Employee Resigned Immediately and Ignored Us: How Do I Handle Payroll and Compliance?

Dear Members of this community,

We have come across a problem that I have no idea about. One of our employees joined us on 22nd August 2016 and left on 31st August 2016 after submitting a resignation with immediate effect. He did so even before we could give him the appointment letter and get it signed. So technically, when he resigned, he was not supposed to give us any notice period, as the letter we had given him before his joining was only an offer letter where no exit clause was mentioned.

We replied back that we need some documents and NOC in order to process his full and final settlement, and we have to give him the salary for those working days. However, since he didn't sign the appointment letter, he doesn't need to give us anything (because the notice period in lieu of clause was mentioned in the appointment letter, which was not signed).

But the problem is he didn't comply. He didn't submit any document even though he was supposed to receive money. He didn't reply to any of our emails.

We calculated his dues and even sent him the Form 16 in June this year and remitted the PF (though after 4 months).

Now the problem is all along I was not involved in this mess, and all of a sudden, I'm told to take care of this issue. He is still on our payroll.

Please tell me how long we need to carry him on the payroll. Is there any guideline for the same? I just want to strike him off as it's been a year now, but how do I do it? What records do I have to maintain? His file is still open - please tell me how to close it? His name is showing in our payroll, but we are not uploading his name in EPF-ECR, mentioned gross wages zero - I think we should have done that; otherwise, the number of active employees in payroll is not matching with the number of employees for whom we are uploading ECR. Will this be an issue when the EPF inspector comes?

Since I have no clue about this case, I just want to sort this out and get rid of this amicably. Please suggest.

I need your expert views on how to handle this situation.

As I'm very new in my job profile, and I'm sure a few of my seniors visit this community quite often, I prefer to make my post anonymous if that doesn't irritate you.

Regards,

Management's Responsibility in Appointment Process

In the first place, the management ought not to have permitted the prospective appointee to join duty without issuing him an appointment order just on the basis of the offer letter. At least, a formal appointment order stipulating exit conditions, if any, should have been served on him soon after his joining.

Implications of Employment Without Appointment Order

However, his stay in the organization for 10 days without an appointment order cannot nullify the fact of his employment, which subsequently got terminated by his resignation with immediate effect. Also, the contract of employment between the parties thus subsisted without any conditions and so got unilaterally terminated by the employee. Then, why should the management withhold his salary for his duty period on the pretext of preparing his F and F, which comprises nothing other than his due salary and call for certain documents?

EPF Contribution Concerns

Contribution to EPF is based only on employment and the earnings out of it. When the employment came to cessation by resignation with immediate effect, why should his name continue to be shown in the payroll? When the EPF contribution for the earnings of the resigned individual was remitted already, how can any EPF authority insist upon further contribution just because of the inadvertent act of showing his name on the payroll?

Resolution and Closure

Since the unconditional contract of employment was already over, take immediate steps to disburse his duty salary and close the matter with the approval of the CEO.

Dear Sir, As per our company rule, even if someone works for a single day to complete their full and final settlement, they need to submit some documents—basically, some NOCs from different departments. This gentleman didn't submit any of these. However, to calculate his salary and submit the TDS, we had to collect the NOCs internally and calculated the amount payable. Subsequently, we had already issued him the Form 16 even though he was not paid as the amount is still "Payable" in our system. I can't comment on why we have such a rule as this is the prevalent rule of our organization.

And thus, since the file is still open, his name is still on the payroll. I also failed to understand how we are showing him as one of our employees in the payroll system just on the pretext of "F and F pending due to employee non-initiation" when he had resigned, and we had accepted that. As per my understanding, the relationship ended long ago. Still, we are showing him as our employee, and we are carrying his name internally.

Very recently, this case was handed over to me, and the first question I raised was this only. The second question that I raised was we showed his salary accrued in the month of August 2016 and declared accordingly in the IT department. On the other hand, we had remitted the EPF amount in December with other employees in December wages (Not as arrears). I think it's a glaring mistake done by our internal system.

