Pay for unused vacation: Can India employer refuse to encash leaves? I work for a small tech company (9 employees) in India. My appointment letter states that I get 2 days of leave for every month of service rendered. I have accumulated 20.5 days of unused leave over the last 2 years. I submitted my notice of resignation two months back (2 months notice period as per appointment letter). The two months notice ends in a few days. Now, the Founder/CEO says that my leaves will not be encashed since the company does not have a leave encashment policy. My question is: Can my employer legally refuse to encash my leaves? Please let me know if any more information is required.
There seems to be one national law about leave, the Factories Act, 1948 §79, which grants an adult employee 20 days of paid leave after a year of employment, assuming the person has worked the required number of days within the year. Sub-section 3 addresses accrued leave at the end of employment (for whatever reason), that he: shall be entitled to wages in lieu of the quantum of leave to which he was entitled immediately before his discharge, dismissal, quitting of employment, superannuation or death, calculated at the rates specified in sub-section (1), even if he had not worked for the entire period specified in sub-section(1) or sub-section (2) making him eligible to avail of such leave In the case of a person quitting, the law continues and such payment shall be made (i) where the worker is discharged or dismissed or quits employments before the expiry of the second working day from the date of such discharge, dismissal or quitting As for accumulation of leave, sub-section (5) says If a worker does not in any one calendar year takes the whole of the leave allowed to him under sub-section (1) or sub-section (2), as the case may be, any leave not taken by him shall be added to the leave to be allowed to him in the succeeding calendar year: Provided that the total number of days of leave that may be carried forward to a succeeding year shall not exceed thirty in the case of an adult or forty in the case of a child So there is a statutory "use it or lose it" element. That said, the question is whether you are a "worker" as defined by that act. The definitions say: "worker" means a person employed directly or by or through any agency (including a contractor) with or without the knowledge of the principal employer whether for remuneration or not in any manufacturing process, or in cleaning any part of the machinery or premises used for a manufacturing process, or in any other kind of work incidental to, or connected with the manufacturing process, or the subject of the manufacturing process but does not include any member of the armed forces of the Union Tech work is typically not considered to be "factory work" and is not obviously part of manufacturing, but writing software might be work "connected with the manufacturing process". There is an act implemented at the state level (Maharashtra version here), the Shops and Establishment Act. Ch VII of the act governs leave: the terms are similar to the above act in terms of accrual, number of days, prior service. However the payout on termination wording is different: If an employee entitled to leave under sub-section (1) [or (1-A)] is discharged by his employer before he has been allowed the leave, or if, having applied for and having been refused the leave, he quits his employment before he has been allowed the leave, the employer shall pay him the amount payable under section 36 in respect of the leave The important difference is that the payout condition is conditioned on either being fired, or having applied for the leave and being refused (after which point you may resign). If you don't make a claim for leave and you resign, then the conditions of that law don't appear to apply. But, in another state, the wording could be different, so it depends on your state. The definition of "commercial establishment" includes "legal practitioner, medical practitioner, architect, engineer, accountant, tax consultant or any other technical or professional consultant". It is possible that a different state's version of the act includes a payout requirement.
In the U.S. severance payments are not provided for statutorily, and are rarely made when an employee quits or is fired for cause. However, even when not provided for within contracts it is common to see voluntary severances paid during lay-offs. Furthermore, in the U.S. it is more likely that they would be "laid off" in order to qualify for unemployment insurance. In Pennsylvania one can make claims on the state-run unemployment insurance system only if one is able to work and does not refuse suitable work when offered. If one quits one is not eligible for these payments. Ultimately unemployment claims are born by the employer (since their legally-mandated unemployment insurance premiums are adjusted based on realized claims). So managers with the authority to layoff employees can impose real costs on their companies, both in terms of direct severance payments (which may be optional), and in terms of the inflated unemployment premiums that will hit the company down the road. However, I have never heard of a company attempting to recoup such costs from managers, since such decisions are specifically delegated to managers with hiring/firing authority. It seems much more likely that a manager deemed to have abused the company's purse would be demoted or fired rather than being sued, unless there were some gross fraud involved (e.g., kickbacks).
Does it matter whether employer is company or individual? No. Must certain amount of notice be given? Yes - the notice period maybe specified in the contract but even if it isn't there are statutory notice periods that apply depending on length of employment etc. So if the following criteria are met they are legally classed as an employee they have worked for the employer for at least a month Then certain minimums apply: If they have worked for the employer for: 1 month to 2 years – statutory notice is 1 week 2 to 12 years – statutory notice is 1 week for each full year they have worked 12 years or more – statutory notice is 12 weeks A notice period in the contract (i.e. &quot;contractual notice&quot;) can exceed the statutory minimums but it can't reduce them. What other requirements are there that must be followed? This is pretty broad and I don't really want to reproduce everything here but the ACAS page on dismissals covers the basics. Can notice be dispensed if the task is of an urgent nature and employee must be replaced as a matter of urgency? Dismissal without notice is possible in cases of Gross Misconduct but that is about what the employee has done - nothing to do with the urgency of replacing them. However, if both parties agree a notice period can end early: The employee can ask if they can leave before their notice period ends. They should get agreement from their employer in writing. If the employee does not get agreement to leave early they could be in breach of contract. If the employee leaves early, the employer only has to pay them for the time that they’ve worked. If an employer wants them gone immediately they can do that if it's either in the contract but they still have to pay them for the notice period. They can also offer payment in lieu of notice if it's not in the contract but it's then up to the employee if they agree.
