Is It Legal for My Company to Withhold Salary Over Notice Period Dispute? Seeking Advice

Dear Members, I have resigned from my present firm due to personal reasons and gave them 30 days' notice. According to the agreement I signed, they have stated the mandatory notice period as 90 days. Based on this, I proposed taking a 1-month notice period and a 2-month buyout (as mentioned in the agreement - 3 months' notice or 3 months' salary).

However, they have rejected this option and have withheld my salary, claiming it will be adjusted in the Full and Final settlement. Despite my requests to release my salary or adjust it in the buyout, they are refusing to do so.

Informally, they have threatened me that if I don't serve the mandatory notice period, they will cause issues with my paperwork. I have not been paid for 2 months now.

Legal Concerns and Options

Is it lawful for them to withhold my salary for such an extended period? What options do I have as it's becoming increasingly challenging to continue working in this environment?

I would appreciate any suggestions or advice.

Thank you,
Alka

Understanding Employment Terms and Buyout Options

You need to go through the terms of employment stated in your appointment letter and in the standing orders (if applicable) or in the HR Manual/Employee Handbook (if there are no standing orders).

It is not necessary that the management will agree to a buyout unless it is stated as mandatory in the terms of employment. They can refuse to agree to a buyout. Since you have apparently stopped attending the office after 30 days without approval and without a handover/relieving, they are within their rights to withhold your salary. There is no law that will compel them to pay this amount where you have absconded and not completed your notice period.

They are also free to refuse a relieving letter and to give negative feedback during a background/reference check in the future. So it is always better to have a clean and mutually agreeable separation.

Regards

As per the terms of your agreement, it is optional either to serve or to pay. That will always be in your favor. However, it could be that after the agreement made with you, the company may have changed their notice policy, and you will have to comply with the new policy.

Options to Consider

In this case, you have two options:

1. Try to negotiate with your current employer to obtain the relieving letter by completing a proper handover and submitting compensation for the remaining unserved notice period.
2. Communicate with your next employer well in advance that until you serve the 90 days notice period, your current employer will not provide a relieving letter and may withhold your full and final settlement (legally, they cannot withhold it) and could also provide inaccurate feedback during reference checks.