Dear Members,
I recently resigned from my Indian company by serving a 2-month notice instead of the required 3 months as per my appointment letter. I was deputed to Africa 1 year and 1 month ago but joined the company 2 years and 10 months ago. I receive two components of salary during my deputation to Africa:
- Indian salary in my Indian account
- Overseas allowance in my foreign account
Please go through the attachment for the salary bifurcation.
The company is now saying they will recover the shortfall by deducting 1 month of basic salary (India) and 1 month of overseas special allowance.
Is it legally permissible for the company to deduct the overseas allowance as part of notice period recovery? The appointment letter mentions that the company can recover gross salary in case of a shortfall in the notice period.
Kindly guide.
Thanks in advance.
From Cameroon, Douala
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I recently resigned from my Indian company by serving a 2-month notice instead of the required 3 months as per my appointment letter. I was deputed to Africa 1 year and 1 month ago but joined the company 2 years and 10 months ago. I receive two components of salary during my deputation to Africa:
- Indian salary in my Indian account
- Overseas allowance in my foreign account
Please go through the attachment for the salary bifurcation.
The company is now saying they will recover the shortfall by deducting 1 month of basic salary (India) and 1 month of overseas special allowance.
Is it legally permissible for the company to deduct the overseas allowance as part of notice period recovery? The appointment letter mentions that the company can recover gross salary in case of a shortfall in the notice period.
Kindly guide.
Thanks in advance.
From Cameroon, Douala
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In this scenario, the legality of deducting the overseas allowance as part of the notice period recovery depends on the specific labor laws and company policies applicable in India. Generally, notice period recovery clauses in employment contracts should comply with the terms agreed upon by both parties. To address this issue effectively, consider the following steps:
1. Review Employment Contract: Carefully examine your employment contract, particularly the sections related to notice period, salary components, and any provisions regarding deductions in case of early resignation.
2. Seek Clarification: Request a meeting with the HR department or management to seek clarification on the deduction of the overseas allowance. Understand the rationale behind this decision and how it aligns with the terms of your contract.
3. Legal Consultation: If necessary, seek legal advice from a labor law expert to determine the legality of the company's action. They can provide insights into relevant laws and regulations governing notice period deductions and overseas allowances.
4. Negotiation: Based on the contract terms and legal advice, consider negotiating with the company regarding the deduction. Present your case professionally and seek a resolution that is fair and mutually acceptable.
5. Escalation: If discussions and negotiations do not yield a satisfactory outcome, consider escalating the matter through formal channels within the company or seeking assistance from relevant labor authorities.
Remember, it is essential to approach this situation with a clear understanding of your rights, the contractual obligations, and the applicable legal framework to ensure a fair resolution.
From India, Gurugram
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511. Review Employment Contract: Carefully examine your employment contract, particularly the sections related to notice period, salary components, and any provisions regarding deductions in case of early resignation.
2. Seek Clarification: Request a meeting with the HR department or management to seek clarification on the deduction of the overseas allowance. Understand the rationale behind this decision and how it aligns with the terms of your contract.
3. Legal Consultation: If necessary, seek legal advice from a labor law expert to determine the legality of the company's action. They can provide insights into relevant laws and regulations governing notice period deductions and overseas allowances.
4. Negotiation: Based on the contract terms and legal advice, consider negotiating with the company regarding the deduction. Present your case professionally and seek a resolution that is fair and mutually acceptable.
5. Escalation: If discussions and negotiations do not yield a satisfactory outcome, consider escalating the matter through formal channels within the company or seeking assistance from relevant labor authorities.
Remember, it is essential to approach this situation with a clear understanding of your rights, the contractual obligations, and the applicable legal framework to ensure a fair resolution.
From India, Gurugram
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Notice Period and Salary Recovery
If your appointment order states that you are liable to give three months' notice or payment in lieu, then the company can recover the shortfall in gross salary. Normally, companies will waive it off and allow employees to leave without collecting the shortfall. However, this typically happens only when the employee-employer relationship is fair.
Now, regarding the salary for the purpose of notice period adjustment, since the appointment order specifies gross salary, and you have resigned and served the two months' notice period from abroad, you are required to pay one month's gross salary, including the allowance, to cover the shortfall. Of course, if you had resigned after returning to India, the last drawn salary would have been different.
Legal Aspects of Notice Period Recovery
If you consider the legality of the right to recover the notice period from employees, you need to refer to the Industrial Disputes Act, 1947. This Act provides that an employer should give notice if they wish to terminate a contract of employment, but it does not state that an employee must give notice if they wish to leave the service. However, the Act applies only to workmen or employees who do not have any supervisory or managerial role. Whether a person has been working in a supervisory role or not is a legal question, and there are numerous court interpretations on this matter. All these verdicts indicate that a person with the authority to appoint, dismiss, sanction leave, appraise performance, initiate disciplinary action, or make other decisions is considered a managerial person. All others fall under the scope of workmen, enjoying the protection of the said Act.
From India, Kannur
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If your appointment order states that you are liable to give three months' notice or payment in lieu, then the company can recover the shortfall in gross salary. Normally, companies will waive it off and allow employees to leave without collecting the shortfall. However, this typically happens only when the employee-employer relationship is fair.
Now, regarding the salary for the purpose of notice period adjustment, since the appointment order specifies gross salary, and you have resigned and served the two months' notice period from abroad, you are required to pay one month's gross salary, including the allowance, to cover the shortfall. Of course, if you had resigned after returning to India, the last drawn salary would have been different.
Legal Aspects of Notice Period Recovery
If you consider the legality of the right to recover the notice period from employees, you need to refer to the Industrial Disputes Act, 1947. This Act provides that an employer should give notice if they wish to terminate a contract of employment, but it does not state that an employee must give notice if they wish to leave the service. However, the Act applies only to workmen or employees who do not have any supervisory or managerial role. Whether a person has been working in a supervisory role or not is a legal question, and there are numerous court interpretations on this matter. All these verdicts indicate that a person with the authority to appoint, dismiss, sanction leave, appraise performance, initiate disciplinary action, or make other decisions is considered a managerial person. All others fall under the scope of workmen, enjoying the protection of the said Act.
From India, Kannur
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GST ON RECOVERY OF UNSERVICED NOTICE PERIOD.docx
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(Fact Checked)-Your explanation is accurate, considering the appointment letter's terms and the Industrial Disputes Act, 1947. Great job on providing a comprehensive response! Keep up the good work. (1 Acknowledge point)