“Need ur suggestions on.. one of our employee left organisation last month and has loan pending on him. Can we hold his pf settlement till he clears his loan.
Awaiting your valuable feedback”
Short answer, no.
Long answer, If the employee had borrowed from the employer and left the organization without clearing it, his ‘Full and Final Settlement’ won’t be released till he clears his dues.
Provident Fund release is a part of ‘Full and Final settlement’ Hence, this might be delayed till the employee settles every clearance.
Let’s understand how Release works. When an employee Resigns, the Reporting manager issues a Letter of Acceptance mentioning the terms and conditions to the Release. The Reporting Manager initiates the Clearance with Knowledge Transfer. Every duty needs to be handed over to the Back-Fill or the employee chosen to work on that role. This ends before the employee leaves the organization.
Every Letter of Acceptance of Resignation, offered during the submission and acceptance of Resignation Letter, clearly mentions that his Clearance is subjected to settling the dues. Hence his Letter of Experience and Relieving Letter would depend on the settlement of his dues. This is that last and the final step to release.
Calculating dues takes a number of areas into consideration. It calculates the number of days left in the Leaves Balance. In case the employee had taken leaves in excess, then he or she might need to pay for those number of days. It also calculates the days served in the notice period. Incase of salary-freeze, initiated at the point of resignation, the amount is usually deducted from remaining salary to be paid. A check on the submission of the office properties is made, to ensure there had been no loss incurred. In case there is a loss of property, such as employee failing to submit an office property including Laptop, Mobile Phone, Data card and other utilities issued to the employee, the amount is deducted from the remaining salary.
The calculation also takes in consideration of the money borrowed by the employee.
Once the internal calculations are over, the process to release the PF and Gratuity amount is initiated.
Hence, until and unless every area is settled, the Clearance and Release Letter of the employee remains impending.
Hope this helps!
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Nabomita is the Founder to Nabomita.com. She is the 100 Women Achiever Awardee, awarded by Government of India , Quoted on ForbesUS, one of the Top 20 HR Influencer in Social Media as declared by SHRM India and one among the Top 100 Technology Influencer in India. Connect with her on @nabomita_smiles , Facebook Page and Google+