Rahul Shukla 06 February 2020

Recovery of incremented salary if any employee leaves organisation with in a period of one year

An employer given salary hike to all it’s employees uniformly based on the salary benchmarking and similar industry practice for retention of employees, then by a common office circular put a condition that if any employee leaves organisation with in a period of one year from the date of salary revision the difference incremented amount will be recovered from Full & final settlement of the concern employee. Whether it is legal to recover the salary once paid to employee by giving the reference of the circular. In this case no formal agreement was executed between employee and employer or in other word employee has not given any acknowledgment on the condition / circular. Please share your input.

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Joy Bose 06 February 2020

Hello,

No, the Employer cannot recover salary after it is paid. The Supreme Court in State of Punjab vs Rafiq Masih (White Washer) AIR 2015 SC 696, observed that

"the right to recover being pursued by the employer, will have to be compared, with the effect of the recovery on the concerned employee. If the effect of the recovery from the concerned employee would be, more unfair, more wrongful, more improper, and more unwarranted, than the corresponding right of the employer to recover the amount, then it would be iniquitous and arbitrary, to effect the recovery. In such a situation, the employee’s right would outbalance, and therefore eclipse, the right of the employer to recover.

So, if the recovery seems unfair and unjust in nature, the employer has no right to recover the salary which is paid. In your case, it does seem that recovering the increment is unjust and unfair.

Regards,

Joy Bose

Feel free to ask further questions