Can My Employer Demand a Notice Period Payment Three Years After Termination? How to Dispute It

I was terminated three years ago, and the termination is currently under litigation in court. Now, after three years, the employer has suddenly issued a Full & Final Settlement statement asking me to settle the amount due for "Notice Period Recovery." However, I do not believe I am obligated to pay anything towards the notice period since I was terminated without any prior notice or compensation—it was not a resignation.

Validity of Full & Final Settlement After Three Years

Is it valid for the employer to issue a Full & Final settlement after three years?

Disputing the Notice Period Recovery Claim

How can I dispute this false claim demanding payment for "Notice Period Recovery"?

If the matter is pending before the court, it is better not to sign the F&F statement. However, you can keep it as evidence that may be used in the proceedings.

Understanding the Situation

I understand the situation like this: You were terminated from service without receiving any compensation. They were supposed to give notice pay and compensation. You approached the court, and the matter is pending with the court. Now the employer wants you to sign a statement of the amount due, through which you would be accepting the amount as adjusted against the notice pay payable to the company. If you were terminated, the question of notice pay from your side will not arise. Therefore, never accept it.

Issuance of F&F

F&F can be issued at any time. If the settlement is made either through an award of the court or through conciliation, the employer can prepare a statement of amounts due and make the employee sign it. Therefore, let the court come to a decision.

Responding to Employer Notice During Litigation

You should not reply or take any action regarding the employer's notice if the termination matter is pending before the court. You can certainly bring this issue to the court on the upcoming date, highlighting how the employer is attempting to derail the case. Generally, the Full & Final settlement should be completed by the employer within 48 hours of termination or separation. Anything beyond this period is illegal, except in cases where there are accepted conditions signed during employment or a laid-down policy of the establishment.

Thank you for the replies [Madhu.T.K 4207; PRABHAT RANJAN MOHANTY 583]. The reason I posted these questions was because I wanted to find out who is going to be held responsible for this delay of 3 years to issue digital F&FS (by email).

1. Is it the duty of the employer to provide F&FS?
2. Or is it the responsibility of the employee to ask for it and obtain it?

I just want to be sure that I am not going to be held accountable for the delay in F&FS. Also, it should not appear that the F&FS is deemed to be correct by default because it is made to appear that I have not challenged the F&FS for 3 years.

Understanding Full and Final Settlement (F&F)

F&F means a statement of Full and Final settlement. It is a document prepared by the employer showing what is available to the employee and what is deductible. An employee cannot create and submit such a statement to the employer and demand payment. The employer is responsible for preparing the statement and requesting the employee's signature to acknowledge acceptance, enabling the payment process. If there are any delays, the employer bears sole responsibility.

If the litigation is pending, then do not sign any F & F settlement of the employer.

Thank you. Noted.

Second part of the question

I now have to file IT returns for FY2023 (AY2024-25) before the deadline of 31 July 2024, but there are the following problems:

1. The ex-employer is showing an income by creating a false employment date of 1 day in FY2023 (as seen in AIS Part B) although I was terminated in FY2020.
2. This income should actually have been shown for FY2020 (AY2021-22).
3. Most importantly, I have not received this money at all.
4. To avoid paying me, they have created a false deduction of "Notice Period Recovery," making it appear that there are dues pending from my end.

So now, how do I handle this while filing IT returns?

Even if I contact the ex-employer, it is unlikely to get resolved before the IT deadline of 31 July 2024, so contacting the ex-employer is not an option.

If the amount is not paid to you, and you have not received it, you need not include it in your income. In the event of a scrutiny, it will be the employer's responsibility to establish that the payment has been made. Furthermore, the amount is not earned; it is merely an imputed amount. Therefore, you can proceed with normal filing as if you did not receive income from this specific employer in the last financial year. You have sufficient grounds to assert that the money was not paid to you.

Thank you. Actually, the income is towards Leave Encashment (Earned Leave). It is real and valid, but I have not received it. Like I said, it was not communicated to me for 3 years until all of a sudden.

Questions about Leave Encashment Income

1. Does that make it earned income (instead of imputed income)?
2. And if it is not imputed income, can I still proceed with normal ITR filing as if I have not received an income?

Understanding Income and Notice Pay Recovery

Whether it is earned income or not, or imputed income or not, is not the question. The basic question is whether you received it or not. If received, when did you receive it? If you have not received it, why should you pay tax on it or include it as earned income? The employer has generated it as income just because he wanted to figure it out in the F&F as earned and then deduct it as notice pay recovery. Notice pay, anyway, is out of the question because you did not resign from the employment but you were terminated. In such instances, notice pay should be considered as income and not a cost for the employee concerned. Therefore, you can file the returns without this amount.