Ex employer demand for wrong salary calculation post year of full and final settlement

I have a situation at hand related to FnF process completed by my ex employer. After nearly a year of FnF completion, no dues exchange and experience letter release, I get a call from HR that during one of the months during employment, I have been released excess variable pay along with my salary which needs to be refunded now. Is the employer liable to recover for such a mistake from me after a year and that too once full and final settlement has been released after multiple checks? There are tax implications too which make the issue a bit more complex. Please guide.

Dear Varun,

You have written about the notice that you have received from your ex-employer. It is on wrong calculation and their contention is that you have been disbursed with the excess amount. You have questioned the validity of the refund claim as it has been raised after a year.

Possibly the wrong calculation might have been pointed out in the yearly audit. Hence the delay.
Nevertheless, the question arises on the validity of the claim? Have you checked their previous calculation and the second calculation? What is the discrepancy and why the discrepancy has cropped up?

If their claim is valid then I recommend you refunding the amount. If you have shown that income in the tax and filed the return with also then deduct the proportional tax component and refund the remaining amount.

Thanks,

Dinesh Divekar

Thanks for the revert @dinesh. I checked and there's an amount which has been credited. I am questioning the validity of the claim on the grounds that multi level checks have been done and documentary formalities have been completed towards release. My concern here is then does this mean an employer can nullify own F&F after the employee has been released the clearance, reverse the amount calculated and resultantly nullify the no dues clearance released?
I there are other deductions which have been made upon recheck for which no description has been given.

Dear Varun,

Whether the employer does multi-level checks of the FnF settlement form or not, if you had observed the payment of the excess amount then honestly you could have brought to the notice of the employer and as per the procedure could have refunded the excess amount. If you had done it then you would not have received this notice.

If you had doubts on the deductions of any kind, you could have raised the query immediately on receiving the FnF amount. Anyway, you may do so even now also.

Even now also you can refund the amount. However, tell the HR Head to send the letter on the comany's letterhead. It has to be signed by the competent authority.

I strongly recommend you refund the excess amount because even now also you would need the previous employer for the background verification (BGV). When you quit the current job and join a new one, the future employer could do BGV from the last two employers. One of them would be your immediate past employer. If you do not refund the amount then internally they may blacklist your name and it could create problem for you in the BGV. Hence the suggestions.

Thanks,

Dinesh Divekar

I agree to what you are saying but its not something which was intentional or else I will not be concerned about the way forward. I also came to know about this issue when I received the info from HR of the ex employer after a year. I am surprised because all official records showcase the same so I wouldn't doubt the payment being released by the company at any point.
The idea is not to hold company's funds not due to me but to be concerned about such queries. My logic is tomorrow the company may call up after another 6 months that salary computation was wrong hence another refund is due. I am not worried because I have not kept the money intentionally but process as laid out has a validity and it can't be open for corrections infinitely. Hence in need of guidance.

Dear Varun,

If you feel that after an year the refund claim is untenable then you can very well write to the previous employer stating that you have been issued with a "No Due Certificate". Therefore, after an year the refund claim cannot be entertained.

However, there is a downside of holding on to his position. One is that your ex-company may send a notice to you with CC to your current employer. A tactic of marking copy of the letter to the current employer may used so as to bring mental pressure on you to refund the excess payment. If your ex-employer comes to know about this case, they may start asking unnecessary questions and you may be cast in unflattering light.

Else your ex-company may send you the lawyer's notice and copy of this notice also may be sent to the current employer. However, this possibility will arise if the amount involved is big enough that merits lawyer's notice.

Lastly, be aware gentleman! Life is too uncertain. There are always ups and downs. Who knows you may need help of your ex-company for some or other reason. If you take a tough stand then the doors of taking help will be shut permanently. In contrast, if you pay the amount then the door will be left ajar for a long time.

Therefore, the choice is yours!

Thanks,

Dinesh Divekar

Hi
If your previous employer had written and explained you about the wrong calculations done in your F&F, maybe it should be taken as admittance on their part of the mistake and as rightly pointed out there has to be an end to the issue which is nothing but repay through a cheque in the name of the company less whatever was deducted towards tax on that component.
Do not get stressed on these issues as it is not a recurring issue and can be sorted out amicably. Be generous to the mistake and its admittance.
Thanks and Regards

Dear Varun
There are chances of calculation mistake during the payroll process. But it is always adiviciable that the mistake should be corrected as soon as it is brought into the notice.
It is bit late from your ex-employer to inform you but take it as an opportunity to correct your mistake and be on good terms with them. Industry is small and may be they can be of any help in future.

Dear Varun,

You were very well aware that you had been paid excess variable through one of the months during your employment and you had not shown courtesy to refund the amount to your ex-employer nor brought to the notice of Payroll / HR dept.

Mr. Dinesh Divekar has rightly pointed out that this might be Auditor's remark during the audit and advised the concerned dept. for recovery.

You have mentioned that after multiple checks and releasing your F&F settlement how Company can ask for refund? the reason is the Audit must have taken place after your full & final settlement, else they would have recovered it from your F&F without referring you.

Now choice is yours whether to refund the amount to the Company or not. But this decision you take only, if you have not made any mistake in your life.

Regards,

Suresh

Dear Varun,



Nobody is infallible. I think this excess payment pertains to a particular month due to wrong calculation of a variable part of the salary. Had you been still in service, it would have been easily recovered from your salary subsequently. Just because you left the organization, they are asking you now refund the same. If the calculation is correct in all respects, then the demand for recovery would also be correct despite the full quit receipt obtained from you on your formal exit. Suppose, some benefit like gratuity or arrears of salary consequent on retrospective pay revision becomes due, would you accept the refusal of the ex employer based on the contention of the full and final settlement? Any genuine omissions or mistakes in calculation in the full and final settlement can be rectified later. Besides, as the recovery pertains to one time excess payment due to wrong calculation only, your contention based on full and final settlement seems to be hyper technical.

One more important and practical point: if it cannot be recovered from you, probably the amount would be recovered from the poor guy who made the mistake. Will it be fair on your part? Think it over please.