Can we prepare a separation policy like this:
1. If an employee resigns before one month, no salary will be given.
2. If an employee resigns between 1-6 months, only basic salary will be payable for the unpaid period.
3. If the company terminates or asks the employee to resign, then the company will pay only basic salary between 1-6 months.
Is this policy legally valid? If not, which act applies?
From India, Madras
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1. If an employee resigns before one month, no salary will be given.
2. If an employee resigns between 1-6 months, only basic salary will be payable for the unpaid period.
3. If the company terminates or asks the employee to resign, then the company will pay only basic salary between 1-6 months.
Is this policy legally valid? If not, which act applies?
From India, Madras
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Dear Dev,
You have asked your query from a legal point of view only. In that case, I recommend you refer to the Payment of Wages Act, 1936. I doubt whether your proposal will stand scrutiny of this act.
I would like to go a little further and handle this case from a management science point of view. When would you like to disclose these conditions of employment to the job candidates? Once these conditions are disclosed, do you think that you will attract talented candidates? Will a job candidate who is quite confident of getting the job and who also has a high level of self-esteem join under these conditions?
The unsaid part of your post is that your organization could be facing a problem of attrition of newly joined employees. To mitigate the expenses of employee exits, you have tried pulling this rabbit out of your hat. But then, if this policy comes into effect and if some talented job candidate refuses to join, what will be the cost of lost opportunities; have you measured that?
If employees are not sticking, then your problem could be with your organization's culture or your leadership. Please fix either or both of the problems. If other companies are able to retain employees, then so should you. Study your organization's ills and take remedial measures rather than finding unconventional solutions.
My experience: I conducted training for the staff of one major photo studio. They had a similar problem. The owner went to the extent of withholding salary for the first two months. Even then, attrition did not decrease. Those who wanted to leave did so anyway, without bothering about the loss of two months' salary.
Thanks,
Dinesh V Divekar
From India, Bangalore
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8032You have asked your query from a legal point of view only. In that case, I recommend you refer to the Payment of Wages Act, 1936. I doubt whether your proposal will stand scrutiny of this act.
I would like to go a little further and handle this case from a management science point of view. When would you like to disclose these conditions of employment to the job candidates? Once these conditions are disclosed, do you think that you will attract talented candidates? Will a job candidate who is quite confident of getting the job and who also has a high level of self-esteem join under these conditions?
The unsaid part of your post is that your organization could be facing a problem of attrition of newly joined employees. To mitigate the expenses of employee exits, you have tried pulling this rabbit out of your hat. But then, if this policy comes into effect and if some talented job candidate refuses to join, what will be the cost of lost opportunities; have you measured that?
If employees are not sticking, then your problem could be with your organization's culture or your leadership. Please fix either or both of the problems. If other companies are able to retain employees, then so should you. Study your organization's ills and take remedial measures rather than finding unconventional solutions.
My experience: I conducted training for the staff of one major photo studio. They had a similar problem. The owner went to the extent of withholding salary for the first two months. Even then, attrition did not decrease. Those who wanted to leave did so anyway, without bothering about the loss of two months' salary.
Thanks,
Dinesh V Divekar
From India, Bangalore
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Please note we are in the year 2014. This posting is a clear reflection of problems in your organization's top management and leadership team. That's why there is high employee turnover. Instead of dwelling on such negative HR policies, consider either urgently changing your job or focusing on building a positive, dynamic HR culture which will automatically ensure employee retention.
Remember, you can buy an employee's time, you can buy an employee's work, but you cannot buy an employee's heart. To win over the heart, firstly, you need positive leadership, transparent policies, ethical work practices, a focus on employee relations, dignity of work, quality of life, respect, and rewarding performance. Only then will you be able to resolve your retention issues.
Best wishes! Rajesh Satyal
From India
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Remember, you can buy an employee's time, you can buy an employee's work, but you cannot buy an employee's heart. To win over the heart, firstly, you need positive leadership, transparent policies, ethical work practices, a focus on employee relations, dignity of work, quality of life, respect, and rewarding performance. Only then will you be able to resolve your retention issues.
Best wishes! Rajesh Satyal
From India
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Thanks to all,
My main concern is whether we are legally correct to pay only the basic salary to terminated employees when the company requests resignation. As per the Payment of Wages Act 1936, we should pay one month's extra salary to terminated employees. However, here we are only paying the basic salary for the days worked. Please suggest briefly.
Thanks,
Dev.
From India, Madras
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My main concern is whether we are legally correct to pay only the basic salary to terminated employees when the company requests resignation. As per the Payment of Wages Act 1936, we should pay one month's extra salary to terminated employees. However, here we are only paying the basic salary for the days worked. Please suggest briefly.
Thanks,
Dev.
From India, Madras
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Please help confirm, can we ask the employees to re-pay if they deny to serve notice period and leave the organization within the probation period?
From India, Bengaluru
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From India, Bengaluru
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PAYMENT OF WAGES ACT 2009.doc