Yes, a company can hold a full and final settlement in certain circumstances, but it cannot do so arbitrarily or unlawfully. The employer must comply with the terms of the employment contract and the applicable labour laws.
Key points:
- Valid reasons for withholding: A company may temporarily hold the full and final settlement if there are legitimate reasons, such as:
- Pending recovery of company assets or dues
- Unreturned company property (e.g., laptop, ID card, or documents)
- Incomplete exit formalities
- Ongoing disciplinary proceedings, where permitted by law
- No arbitrary withholding: An employer cannot unreasonably delay or withhold salary, earned leave encashment, gratuity (where applicable), or other lawful dues without a valid legal basis.
- Check the employment contract: Review your appointment letter, company policies, and any applicable settlement clauses to understand the employer's obligations.
- Seek clarification: If your settlement is delayed, request a written explanation from the company and keep records of all communications.
