HRM – “The Practice of Withholding Salaries” – (MN2M)

MN2M = My Notes To Myself

Even today, in my part of the world, there are companies that resort to ‘Withholding of Salaries’ of its employee(s), for whatever reasons. Primitive actions, I would say.

Well, if a company decides to terminate the services of an employee, it may withhold the salary of that employee (to recover the dues, if any) and make the final payment along with the settlement, at the earliest, as per company norms. For other situations, ‘withholding of salary’ should be avoided.

Many a time, salaries are withheld on flimsy grounds or at the whims of a Reporting Authority. The ramification of withholding-the-salary is no less than issuing a show-cause notice to an employee.

Since his other colleagues will know of his salary having been withheld by the company, it tantamounts to belittling the employee among his other colleagues --- subordinates as well as peers. Not to speak of the hardships that he would have to face at home for his monthly domestic expenses.

Some perverted sub-ordinates and peers may also use the opportunity to indirectly antagonize or belittle him, like the typical mother-in-law as depicted in our Indian films.

We must remember that the moment a salary is withheld, the employee is insulted; it is fait accompli. Since one cannot erase such incidents from one’s memory, the insult will remain in that employee’s mind forever. No employee motivation exercises, HR programmes, … will ever remove the residue of that insult from the affected employee’s mind.

Some of the colleagues of the affected employee would also develop a negative image about the company. There would also be discussions and gossips on that issue in the cafeteria, at informal gatherings, … which are undesirable in any organization.

Companies must therefore have a strict and clear policy on the withholding-of-salaries such that no Reporting Authority would take undue advantage in spoiling the employer-employee relationship. First of all, the practice should be avoided. However, if the salary of an employee has to be withheld, it must have the written approval from the top management. Top Management could be a single person (in smaller organizations) or a Committee in large organizations.

Recently, I was privy to one such incident in another company where the affected employee (a senior person) submitted his resignation giving no room to the company for re-conciliation. And, that company lost a very important resource for a silly action of ‘withholding the salary’ (on a flimsy ground) while releasing others salaries. That incident prompted me to pen my thoughts on ‘withholding of salaries’.

Jaikishan - 30th May 2010