Company Policy Dilemma: Should Settlements Be Denied to Employees Leaving Before Six Months?

Need guidance regarding the company policy. Can we include a point stating that the settlement will only be paid if the employee works for more than six months in the organization? Any person leaving before six months will not receive dues. Additionally, will relieving letters and service certificates be issued to everyone?

Such a policy will not be in order. Even if an employee works for one day, he is entitled to pay. What is the reason for thinking of this 6-month limit?

Policy for Employee Settlements in FMCG Sector

The reason I am asking for such a policy is because I am working in the FMCG sector, and it's a new setup. Salespeople join our company and leave their jobs in a short period without intimation. Later, they ask for their settlement salary, bonus, leave encashment, expenses, and any other eligible amounts. To avoid paying such undeserving employees who have not contributed to our organization, we want to stop this practice. Is it possible to add the clause I mentioned earlier in the email to the offer letter?

Please suggest whether there will be any legal consequences we will have to face if we don't pay their settlement.

If employees leave in a short period, bonuses, leave encashment, etc., do not become due. They are, at best, entitled to the days of work. Inclusion of a clause that you have to work a minimum of 6 months, etc., will not be legal and could give rise to complaints to the Labor officer for non-payment of entitled dues.

Recruitment procedures should be tightened to avoid selecting people who exit soon or at least reduce the number of people who exit soon.

Compliance with the rules of the land

Your company is governed under the rules of the land. How can your company be exceptional to these rules? The payment of salary and wages should be made after and within the wage period of the month. The bonus should be paid or due for payment within 8 months of the completion of the financial year. Leave encashment should be done or due at the end of the calendar year. If the payments above are not made within the stipulated time, the company can be sued or held liable for action by the authorities upon receipt of a complaint from a worker. This is in response to your query.

Thank you for the guidance. It was just a suggestion from my side. I haven't communicated this to my management yet. As advised by everyone, we will explore alternatives to retain employees for a longer period or focus on recruiting the best candidates who are truly enthusiastic about their work.

Thank you,
Kumar Nair