Is relieving letter mandatory?

By in HR

Is Relieving Letter Mandatory?

A relieving letter, while a common practice in many organizations, is not a legal requirement in most countries, including India. However, it is considered a standard and essential part of the employee separation process in the corporate world. Its primary purpose is to formally acknowledge the employee’s resignation and provide details about their employment with the company.

Here are some key points to consider regarding the necessity of a relieving letter:

  1. Employer’s Discretion: Whether or not to issue a relieving letter is at the discretion of the employer. Some companies have established policies mandating the issuance of relieving letters, while others may choose not to provide one.
  2. Industry Practices: In certain industries and sectors, such as IT and finance, relieving letters are more common and often expected by future employers. Job seekers in these industries may find it challenging to secure new positions without a relieving letter.
  3. Employee’s Rights: While a relieving letter is not mandatory, an employee has the right to request one from their former employer. If the company refuses to provide a relieving letter without a valid reason, the employee can escalate the issue to higher authorities or labor authorities if necessary.
  4. Proof of Employment: Relieving letters serve as proof of an employee’s past employment, which can be useful when applying for new jobs, securing loans, or other financial transactions. Without a relieving letter, employees may need to rely on other documents, such as offer letters or experience certificates.
  5. Clearance of Dues: Employers often use the relieving letter issuance as an opportunity to confirm that all dues, such as pending salaries and bonuses, have been settled. This can be beneficial for both parties in ensuring a smooth exit process.

In conclusion, while a relieving letter is not legally mandatory, it is a widely recognized and valuable document in the professional world. Employers should consider issuing relieving letters to departing employees as a standard practice to maintain a positive employer brand and assist their former employees in their career transitions.

Can a Company deny to issue a Relieving Letter?

Yes, a company has the discretion to deny the relieving letter, but this decision should be made based on valid and justifiable reasons. Here are some circumstances in which a company might choose not to issue a relieving letter:

  1. Performance or Conduct Issues: If an employee’s performance or conduct during their tenure with the company has been unsatisfactory, the company may withhold a relieving letter as a disciplinary action. This is often seen in cases of misconduct, violation of company policies, or poor performance.
  2. Pending Dues or Liabilities: If an employee has unpaid dues or outstanding liabilities with the company, such as loans or advances, the company may choose to withhold the relieving letter until these financial matters are resolved.
  3. Breach of Notice Period: If an employee resigns without serving the notice period as per their employment contract or without paying the notice period salary in lieu, the company may consider this a breach of contract and withhold the relieving letter.
  4. Legal or Ethical Violations: In cases involving legal or ethical violations, such as fraud or harassment, the company may withhold the relieving letter as part of a legal or internal investigation.
  5. Non-Compliance with Exit Procedures: Some companies have specific exit procedures that departing employees must follow. Failure to comply with these procedures, such as not returning company assets or failing to complete clearance formalities, may result in the withholding of the relieving letter.

It’s important to note that withholding a relieving letter should be a well-considered and documented decision by the company. Arbitrarily refusing to issue a relieving letter without a valid reason can lead to legal disputes and damage the company’s reputation.

Is a Relieving Letter Mandatory for PF Withdrawal?

In most cases, a relieving letter is not mandatory for provident fund (PF) withdrawal in India. The Employees’ Provident Fund Organization (EPFO), which governs PF matters, primarily requires the following documents for PF withdrawal:

  1. PF Withdrawal Application: The employee must submit a PF withdrawal application, typically Form 19, to the EPFO. This form provides details about the employee’s PF account and reason for withdrawal.
  2. Bank Account Details: The employee must provide bank account details where the PF amount is to be deposited.
  3. KYC Documents: Know Your Customer (KYC) documents, such as Aadhar card, PAN card, and canceled check, are required for verification.

While a relieving letter is not a mandatory document for PF withdrawal, it can be helpful in certain situations:

  • Address Verification: If the employee has changed their address after leaving the company, a relieving letter with the company’s official address can be used as a proof of address.
  • Employment Proof: In case the EPFO requires additional documentation to verify the employee’s employment with the company, a relieving letter can serve as proof of past employment.