How Should I Handle an Employee Threatening to Quit Over a Security Deposit Rule?

Hi all, We are a medium-scale manufacturing company of engineering materials. One employee joined our organization on the 17th of July. At the time of his joining and during the induction program, I explained all the rules and regulations of the organization to him. Deductions like PF, PT, and a security deposit (Rs. 2000/-) were all mentioned in the induction program.

Now, at the time of salary processing, he is saying not to deduct the security deposit by telling me that he will leave if I deduct it. We hired him with long-term planning and offered him a handsome package. He is saying, "You are making rules from your home; I have worked in very good organizations where there were no rules like this."

Please advise me on what I should do. Should I let him go or change the organization's rule for one employee?

Hello,

I seek your senior's advice in this matter. Were the rules mentioned briefly in the offer letter? If the employee has signed the offer letter, he can't deny it now.

Dear Neeki, two things emerge from your post. One is about the security deposit, and the other is the refusal of the employee to pay this deposit.

Why take a security deposit?

The first question is, why would you like to take a security deposit? After all, Rs 2,000/- is not that great an amount. So why was the need felt to charge this small amount? What is achieved from this concept?

Communication about the security deposit

The second question is, when did you communicate to the employee about the security deposit? Was it before 17th July or after? Did you clarify the policy of the security deposit at the time of his selection? If yes, then he should not grumble about it.

What he says about charging a meager amount as a security deposit is true. This is a novel concept. Nevertheless, if this was communicated to him and if the rule was applied to all the employees, then he should not have any objection. I recommend you put your foot down. For the sake of one employee, rules need not be bent. Waiver of this condition could demotivate the employees who have paid the security deposit.

Possible underlying issues

I perceive the real issue to be different. I feel that he could be a little nervous about your organization's culture. Therefore, raising an objection against the security deposit and giving a threat to quit employment could be nothing but a maneuver to prepare the ground for his exit. Please look from this angle also. Of course, this is my perception and it may or may not be true.

Thanks,

Dinesh Divekar

Hi Vaishali, rules are not mentioned in the offer letter, but at the time of his joining on the 17th, I briefed him about all the rules. Also, we sent a soft copy of the employee handbook of our organization on the day of joining, and it was mentioned in it as well.

Hello Dinesh sir, deduction of a security deposit of Rs. 2000/- will occur every month, and the employee will receive Rs. 24000/- upon completion of a 1-year tenure. This decision was made by management and has been in practice for 3 years. This measure aims to prevent employee turnover and encourage employees to stay with the organization for at least one year.

All policies are detailed in the employee handbook of our organization, which I had emailed to him on the day of joining.

Today, I received news that he has secured another job, and due to that, he is raising these issues.

Now, the management has decided to terminate him with immediate effect.

Dear Neeki, If you are deducting Rs 2,000 per month, the average candidate is bound to raise objections. In fact, in your post, you did not clarify that deductions will recur for a year. Therefore, the issue arose due to incomplete communication or non-communication. Why did you not clarify the rules of employment before issuing the offer letter? You have complete freedom to design how to run a company, but job candidates also have the freedom to accept or reject those rules. Keeping job candidates in the dark and springing surprises after joining is bound to cause resistance.

Anyway, he wishes to discontinue employment; therefore, termination from your side does not have much bearing. However, as a lesson for the future, before issuing the offer letter, clarify to the candidate what their salary breakdown will be and what their take-home salary will be.

Thanks,

Dinesh Divekar

You are following a wrong HR policy. Rules and conditions should not be informed at the time of joining. They should be mailed to selected employees before joining or included in the offer letter so that they can decide whether or not to join your company before resigning from their earlier job.

Normally, a security deposit is collected from a new employee if their duties mainly involve cash handling. Therefore, I am not able to understand or appreciate the concept of collecting a security deposit in installments solely for the purpose of reducing employee retention for a specific period when the mutually agreed-upon rules of exit are in place.

Dear NEEKI MODI,

In my view, deduction towards security deposit from wages amounts to unauthorized deduction under the provisions of the Payment of Wages Act, 1936.

The Payment of Wages Act, 1936 applies to employees drawing wages up to Rs. 18,000 per month. You should have a fair policy to retain employees. Your policy is compelling the employee to stay with you, which is against their fundamental rights.

Thank you.

Company Policies and Legal Compliance

I fully agree with Mr. Keshav. You cannot have company policies that are out of tune with the law of the land.

There are some companies that make employees sign a bond for a certain amount, and if the employee leaves before the contractual period, then he/she is bound to pay the sum to the company. However, this occurs when you are providing specific training in certain skills to the employee and want to retain them so that you can recover the training costs.

If challenged in court, your company policy is bound to receive an adverse judgment as it amounts to unfair practices and can be termed as "Bonded Labour."

Regards, Anil Raina

[Phone Number Removed For Privacy-Reasons]

Dear professional colleague,

The policy of deducting Rs 2000/- towards a security deposit every month and returning the same after completion of one year as a retention measure can be debatable. Let us not question the wisdom of the policymakers as the same appears to have been successfully practiced for the past three years. The real question is whether the company has the system of communicating the same well before accepting the offer or not. In the instant case, the company had informed this policy, and the candidate had accepted the same at the time of accepting/joining. Therefore, his turnaround is unacceptable, and the company's action of termination is justified.

The question of legality, like whether the Payment of Wages Act is applicable or whether it is an unauthorized deduction, will differ from individual to individual and can be examined, but to jump to a conclusion will not be appropriate.

Similarly, the view that HR should raise a voice against the policy by putting his foot down is impractical and unwise, particularly when the same has worked well except for the instant employee.

Regards,
V.L. Nagarkar
HR Consultant