Is It Fair for Companies to Delay FNF Over Client Non-Payments After You Leave? Seeking Advice

Hi all,

I have a question regarding FNF (Full and Final) settlement policies.

I left my previous company over 45 days ago, but my FNF is still not cleared. The company is stating that some clients I was handling have not made their payments, and therefore my dues are being held back. They mentioned in my KRA letter that if clients default, my payment may be withheld.

Is it legally or ethically acceptable to hold FNF due to client payments?

I wanted to check if it is legally or ethically acceptable for a company to hold an employee's FNF due to pending client payments. Once I've left the organization, am I responsible for getting the payments?

Would appreciate any insights or guidance on how to proceed in such a situation.

Thanks in advance!

In this situation, it's crucial to understand the legal aspects and your rights as an employee. Here are some practical steps to consider:

1. Review Employment Contract: Check your employment contract or company policy regarding FNF settlements. Look for clauses related to client payments affecting your dues.

2. Consult HR or Legal: Reach out to HR or legal department for clarification on the company's stance. Seek information on the legality of withholding your FNF in such circumstances.

3. Labor Laws: If necessary, refer to relevant labor laws or regulations that govern FNF settlements. These laws may outline the employer's obligations and your rights as an employee.

4. Negotiation: If the company's actions seem unfair or unjust, consider negotiating with the management. Present your case professionally and seek a resolution through dialogue.

5. Escalation: If internal discussions do not yield results, consider escalating the matter to higher authorities within the company or seek guidance from labor authorities or legal counsel.

Remember, FNF settlements are crucial for both parties, and it's essential to ensure fair treatment based on legal requirements and company policies.

Legality of the Offer and Contract of Employment

The legality of the offer and contract of employment will depend on the employee category with regard to their functions, duties, and responsibilities. If you were given managerial powers, such as the authority to supervise subordinates, sanction leaves, appraise performance, or initiate disciplinary action, then you fall under the managerial category and are bound by the contract of employment. On the other hand, if you did not have any of these rights or supervisory powers, you would be classified as a workman under the Industrial Disputes Act, which provides certain protections. In case your dues are not paid, you can approach the relevant authority to recover them.

Payment of Wages Act, 1936

The main issue is with the Payment of Wages Act, 1936, which states that dues payable to an employee who has left the establishment should be paid within 48 hours. However, the Act only covers employees whose wages do not exceed Rs 24,000. Most employees are likely above this limit. If your salary exceeds Rs 24,000, you may not be able to approach the Inspector under this Act. However, if you were a workman as described, you can approach the Conciliation Officer under the ID Act and initiate recovery under Section 33 of the Act, although this is a lengthy process.

Non-Payment of Wages Due to Client Non-Payment

Non-payment of wages or salary due to non-payment of the bill amount by the company's customers is not acceptable. It is a recognized norm that a contract of employment extending beyond its termination is void. Holding salary by enforcing a clause in the contract that makes the employee responsible for amounts due from clients is effectively extending the contract after its termination, which is illegal.

Looking at your situation, it seems that you're caught in an unfortunate position. However, as the reply has rightly pointed out, withholding of Full and Final settlement due to non-payment by clients is neither legally nor ethically acceptable. This is especially true after the termination of your contract.

Pay close attention to your role in the company. If you were a manager with certain authorities, you're bound by the contract of employment. However, if you were a workman, you have some protections under the Industrial Disputes Act. If your dues haven't been paid, you can approach the relevant authority.

Remember that the Payment of Wages Act, 1936 mandates that dues payable to an employee who has left the establishment should be paid within 48 hours. But this is applicable only if your wages do not exceed Rs 24,000. If it does, you may not be able to approach the Inspector under this Act. If you were a workman, you can approach the Conciliation Officer under the ID Act and initiate recovery under Section 33 of the Act. However, keep in mind that this is a lengthy process.

A clause in the contract that makes the employee responsible for amounts due from clients, extending the contract beyond its termination, is illegal.

Here are some steps you can take to address this:

1. Review your employment contract: Go through all the clauses carefully, especially those related to payments and dues.

2. Consult a legal expert: If you're unsure about the legality of any clause, seek professional legal advice.

3. Approach the relevant authority: If you were classified as a workman, you can approach the Conciliation Officer under the Industrial Disputes Act.

4. Maintain communication: Keep in touch with your former employer and express your concerns clearly and formally.

5. Document everything: Keep a record of all your interactions with the company regarding this issue.

I hope this information helps you navigate your situation. Good luck!