New Delhi, August 13: As India’s white-collar workforce becomes increasingly mobile, HR departments across the country are reporting a sharp rise in a specific category of exit dispute — the refusal, or delay, by resigning employees to return company-issued equipment until their final salary is credited.
The stand-off, often played out over email in the last week of employment, has quietly become one of the most common flashpoints between employers and departing staff, particularly in the education, IT services, BPO and startup sectors.
The Legal Position
Under the Bharatiya Nyaya Sanhita (BNS), 2023, which replaced the Indian Penal Code in July 2024, retaining a company-owned asset after separation of employment can attract three distinct offences.
- Section 316 — Criminal Breach of Trust applies when property entrusted to a person during employment is dishonestly retained after the entrustment ends.
- Section 314 — Dishonest Misappropriation of Property covers situations where the ex-employee converts the asset to personal use.
- Section 318 — Cheating may apply where confidential data or intellectual property is involved.
Legal experts point out that all three are cognizable offences, meaning police can register an FIR and arrest without warrant.
“A laptop or mobile handset issued by the employer never becomes the personal property of the employee, regardless of how long they have used it,” said a Delhi-based labour law practitioner. “Holding it back as bargaining chip is not a civil dispute — it is a criminal act.”
But Employers Cannot Withhold Wages Either
Companies, however, do not have a free hand on the other side of the equation. The Payment of Wages Act, 1936, and the newer Code on Wages, 2019, both make it clear that earned salary must be paid within the statutory window typically within seven days of the end of the wage period.
“An employer cannot legally hold back an employee’s earned salary against a pending asset return. The two are independent obligations under Indian law,” a senior HR consultant explained. “If the employer withholds wages, the employee can approach the Labour Commissioner, and the case usually goes against the company.”
The Labour Ministry’s helpline receives thousands of complaints every year on delayed final settlements, particularly from employees of small and mid-sized firms.
The Correct Handover Protocol
Industry HR bodies recommend a clear, written procedure that protects both parties:
- The employer should issue a written handover receipt at the time of asset submission, listing item codes, IMEI numbers and physical condition.
- The Full and Final Settlement (F&F) should be processed immediately upon verification of returned assets.
- Salary should never be positioned as conditional on asset return in writing, as this can itself invite scrutiny under labour laws.
- Employees should return assets against a signed receipt and pursue salary through proper channels if delayed.
The Rising Trend
HR industry data suggests that nearly one in every eight exit cases in urban India now involves some element of asset-related dispute, up sharply from pre-pandemic levels when work-from-home policies were rare.
“The line between office equipment and personal device has blurred badly,” said a Bengaluru-based CHRO. “Employees carry the laptop home for two years, and by the time they resign, they mentally treat it as theirs. That is where the trouble starts.”
Advice to Both Sides
Legal counsels advise that employees genuinely owed salary should send a formal written request to the HR and Accounts Departments, keep records of every communication, and approach the Labour Commissioner’s office if wages are wrongfully withheld — not hold back company property.
Employers, on the other hand, are advised to issue a final written notice with a clear deadline, offer written assurance of F&F release upon handover, and only then move to file an FIR or civil recovery suit if the employee remains non-compliant.
“Both sides lose in court if they try to take shortcuts,” the labour law expert added. “The law is very clear — return the property, release the salary. In that order, but both must happen.”
