When Should We Pay an Employee's Last Salary After Resignation? Seeking Legal and Practical Advice

Dear Seniors, If an employee resigns from the organization, when are we required to pay his last month's salary? Will it be along with the full and final settlement, or shall we process his salary and hold back only the F&F? Is there any legal obligation regarding this?

For example, an employee has resigned on the 9th of March and is expected to work until the 8th of April (considering a one-month notice period). However, the employee has decided to leave the organization on the 31st of March.

Normally, we would have processed and paid his March salary in March, and the salary for April would have been paid along with the Full and Final settlement. There wouldn't have been any issue. Now, since the employee is leaving the organization, should we pay the March salary first and then the F&F in April? The only deductions in our case are the accumulated Privilege leave.

Our salary cut-off is on the 25th of each month, assuming the employee is present until the last day of each month. Salaries are credited to the employee accounts on the 27th/28th of the respective months.

A prompt response would be highly appreciated.

Thank you in advance,

Regards, Prema Saldanha Indeus Life Sciences

It depends on your company policy. In this specific case, if you have released the salary till 25th March, you can hold the rest of the salary and pay it at the time of Full & Final (F&F) settlement. The F&F process time can be defined by senior management as per their convenience, but the standard time for F&F is 30 days. Additionally, you may recover the amount from the employee if their notice period ends on 8th April. If you agree with their relieving/last working day, then there is no need to recover.

I hope this helps clarify the process. Thank you.

Sincerely,
Regards