Understanding Notice Pay Deductions, LTA, and Performance Bonus in Employment Disputes

Hi Tre,

I resigned from my earlier job without serving the notice period fully. As per the HR Manual available to me, the notice period was 15 days; however, my boss insists it was 30 days. In lieu of the notice period settlement, they deducted 10 days of my salary, my LTA for the whole year, and my performance bonus for the whole year, stating that since I was an unconfirmed employee (I left one month before my confirmation), I was not entitled to claim LTA and bonus. My expense reimbursement was also stopped by my previous employer, and instead, they have calculated an amount recoverable in lieu of the notice period from me. The only amount I received was my annual medical reimbursement received in advance.

My new company has exempted my relieving letter from my previous employer. My question is whether I am liable to pay the notice pay even when I have not received my LTA claim and performance bonus. Please guide me about the consequences if I do not pay the notice pay.

Regards,
Abhishek Sharma

Dear,

Your situation is tricky. Please demand from your previous employer the legal basis for your deduction. Prima facie, having given a benefit, they cannot take it back. Once you get the explanation, then you can decide on possible legal action. Firstly, they have to explain their deductions. If the reply is not satisfactory, then you have legal remedies.

With Regards,
V. Sounder Rajan

Dear All,

As the LTA is a part of your salary, the employer is not authorized to hold it, but the LTA amount is subject to tax. Also, if an employee is in the probation period, they need not pay the notice pay amount. This is the practice we follow in our organization.

Regards,
V. Arunkumar

Dear Sir,

I had asked for an explanation about the deduction of my LTA and performance bonus, as well as holding back of my expenses incurred by me. However, the explanation given by them is as follows:

1) Your notice period is 30 days (please refer to the email from Mr. Zubin Mody dated 26/09/2006 explaining the same).

2) Regarding LTA, as per HR policy, the employee becomes entitled to LTA after completing the probation period; hence, you are not eligible.

3) Regarding Performance Bonus (PB): it has not been declared by the bank for the FY 2006-2007 so far, and as per HR policy, the employee should be on the payroll on the date of declaration of PB to be eligible for the same.

4) Your pending expense statements shall be duly credited to your account after receiving the final settlement from your side.

5) Regarding PF balance: Required forms shall be sent to you along with your relieving letter once you settle your dues. You will have to return the completed forms to HR Dept. for organizing the transfer of your PF to your new PF account.

Please guide me on whether the explanation given by them has any legal basis or not, as the HR policy manual available with me does not mention any of the said details.

Regards,
Abhishek Sharma

The reply you got was technically correct. I have these points of view:

1. An employee becomes eligible for LTA only on completion of one year.
2. Regarding the notice period recoverable, please refer to what is written in your appointment letter. If it is 15 or 30 days, your company cannot demand more than what is given in writing.
3. It is a usual practice that other claims like conveyance, etc., are settled as part of the final settlement.

Thanks,
Bala

You have not clarified what notice period was mentioned in your letter of appointment. If it was 30 days, then the company will stick by it because it will say that the notice period of 15 days notified earlier in the HR manual has been amended. As far as LTA and bonus are concerned, if what the company says is correct, then you have no claim. Your pending expense statement should be cleared once the notice period pay issue has been sorted out and settled. They cannot hold back your PF accounts, and you should contact the PF authorities directly for transferring the same.

Jeroo

How long did you serve your previous employer? Is it less than one year, or have you completed one year of service?

SAKTI

Dear Mr. Rajan,

Could you please update me on how an employee can file a case for non-payment of salary when management has agreed via email without an offer letter?

Thank you,
Stru