Notice Period Pay Retrieval From Salary - Labour Department Issues?

Dear Friends,
One of my employee has resigned and he has been relieved on his request from his duties after serving 2 months notice period instead of 3 months. We have paid his salary for the 1st month during NP and 2nd month salary is not paid as he has not served the 3rd month NP and we want to compensate his salary for that.
What will be the consequences for this as the employee is saying that he complain to Department of Labour Relations.
Please assist me in this regard asap.
Regards,
Prasad.

Under Payment of Wages Act read along with Shops and Establishment Act, you need to pay him the wages within 7th of next month. Now you said you have allowed him to leave this means you have legally made remission o employee notice period. Hence you cannot sue for compensation.

Prasad, what needs to be looked into is that -
1. There was provision to relieve employee in the employment letter, with or without pay
2. The employee was not deprived of his right to compensation for the notice due to a non-compliance of your company policies
In your case it is evident that -
1. the employee resigned on his own and agreed to serve three month notice period
2. salary for month 1 was paid to him for the time he worked for your company
3. salary for month 2 is still not paid
4. salary for month 2 can be set off against the last month notice 'which the employee is not intending to serve'
It is important that condition, as I outlined in clause 4 above was agreed to with the employee and substantiated by a prima-facie evidence. If it was agreed then you are all set to set off of month 2 payable with month 3 notice. If there was no agreement, please release month 2 salary and move ahead with the recovery proceedings for notice period not served, i.e., month 3.
Best wishes.

Mr. Prasad
What is your Company HR Policy says?. Is the terms of employment speak about this? If so, you can recover balance NP amount from the final settlement or dues payable to the employee.
V.Murali

We being in the HR department have the power to analyze the right from wrong. If you have asked him to serve two months notice period and then you (read:company) decides to not pay him for one full month is such an unfair practice. We (read:Company) always end up making the "notice period" phase extremely difficult for an employee for no good reasons. He is very much right to sue the company for non payment of salary. Employees will always remember how you treated them in their notice period and pass it on, make sure it adds to the goodwill.