank you.