Is It Legal to Deduct LTA from My Final Settlement After Contract Termination in India?

Hi,

I worked for XYZ Co on contractual payroll. My contract was terminated, and my last working day was 7th April 2018. I availed LTA (called LFC in my company) in the month of February 2018. From my full and final settlement, an amount equivalent to 268 days of LTA payment (from 8.4.2018 to 31.12.2018) has been debited.

What I wanted to know is whether this is legal under the currently prevailing labor laws of India.

Regards,

Dear Anamika,

You have stated that your employer has deducted an excess of LTA amount (on a pro-rata basis) for the period from 8.4.2018 to 31.12.2018. Please note that you have to analyze the same on the basis of annual payment, which is paid proportionately. Furthermore, you have confirmed that your service has been terminated as per the appointment letter. The employer is right in deducting the LTA amount towards the shortfall in service.

The company may have a set policy in this regard. Perhaps you may have agreed to be bound by the Rules and Regulations of the company by accepting the offer of appointment or during the joining formalities. Please ascertain whether there are any rules providing for such deduction. In case it is so, then probably there is no case; otherwise, there cannot be a post-event (after your discharge) rationalization for the deduction made.

Dear KKHR,

I did not find anything of that sort in the appointment offer, as well as in the LFC policy, which clearly states about such pro-rata debit in the event of separation before serving the complete year in which the LFC was availed. I will re-check every line again and get back to you.

Thanks.