Can We Legally Include These Terms in Our HR Policy Under Delhi Shops & Establishment Act?

Dear Concerned,

Our company falls under the Delhi Shops & Establishment Act. Please guide us on whether we can include the following points in the company HR policy and distribute them among employees:

1. All remaining leaves of employees will be frozen, and they will not be able to take any leave during the notice period. (Earned leave will be paid out at the time of full and final settlement.)
2. The full and final settlement will occur within 30 days of an employee's last working day. This settlement will include a Relieving Letter cum Experience Letter and the final settlement check.
3. The company reserves the right to withhold salary, gratuity, ex-gratia/bonus, and leave encashment (if applicable) if an employee fails to submit the No Dues/Handover form.

Your input and guidance are highly appreciated.

Thanks,
Deepti

During the notice period, the employee is not entitled to any kind of leave. However, in exceptional cases such as the death of a kin, leave will be allowed, provided the organization has the right to extend the notice period equal to the leave taken.

All financial settlements will be finalized within 30 days from the date of relief from service. Payment will be made by cheque; no cash payments will be issued.

Salary, gratuity, and leave encashment will be withheld by the company until the final clearance from the relevant department. If any embezzlement or financial loss is found, deductions will be made from the employee's payments. The employee must obtain a clearance/no dues form from the department and submit it for processing the final financial benefits, which is the responsibility of the employee.

Regarding the salary certificate and service certificate, these may be issued to the employee upon completion of the notice period, as they are important for the employee's future progress. No obstacles should be placed on these matters.

Please let me know if you need any further assistance.

Regards

Ms. Yadav,

Would you please clarify on which points of merit the proposals of Ms. Drishti/Deepti have been considered genuine and valid?

Dear Dipti,

I have a different opinion regarding the first point. All balance leaves of employees will be frozen, and he/she cannot avail any leave during the notice period. (EL will be encashed at the time of full & final)

Comments: Just because someone is on the notice period cannot be grounds to deny leave. Whether to approve leave or not is at the discretion of the HOD. Let him/her exercise this discretion.

Thanks,

Dinesh Divekar

With regards to your thread, please refer to the view in Bold Capital:

1) All balance leaves of employees will be frozen, and he/she cannot avail any leave during the notice period. (EL will be encashed at the time of full & final) CL/SL CANNOT BE DENIED

2) The full and final settlement shall take place within 30 days of the last working day of an employee. It includes a Relieving letter cum Experience letter and full and final settlement cheque. THE SALARY HAS TO BE RELEASED WITHIN 7 DAYS FROM THE LAST WORKING DATE. WITH REGARDS TO EXPERIENCE/RELIEVING LETTER, IT HAS TO BE HANDED OVER WITHIN 3 WORKING DAYS AS IT IS MANDATORY FOR THE FUTURE EMPLOYER

3) The company has the right to withhold the salary, gratuity, ex-gratia/bonus, and leave encashment (if applicable) in case the employee does not submit the No dues/Handover form. GRATUITY CANNOT BE WITHHELD

Dear All,

First of all, my name is Deepti. I have 4 years of experience in HR, mainly in recruitment. Thank you for your inputs.

These points are mentioned in our separation policy. One of the newly appointed legal persons in our organization has raised the question that such things cannot be mentioned in the company policy according to legal aspects.

I just wanted to know if he is right. Should we consider changing this, or should only the language be adjusted? The organization is a private limited company.

Regards,
Deepti

There is nothing wrong with mentioning these things in your policy or including them in your standing orders. All companies have this "no leave during notice period" rule, which is definitely valid. The company can always use its discretionary powers to grant leave when it is genuinely required. The policy, as such, is right and good.

30 days' time for full and final settlement is okay, except that the salary for days worked needs to be given within 2 days of the last working day. (Check the Delhi Shop Act and rules as they may have a longer period—perhaps 7 days). The rest of the money can be given in 30 days. You can withhold payment if the person does not complete exit formalities, including clearing of dues.

However, as Saji says, withholding gratuity may not be an option, as there are specific rules about its payment.

Remember, though, if you do not pay these dues for any reason, you are required to put it (net of any dues to your company) in the unpaid wages register and hand the money over to the labor welfare fund at the end of 3 years.