Can Employers Deduct Salary for Unreturned Company Assets? Navigating Legal and Fair Practices

Can an employer withhold or deduct salary in lieu of company assets not returned by the employee upon employment termination or exit?

In general, employers may have policies in place that allow for the deduction or withholding of salary to recover company assets not returned by an employee upon termination or exit. However, it is important to ensure that such policies comply with local labor laws and regulations.

Clause to be added to the employment letter

The clause that addresses this issue should clearly outline the circumstances under which deductions or withholdings may occur, the process for determining the value of the company assets, and any applicable procedures for disputing the deduction. It is advisable to consult with legal counsel to draft a clause that is legally sound and fair to both parties involved.

Employment Contracts and Asset Recovery

An employment contract is an agreement between the employer and the employee. As the employer is a 'job giver' and the employee is a 'job receiver', naturally, the employer has the upper hand to devise policies or clauses that may safeguard the interests of the employer without hampering the employees' interests.

In such cases, the employer has every right to demand the company's assets from employees who are seeking separation from the company. If the assets are not surrendered to the company, the employer has the power to proceed legally to recover the assets or their equivalent cost.

Thank you for the prompt reply. Can you also help me with the language of the clause that can be added to the employment letter if an employee fails to return company property and the action that can be taken?

Addressing Employee Actions in Employment Letters

In an employment letter, management should not issue any warnings. If an employee takes any action that could harm the company's image, cause loss to company property, or fail to return company property, these issues should be addressed individually, on a case-by-case basis.

Clause for Employment Letters

To enhance the clarity of expectations, consider including the following clause in the employment letter or appointment offer:

"You are solely responsible for the proper upkeep and maintenance of any company property under your possession during your employment with us."