Can We Withhold Salary for an Underperforming Employee? Seeking Advice on Legal Steps

Dear Experts!

We hired an Area Sales Manager on a 30k CTC per month basis, but since the date of joining, he has not been performing well and has not even achieved 1% of the target.

Management has given him a warning that if he does not improve his performance in the next 15 days, we will terminate his employment and not pay him for those 15 days. Due to his non-performance, we have decided to terminate his employment and not pay his salary for the last month and the current 15 days.

Is this correct? If we follow this procedure, what kind of process do we need to implement?

Thank you.

Dear Nilam, yes, the employee must render performance according to the requirements of the job; nevertheless, non-payment of the wages for which the employee has rendered his/her services is against the law. That you did not get any output from that person is a different matter altogether. Therefore, the Area Manager was due to get his payment till his last working day.

Recruitment Failure

By the way, this is a classic case of recruitment failure. Who was involved in the selection of the Area Manager who could not achieve even 1% of the target? Will your management conduct an investigation on why they failed? In India, employers are so obsessed with taking "experienced" people on board. Was the person selected had sufficient "experience" or not?

Compensation Policies

Lastly, you need to check your compensation policies as well. How can a person of the stature of an Area Manager have a salary of Rs 30K? For such a paltry salary, obviously, you will get candidates whose candidature was turned down everywhere.

Thanks,

Dinesh Divekar

Hello Nilam,

It's not correct. You can terminate him, and that's okay, but terminating him without paying is not correct. Please pay him for the days he has worked in your company.

Thank you.