Is It Legal to Hold an Employee's Full Salary During a 3-Month Notice Period?

Hi All, If an employee is serving a 3-month notice period, then as per the company policy, the full and final settlement will be done only on the last working day, which includes three months' salary. Is it legal to hold an employee's full salary for 3 months during the notice period?

Thanks,

Sumathi PK

Legal Requirements for Salary Payment and Settlement

It is not legal to hold the salary for 3 months; the monthly salary has to be paid within 7 working days from the last date of the month. The Full and Final Settlement (FNF) has to be settled within 30 days from the last working day, including salary and other components like PL encashment, Gratuity, etc.

In the case of termination by the employer, the salary has to be paid within 24 hours of termination, and the FNF has to be settled within 3 working days.

My question to you is, what legal action can one take if the employer refuses to pay the last salary of an employee after terminating the service on a performance basis?

Thank you,

AK

Salary is the birthright of an employee for their service towards the organization. They cannot be deprived of this basic right. However, you can seek assistance from the Retired Additional Commissioner of Labour, Mr. Umakantah M.

Warm regards,
Pranab Chaklraborty
[Phone Number Removed For Privacy Reasons]

Thank you for the reply.

It is not legal to hold the salary for 3 months. Salary is a birthright, but still, companies execute these policies. It is hard for people to serve a 3-month notice period without salary, especially when the family is totally dependent on one person's salary and has commitments like housing loans, car loans, etc.

Holding the salary for 3 months is to avoid employee resignations, which is a wrong HR policy execution. If a company has the right to terminate an employee, then the employee has all the rights to resign.

It is definitely illegal, an action against humanity, against employee basic rights, and wrong employer ethics.

Thanks,
Sumathi P K

Thank you for the reply. It is not legal to hold the salary for 3 months. Salary is a birthright, but still, companies are implementing these policies. It is hard for people to serve a 3-month notice period without salary, especially when the family is entirely dependent on one person's salary and has commitments like housing loans, car loans, etc.

Holding the salary for 3 months is to discourage employee resignations, which is a wrong HR policy execution. If a company has the right to terminate an employee, then the employee has all the rights to resign. It is definitely illegal, an action against humanity, against employee basic rights, and wrong employer ethics.

Unprofessional companies execute this type of policy, i.e., holding the salary to avoid resignations. This shows that the company does not have an employee databank, and the environment is such that candidates do not prefer to join these types of companies.

You can approach the HR and the top management to release the salary, or else you will be forced to go legal, which is the last resort.

Thanks,
Sumathi P K