Can My Employer Legally Hold My Final Pay Until a Client Pays Up? Seeking Advice

I was working for a logistics firm where one of my clients had an outstanding amount which I was following up for recovery. When I resigned and was released by the organization, there was an outstanding due from the client, and I kept following up with the client. However, the employer held back my full and final settlement and didn't issue a relieving letter.

I assured the employer that I would follow up for the recovery of the money and kept pushing the client. Apparently, the client paid some amount, but later, even after pushing a lot, the client kept on giving dates and said that he is in dialogue with the employer and will settle dues as agreed.

On the other hand, the employer wrote to me that they would release my full and final settlement and letter only after the full recovery of outstanding from the client. The employer is not going legal against the client nor pushing for payment.

I need your assistance on how I should go about this. Does the employer have the authority to hold back the full and final settlement? It has been almost three months now, and both the client and the employer are not taking any initiative to settle the matter.

It's not right to withhold F&F settlement on the pretext of arrears of collection of dues from clients. As you know, F&F settlement consists of EPF & Gratuity, which cannot be withheld beyond one month of quitting as per the acts. Even if they withhold, you are not going to lose anything because contributions together with interest until the date of settlement have to be settled by the employer - that is the act. It's your obligation that you should file the claim papers in the prescribed forms and obtain the acknowledgment from your office to support your cause.