However, going to the CEO is not possible in such a huge organization, and I have already tried talking to the VP-HR, and she refused to give me the required approval to strike off his name. That leads to one option only—the employee cooperates after a year of leaving the organization, we pay him, and we strike him off the system EXCEPT you all suggest me something different.

Please bear with me as I'm very new to this profession and in such a huge organization, I found nobody is interested to own up this case. Therefore, I am given the responsibility with no armor at all at my disposal.

Please tell me one thing: can we strike his name off the payroll system marking "F and F pending due to employee non-cooperation"? Is that legally possible and also from the organizational HR point of view?

Thank you in anticipation.

I can understand your precarious position very well. Rules are man-made, as are the procedures for effectively implementing the rules that have been established. When a specific rule becomes unimplementable due to a lack of initial compliance with the basic procedures associated with it, there is no use in pursuing other supplementary procedures. An employee who intends to or is permitted to leave the organization must submit No Objection Certificates (NOCs) or No Due Certificates from other sections/departments within the same organization to receive their Full and Final settlement (F&F). In your case, the employee departed from the organization permanently over a year ago after a brief 10-day stay. How can you now demand that they return to obtain NOCs from internal departments for F&F clearance? Can't the HR department collect these directly from the respective departments now?

I am unsure why the VP-HR is acting in this manner—whether out of ignorance or a tendency to pass the buck. In such a situation, here is a suggestion: write to the former employee requesting the necessary NOCs to facilitate their F&F settlement, and concurrently issue a circular to the relevant departments to confirm if there are any outstanding dues, whether material or financial, from the employee. Following this, you may proceed to remove the employee from the payroll with the notation "Resigned and settled accounts."

Thank you for your understanding. We have already collected NOCs from different departments internally. Only after this, we calculated the payable salary and issued a Form 16 to him.

While we have gathered the necessary documents, the issue lies in the fact that he has not sent us those documents. This is why he remains on our payroll. The primary concern is our reluctance to pay him and settle his dues until he submits the required documents himself. Conversely, we are prepared to compensate him. Unfortunately, I am struggling to comprehend the rationale behind this stance.

Given that we have already internally obtained the documents, may I propose to my superiors to withhold his dues and remove him from the payroll?

Dear Friend, it seems from the description of the matter that the whole issue was due to your management. The appointment terms should be considered without "Notice Pay" in this instance. When the employee had already tendered his resignation and is not continuing the job, it means the concerned individual abandoned his service voluntarily as he was not bound by any terms of your organization. You could have removed the name from the roll broadly from the date of resignation.

Mr. Umakanthan has rightly suggested ending the matter by releasing payment for 8-10 days as per his attendance in the muster roll. The employee is not bound by any of your organizational rules, as he was enrolled and performed work without any conditions until his resignation date of 31.08.2016. Your organization is liable for payment of wages for not disbursing wages for the period of work until now. The contribution to EPF for 8-10 days, as the case may be, for the month of August 2016, not for any other period, since the particular employee did not have any earnings.

It would be wiser to close the chapter as early as possible with a note of approval from the head of your organization.

Importance of Appointment Orders

It's very strange that the employee joined without the appointment order. This indicates that the basic document was not prepared, which lays down the ground rules of the employer-employee relationship. Please put the proper process in place so that no employee joins without this basic document.

Completing Employee Formalities

Please call the employee to complete the formalities. Keep documents ready so that he does not feel any difficulty in completing the process and goes out as your brand ambassador.

Warm regards,
Bharat Gera
HR Consultant

Well, as I see it, he has ceased to be an employee in the organization, so you can process the F&F. The said amount, after calculations, can be set aside by the accounts department in their books. You can write off the employee from the list of employees.

As you have already made the payments, the PF will have no issues. Also, as till now his salary was basically zero, there are no issues with PF.

The employee, if he wanted that 10 days of salary, would have requested it ages ago. It has already been a year now. So just park the amount as pending F&F in the accounts department and close the case.

