Retention Money Claim

As per the company's offer letter, it is stated that I will be eligible for retention money after completion of 18 months. However, I have resigned and left after completing one year. Kindly confirm whether I am bound to ask for retention money from the employer. The offer letter is on a small logo paper and not on letterhead.

You will not get it. Retention money is for securing you in the company for a specific period. If you left on your own, how can you expect the retention payment from a company.

Pon, Chennai

Retention money for what purpose, as per the company's offer letter?

Please provide a detailed description of your issue.

As the name depicts, Retention Money is given to retain an employee for a specific period of time. It is a contract between an employee and the company. If an organization says that it will pay a specific sum after completion of a specific period, the amount is due only when the contractual obligation by the employee is completed. In this case, the contractual obligation is to serve 18 months to claim this amount. It is not payable otherwise, and it cannot be claimed on a prorated basis also.

It states that the company shall deduct a certain fixed amount every month from the salary (Retention). In case I complete 18 months, I will be eligible for claiming the retention amount. If I leave the organization earlier than the stated period, I shall not receive the retention amount. As per the current scenario, I have resigned and left the organization after completing 12 months. Can I ask for reimbursement? The offer letter is printed on a regular company logo paper.

Sales/Service personnel

I have come across two different methods of Retention allowance:

1. Deduct a certain percentage of the salary every month and pay back when the employee resigns. This amount is generally used to adjust any payment due from an employee. Strictly, this cannot be called Retention Money, and the deduction is made on the fixed salary. Such a deduction is illegal, and no employer can refuse to pay back this money. However, some smaller companies resort to such practices, mostly to manage Sales and Service personnel who disappear without any notice.

2. Retention allowance specified as payable on completion of a stipulated time period. This is the real Retention allowance and is payable, as I stated earlier, only on fulfilling the contractual obligation category.

You seem to be coming under category 1 where the amount is deducted from your salary and retained with the employer as retention money to be adjusted against dues payable by you. In my opinion, if you do not owe any sum, the Company must pay this back to you.

You cannot claim the retention money unless you can legally prove that the term is void, in connection with the other terms of your appointment.