How Should We Handle a Dispute Over Full and Final Settlement with a Former Employee?

Issue with Full and Final Settlement

We are facing an issue related to the full and final settlement with an employee in my company. Please advise on the best course of action for the situation described below.

I have been working as HR for this company for four months. Here are the concerns:

The company hired a Business Development Manager in July 2015, who resigned in May 2016. We had performance issues, and after a meeting, we mutually agreed to part ways. She documented the meeting via email, stating that her services were no longer required and asked for a settlement date. The Director responded that it would be done as per policy and advised her to resign as discussed. She then resigned via email. Due to her negative attitude, the company asked her not to come to the office after the handover. We agreed on a settlement amount, including incentives after client payments, and asked her to hand over the client data.

During the notice period, she emailed the Director requesting a day off for an interview and then stopped coming to the office. Later, she claimed she was forced to resign and should be treated as terminated. We emailed her about the handover, but she delayed the process with excuses. She still has company assets, which she acknowledged in conversations, promising a return date that she never met.

She only sent an Excel sheet and did not introduce us to any clients, instead informing them directly of her exit. Now, she is framing it as a harassment issue in her emails. She has sent lengthy emails blaming the company for her performance and resignation. Each email states that the correspondence is made without prejudice, legal rights, and contentions of the issues under reference.

Surprisingly, we have never withheld her full and final settlement. We have contacted her numerous times, but she has not responded. Now, she is demanding more money, claiming her contributions brought many projects to the company and wants incentives. Previously, she verbally admitted to not contributing, but now she denies it.

Please suggest a course of action.

Also, please recommend a lawyer experienced in handling such cases. The company is registered in Delhi.

Regards,

Handling the Return of Company Assets

Send her a letter by speed post asking for the return of company assets. List the items in her custody and provide a date by which they should be returned. Work out her Full and Final (FnF) amount as per the agreement and keep it ready for dispatch upon the return of the company items. It has not yet become a legal case. Most of your dealings have been via email (not that email is invalid), but a record of delivery will be easy to verify for physical letters.

Addressing Harassment Claims

Don't bother about her claims of harassment. Does she specify who harassed her? The harassment issue has come up only after leaving the company and without returning the company items. Keep a copy of all emails readily available in case you have to make it legal. I do hope her performance review meeting was documented and submitted to the next higher authorities in the chain for remarks. Decline to pay the incentive if her poor performance was documented. Do not delay taking up the issue. Stick to the point while writing and provide clear deadlines for the return and the amount that will be paid for FnF.

Regards,
[Username]

Dear Shivani,

It looks like she is receiving some legal guidance on her plan of action. Hence, please consult a lawyer first and then start responding to her. Her harassment claim would strengthen if you make even one single wrong move. This is no longer an HR issue but should rather be dealt with by a Corporate Lawyer. Which city are you based in? You need someone from the same city.

Looking forward to hearing from you!

Thank you for your replies. Regarding her performance, the company has sent numerous emails in the past addressing her poor performance. Unfortunately, we do not have any physical letters documenting this.

We asked her to come to the office. She arrived with two individuals, claiming they were her brother and friend. However, I suspect she was accompanied by her legal lawyer but did not disclose this information.

As my Managing Director (MD) was absent due to an emergency, the meeting was rescheduled. Following this, my boss emailed her about collecting the full and final cheque (noting that the incentive amount was mutually agreed upon).

After the meeting, she emailed us the total amount for her full and final settlement, which is double the amount stipulated by the company. I am unsure about the next steps in this situation.

(Regarding the location), we are based in Delhi.

Regards, Shivani

Dear Shivani,

When you scheduled a meeting with her, did you have your lawyer on board? Did your corporate lawyer attend the meeting? What she is doing is foolproof. Please get a lawyer on board. I suggest you connect with Mr. P.S. Dhingra. He has been contributing to this community.

Steps to Handle Employee Termination and Settlement Issues

First, you need to collate all documentary evidence regarding her work, clients referred, incentives authorized and paid, emails, and any other relevant documents.

Secondly, list out company assets and her acknowledgment of receiving these assets—such as a laptop, including the serial number, make, date of issue, and her receipt for the item, etc.

Pay her strictly according to company norms. Kindly check her appointment order to confirm.

List any dues, such as items or any money of the company that needs to be repaid.

List documents showing her work performance.

The concerned employee has acknowledged after a meeting that she wanted a date for leaving/exit.

Be aware that she is consulting a lawyer.

You should also consult a lawyer and note that Shri Dhingra can be contacted.

When people try to convert a normal termination case into a harassment case, be confident that she is on the losing side (unless she was genuinely harassed).

No company is obligated to keep an employee who is not delivering.

All you need is evidence, documents, and proof that the company tried to advise her and gave her a chance for improvement.

Insist on the immediate return of company assets.

Do not be intimidated by the ex-employee and her lawyer.

Sometimes, the act of bringing a lawyer is just an empty threat.

No judge will reprimand an organization that is following rules and treating employees fairly.

Do not concede and accept a higher full and final settlement than what is justified by claiming more client referrals than what is documented.

Regards

Legal Implications of Employee Termination

Definitely, she is getting legal help and, fortunately or unfortunately, she is moving in the right direction. A company can either terminate the employee, or the employee can resign from the service at their own will.

In your case, it seems that you have asked her to resign (which is documented in the mail), which is problematic in law and amounts to illegal termination. If you wish to terminate the service for some misconduct (even for low productivity), then you have to give her the opportunity to increase her productivity (communication through email is not an issue). However, before terminating on any charges (even if it is low productivity), it is essential to issue a charge sheet, conduct an inquiry, and prove the charges.

Since she is getting professional legal help, it is essential, as mentioned by other members, to seek advice from a lawyer before taking any step. A wrong move can go against you in a very bad way.

Check my labor law blog at www.labourlawhub.com

Regards