Employee on Unauthorized Leave Wants Dues: Can I Legally Withhold Payments?

Dear Seniors,

One of our employees has gone on unauthorized leave citing family problems. After a few days, he verbally stated that he would rejoin from next week. However, after the week passed, he called me saying that he doesn't want to continue working for our company. Nevertheless, he is also asking for his dues to be paid. Please guide me on how to handle this situation legally. Can I withhold his Full and Final settlement, PF, Bonus, etc.?

Thanks & Regards,
Raman

Dear Raman,

Your employee seems to be of a wavering type. So don't take serious note of his verbal communications. Ask him to report for duty forthwith. If he submits his resignation in writing and if you are willing, accept the resignation subject to his fulfilment of the notice period obligations, if any stipulated already. Otherwise, deduct the sums from his F&F other than gratuity.

Dear Umakanthan sir,

He is ready to submit his resignation without serving the notice period, but I don't want to accept his resignation nor pay his F&F inclusive bonus. Please clarify if it is legally valid to hold his F&F and bonus.

Thanks,

The doctrine of displeasure or discretion has no place in settling the statutory dues to an outgoing employee unless the exit is due to dismissal on the grounds of serious misconduct. Your annoyance might have been caused by his unauthorized absence followed by his proposed resignation without serving the notice period.

Terminal Benefits for a Resigning Employee

What would be the terminal benefits available to a resigning employee by way of Full and Final (F&F) settlement? These include gratuity, encashment of eligible leave if any at his credit, unpaid bonus for the previous accounting year, caution deposit if any made by him on his appointment, endorsement of the employer for foreclosing his Provident Fund (PF) account, and what else? Gratuity cannot be forfeited or withheld for resignation without acceptance. Even in the absence of the employer's endorsement, a subscriber can close his PF account. Only bonus and leave salary can be adjusted against his dues to the company but cannot be denied outrightly. So, better indicate to him firmly that his resignation would be accepted subject to the fulfillment of the exit clauses only.

Handling Employee Resignation and Dues

First, do not entertain any verbal communication. Since the employee is on authorized leave, you can initiate a domestic inquiry and take actions accordingly (it will be time-consuming as well as legally expensive).

Now, if the employee tenders resignation, you can accept it on the grounds that he must serve the notice period or pay the equivalent amount in lieu thereof. But you cannot reject his resignation straight away. Moreover, statutory dues cannot be withheld until the said employee has been terminated for some serious misconduct (again to prove misconduct, you have to hold an inquiry).