Regards,

Unfortunately, I have suggested that, but I am told to wait. I don't know what they are waiting for. It seems we are still waiting for that employee to send those documents in order to complete the F&F.

In fact, I have inquired and came to know that the name of this employee is still present in the list of active employees on our EPFO page. This means he's present in our payroll; as per EPFO, he's still working with us. My only concern is why we are carrying his name for so long. When I asked this question, I was told the employee submitted his resignation, but we asked for some documents to complete the full and final settlement, so technically, he is still our employee. However, what I fail to understand is how he could still be our employee when he worked for 10 days without signing any appointment letter and then submitted his resignation with immediate effect a year back.

My line manager also informed me that he didn't comply with the exit procedure set by the company, so he's still considered our employee. However, since we didn't get his signature on any document, such as the appointment letter where the exit clause was mentioned, he was not bound to follow any of our company policies. He came, worked for 10 days, and left after resigning.

I have outlined the entire issue. Can some revered HR practitioner guide me on his employability with us? Is he still our employee? If yes, what should I do right now? I was under the impression that he is not our employee anymore, but my organization holds the view that he's still our employee.

Please suggest.

Handling Employee Resignation Without a Formal Appointment

An employee was permitted to work without a formal appointment order in writing, and he left the job suddenly after 10 days by submitting his formal resignation with immediate effect. Afterwards, he did not return to work, and practically, he is not in your service, which you have also admitted. In order to formally accept his resignation and finalize the full settlement of his accounts, including the payment of 10 days' duty salary, you gave him some instructions which have not yet been complied with by him. Meanwhile, you deducted the proportionate EPF contributions from his duty salary, though it is undisbursed and remitted to the EPFO. You have also ascertained that he had no dues to the organization from other internal departments and collected the NOCs from them on your own. Now, your management insists that he should come to your office in person and affix his countersignature on those NOCs to receive his unpaid salary.

All the members responding to your post, including myself, have clearly stated that (1) you cannot insist on the exit conditions now when you failed to furnish them formally to him by means of a written appointment order, (2) the question of paying further contributions to the EPFO does not arise as the individual had not earned any salary after his resignation, though his name is still continued in the payroll, and (3) to keep his duty salary on hold after finally informing the ex-employee about formalities to be complied with by him in order to get his duty salary and close the matter therewith if he fails to do so.

What else do you and your management expect to be suggested more? I am constrained to state that your repeated follow-ups are only indicative of your wanton refusal to understand the import of our suggestions, simply based on the rigid rules of your organization and your blatant failure to follow them at the very outset for obvious reasons. Therefore, if you are magnanimous, immediately release the payment treating this as a special case. On the contrary, if your management is very pedantic, inform the ex-employee that his salary would not be disbursed unless and until he complies with the exit formalities. Wait for some time, and if there is no response, remit the amount of salary into the unclaimed amounts A/C of the State Labour Welfare Board, remove his name from the payroll, and close the file. If he institutes any case in the future, face it legally.

Sorry, sir, I understood it. I have talked to the concerned ex-employee over the phone yesterday, and he told me he doesn't want any money; he only wants us not to follow him up anymore. Since no one in my company is cooperating with me regarding this case, I should park this case for now, I believe. I'm not rigid, but unfortunately, the rules in my organization are. In fact, that gentleman told me yesterday over the phone that he has been working with another company ever since, and we are also listing his name as our employee. So, he asked me a question: does that mean he is doing two jobs at a time? Is this dual employment? Frankly speaking, I had no answer to his question. He even mentioned that he resigned, and we never informed him that his resignation wasn't accepted. So, how come he is still in our system, and I had no answer as usual.

Finally, I have requested him to comply and asked him to just fill out those papers, scan them, and send them to me to complete the exit formalities. He replied that he wouldn't do any such thing. And if I'm not wrong, we cannot take any legal steps against him to compel him to complete the formalities, nor can we keep his name on the payroll forever. Hence, I better park this issue, as my seniors in the organization are not showing me a way out, nor are they listening to any of my advice.

Thank you very much, sir.