They have exactly zero legal grounds to withhold your last paycheck. From Code of Virginia 40.1: All employers operating a business shall establish regular pay periods and rates of pay for employees except executive personnel. All such employers shall pay salaried employees at least once each month and employees paid on an hourly rate at least once every two weeks or twice in each month, except that (i) a student who is currently enrolled in a work-study program or its equivalent administered by any secondary school, institution of higher education or trade school, and (ii) employees whose weekly wages total more than 150 percent of the average weekly wage of the Commonwealth as defined in § 65.2-500, upon agreement by each affected employee, may be paid once each month if the institution or employer so chooses. Upon termination of employment an employee shall be paid all wages or salaries due him for work performed prior thereto; such payment shall be made on or before the date on which he would have been paid for such work had his employment not been terminated. The Virginia Department of Labor and Industry unfortunately does not take claims if there is a written contract and recommends you pursue the matter in court. You may want to consult with a local labor attorney to get an idea of where to go from here, even if you plan to file in small claims court. Virginia extortion law doesn't appear to apply to withholding stolen property, but their claim that release of the last paycheck is consideration for signing the NDA may be some other civil wrong, like conversion. I do not know whether you could recover damages above the wage owed for that.
When does a CEO (or the investor or the board) have to notify employees they will be unable to pay them for work already done? Directors and officers (which includes executive officers like the CEO) but not investors have a duty to ensure that the corporation does not trade while insolvent. In this context, "trading" means incurring new debts and "insolvent" means being unable to pay their debts as and when they fall due. Unfortunately, it is a judgment call by those directors and officers and the exact point where it occurred is generally only clear with hindsight, if then. For example, you describe a "tumultuous week"; quite likely the company was urgently seeking additional sources of funds and until it was clear they had no prospect of getting those, they weren't insolvent. The director's duty is to act reasonably (a broad range of activities) and not be overly pessimistic nor optimistic about the company's prospects. As far as I know, they don't have a positive duty to inform their creditors that they can't pay. If that happens their obligation is to file for bankruptcy and their obligations cease - the bankruptcy trustee then invites creditors to prove their debts. Does an investor have a responsibility to ensure all employees are paid? No. That is pretty much the purpose of limited liability corporations: to shield the investor from the debts of the company. Do the employees have any recourse? Yes. Employees are typically priority creditors in Colorado and rank ahead of many other creditors. However, if the company is not based in Colorado different laws will apply. Of course, you must be an employee of the company - this priority doesn't apply to true independent contractors. Also, the liquidator's fees rank ahead of anyone and unless the bankrupt company has adequate realizable assets, even employees are unlikely to get a dividend. You also need to be clear who you work for as you say "that last Friday was paid for/fronted by the HR company". Do you work for the bankrupt company or this (non-bankrupt) HR company? If the latter then they owe you your wages and the bankruptcy of their principal is their problem, not yours. Is "secured debt" real? And does that reduce the likelihood of receiving a paycheck in a bankruptcy settlement? Yes. There is a priority in the payment of creditors in liquidations and it varies by jurisdiction but a typical arrangement might go like: Liquidator's Fees Employee wages and entitlement accrued within the last 6 months Certain taxes Secured creditors (who may have a ranking among themselves) Unsecured creditors (including employee entitlements more than 12 months old, other taxes, trade creditors etc.) Shareholders (who may have a ranking among themselves) Basically, the lower you rank, the less likely you are to see a dividend. Does any of this change if the company doesn't file for bankruptcy? Sure. Until the company does this it is still a going concern and it has to pay its debts. If it doesn't it's creditors can sue and recover their monies as best they can which may include forcing the company into bankruptcy.
It isn't 100% clear from the question if a case has been filed in court, or someone was just planning on filing a lawsuit, which is an important fact. It seems like the ex filed a court case and you hired attorneys who responded. If there is a court case filed, that can't just be abandoned until all the i's are dotted and t's are crossed in the eyes of the court. The lawyers can't quit unless the court gives them permission to do so. Usually, lawyers are entitled to be paid for all of the work they do and out of pocket charges they incur in a case, until it is wrapped up, even if some wrap up work happens after the event that determines the final outcome of the case like your ex deciding to abandon his arguments. But, otherwise, if there isn't a pending court case, you normally have the power to tell your lawyers to stop everything and give you the moment left (if any) in your retainer. At first read, it almost sounded as if your lawyers are willing to do that, but are warning you that your ex might continue to be a problem after the lawyers quit and that if that happens, it will be more costly and time consuming to start all over dealing with the threatened lawsuit that your ex made, than it would be to get it over and done with now. But, upon closer inspection, it seems that there is a pending lawsuit and that this is the issue.
the company does have the right to "verify the eligibility of the person and terminate the service to the ineligible at any time" is pretty unambiguous. They have assessed your eligibility, determined you don't have one and have terminated the service. They are completely within their rights to do this. If you feel that they have assessed your eligibility wrongly then you can dispute their assessment - either through whatever dispute resolution is detailed in the contract or by going to court if the contract is silent. The fact that they previously assessed you as eligible (or didn't actually make an assessment) is irrelevant.
At-will employers can fire you for almost any reason or no reason at all, aside from a few protected reasons for termination (defined by things like gender, race, religion, disability, etc.). &quot;Employees who want to work remotely from another country&quot; is not a protected class of individuals, so the company could almost certainly fire you for this with no repercussions whatsoever. Whether they will or not is an different question that's entirely dependent on your specific situation, but in general, US at-will employers have a very wide latitude to &quot;tell you no&quot; by simply firing you. All you can do is ask your manager. If they say no, then the answer is no. They do not require any &quot;grounds&quot; or justification for their decision.