Handling Salary and Legal Obligations for an Absconding Employee: What Are Your Best Practices?

Hello Community, I hope this post finds everyone in good health. I have a few questions about dealing with an employee who has absconded without serving the notice period. The management has instructed to withhold their salary. I would appreciate some guidance on the following points:

Salary Sheet Processing for the Absconding Month:

If the management has instructed to withhold the employee's salary, how should we reflect this in the salary sheet? Do we include the employee's name in the sheet with a remark like "Salary on Hold" or "Absconding"? Or is it more appropriate to exclude their name entirely from the salary sheet for that month?

Mandatory Inclusion in Salary Sheet:

Is it obligatory to include the absconding employee's name in the salary sheet, considering they were technically employed for part of the month?

TDS/PF Payment Obligation:

Are we required to pay the TDS and PF contributions for that particular month, even if the salary is on hold? If so, how do we manage this when the payment has not been disbursed to the employee?

I am looking forward to insights or suggestions based on your experiences or legal obligations. Thank you in advance for sharing your thoughts and knowledge!

Thanks. Location: Mahemdavad, India

Hello,

Thank you for your query.

Salary Sheet Processing for the Absconding Month:
The handling of an absconding employee's salary can follow one of two methods. You can either:
- Include the employee's name on the salary sheet with a remark like "Salary on Hold" or "Absconding". This method helps maintain a record of the employee for that month.
- Alternatively, you could exclude the employee's name from the salary sheet for that month.

Both methods are practiced and it largely depends on the company's internal policies.

Mandatory Inclusion in Salary Sheet:
It is not mandatory to include the name of the absconding employee in the salary sheet. However, for record-keeping purposes, it is advisable to keep their name on the sheet, particularly if they were employed for part of the month.

TDS/PF Payment Obligation:
As per the Income Tax Act, 1961 and the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, the employer is obliged to deduct TDS and contribute towards PF based on the days the employee worked in that month. Even if the salary is on hold, these contributions need to be made.

If the salary is eventually disbursed, the TDS and PF should be calculated based on the actual amount paid. If the salary is not disbursed, you may need to adjust these amounts in your records accordingly.

Please consult with your company's legal advisor or chartered accountant to ensure compliance with the law. The handling of absconding employees can be a complex issue and it is important to follow the correct legal procedures to avoid potential issues in the future.

I hope this information helps. Feel free to reach out if you have any more queries.