Can We Legally Withhold Salary for an Employee Who Resigned Due to Poor Performance?

Dear folks,

A person who worked as a marketing executive for 8 years, from May and June 2018, could not work properly, and his performance was also "zero," resulting in no revenue for the company. Consequently, the company decided to terminate his services, which was conveyed to him by us. He immediately submitted his resignation, which was accepted by us. However, the salary for these two months has not been paid yet due to non-performance.

Although we have settled all other dues, such as incentives, bonuses, and gratuity, the salary remains outstanding. The PF contribution for these two months has been paid. The individual is now demanding his two months' salary and has threatened to take the matter to the labor tribunal if not paid.

The dilemma we face is how to address this issue considering that the owner is unwilling to settle the outstanding salary.

Thank you.

Getting leads and converting them into business is not possible daily. So, if the employee has already resigned and separated from your organization, then pay the balance of 2 months' salary and close the issue. This will help the organization to maintain goodwill before other employees.

If the salary issue needs to be addressed, it should have been done before accepting the resignation. It is now better not to dissect the resignation and salary matters. This is my personal view.

Please be clear that salary cannot be stopped. Performance incentives based on performance can be stopped or awarded, but salary has to be paid.

What incentive was paid?

Settlement of dues and PF contribution

Whereas, we have given all kinds of settlements such as incentives, bonuses, and gratuity except for salary.

How could you pay the PF contribution for these two months, whereas the employee has zero income? You are directly accepting that the person had earned wages from which you realized the EPF contribution and submitted it with EPFO.

It would be wiser to settle the issue before getting into a bigger problem. You cannot abscond from the case under payment of wages if a case is filed. It would be wiser to pay wages for the period to avoid future complications.

Wages are never paid based on the performance of a workman unless there are clear-cut terms and conditions in the appointment letter or otherwise futile.

Wages are the right of an employee and are never linked with performance because of statutory payments made on behalf of wages. Therefore, you can't deduct or withhold the salary. Please pay the same and release him as soon as possible before he goes to any tribunal.

Thanks

Dear Colleague, you will be digging your own grave if you don't pay his salary. Monthly salary is paid for attendance and doing normal work, and incentive payment is paid for targeted performance and the extent of its achievement. Both are different. The question is rightly asked as to how did you pay PF contribution without paying salary. It is illegal in the absence of payment of salary. Don't be vindictive with the employee. Withholding salary presumably without giving an opportunity to explain reasons for non-performance and unilaterally punishing the employee in this manner will fail to stand legal test and is bound to boomerang on you. So settle this with grace and be done with it.

Regards, Vinayak Nagarkar HR Consultant

I fail to understand how incentive has been paid when there is no performance. This act itself is self-defeating, requiring you to pay the held-up salary.

Even otherwise, salary and incentive are two different things and should be treated separately. Similarly, the payment towards PF when there is no salary - how can it be paid?

So, I agree with all my fellow contributors to this query that the best way is to pay up and let bygones be bygone. Start with a fresh slate.