Dear respected seniors, I seek clarification on a few points. We belong to a Retail Group and are considering treating the Full & Final settlements of resigned employees separately from the regular payroll. To illustrate, if an employee submits his resignation on July 15th and serves a one-month notice period as per the agreement, thereby being relieved on August 15th, can we provide his entire salary for July and until August 15th as a Full & Final settlement?
Alternatively, if an employee is unwilling to serve the complete notice period, do we have the right to withhold his salary in full? I seek to understand if there are any specific employee benefit rules or labor laws that are applicable to these scenarios.
I appreciate your advice on this matter and thank you in advance.
From India, Hyderabad
Acknowledge(0)
Amend(0)
70Alternatively, if an employee is unwilling to serve the complete notice period, do we have the right to withhold his salary in full? I seek to understand if there are any specific employee benefit rules or labor laws that are applicable to these scenarios.
I appreciate your advice on this matter and thank you in advance.
From India, Hyderabad
Acknowledge(0)Amend(0)
You cannot view your system/proposed system of Full and Final settlement from a legal point of view because your system lacks logic. Legally, you cannot hold the salary of an employee (who might have submitted his resignation) beyond seven days of the wage period. That means if the date of resignation is July 15th, you cannot hold the salary for that month until final settlement, which may take place on August 15th or later. This is true, at least in the case of non-managerial employees.
At the same time, most companies have an F&F policy whereby the employee who has resigned will not receive his month's salary on time but only at the time of F&F. Nobody questions it because they are much concerned about the service certificate and sometimes due to ignorance. Therefore, you may proceed with your own policy, but do not claim that it will be legally compliant.
Regards, Madhu.T.K
From India, Kannur
Acknowledge(0)Amend(0)
At the same time, most companies have an F&F policy whereby the employee who has resigned will not receive his month's salary on time but only at the time of F&F. Nobody questions it because they are much concerned about the service certificate and sometimes due to ignorance. Therefore, you may proceed with your own policy, but do not claim that it will be legally compliant.
Regards, Madhu.T.K
From India, Kannur
Acknowledge(0)Amend(0)
Dear Bhandavi,
As per the Payment of Wages Act, you cannot hold the salary of the employee for more than 7 days (if the strength is 100 but less than 1000) and 10 days (if the employee strength is more than 1000). However, for the full and final settlement, you can make deductions for the notice period days if the employee has not served as per your appointment order.
Why wait until that time? It is advisable to calculate and settle the amount at the earliest.
Regards,
V. SRI
From India, Madras
Acknowledge(0)Amend(0)
As per the Payment of Wages Act, you cannot hold the salary of the employee for more than 7 days (if the strength is 100 but less than 1000) and 10 days (if the employee strength is more than 1000). However, for the full and final settlement, you can make deductions for the notice period days if the employee has not served as per your appointment order.
Why wait until that time? It is advisable to calculate and settle the amount at the earliest.
Regards,
V. SRI
From India, Madras
Acknowledge(0)Amend(0)Join Our Community and get connected with the right people who can help. Our AI-powered platform provides real-time fact-checking, peer-reviewed insights, and a vast historical knowledge base to support your search.
PAYMENT OF WAGES ACT 2009.doc