Consultant & G.m.
Agm - Hro, Compensation & Benefit Mgt,
Labour Law Consultant
+5 Others

Dear All,
Would like to know the pay policy for employees involved in fraud and have been asked to go on leave.
Will the company has to continue with pay?
If yes, is there any %'age slab fixed, etc?
Can employer put the salary on hold till the investigations are completed?
Request your inputs backed by labour laws safe guarding employer interest.

From India, Mumbai
Dear friend,
As per the infn.provided, U have sent him "on leave" and he is "on leave" and hence discontinuing payment of salary legally is not possible.
Though practically you may stop payment of salary unless a preliminary investigation/inquiry is initiated into the alleged fraudulent activity and finding a prima facie evidence of his involvement in the fraud and thereon suspending him pending a detailed inquiry stopping salary is not possible.
All these process should be conducted as per the "Standing Order" governing the conduct & discipline of employees. If you don't have an approved Standing Order then you have to proceed with the generally followed procedure for a "domestic inquiry" followed by action possible under Cr.PC/IPC when a fraud has been established beyond doubt.
To start with you should find out the nature of fraud and then issue a "show cause notice" asking for his explanation and then proceed further depending on the merit of the case.
With regards,

From India, Bangalore
In geenral, there will not be any pay policy for the employees who commit fraud. Need to get the matter investigated and basing on the preliminary findings, employee can be placed under suspension in which case, he is eligible for subsistence alloowance as per the standing orders of the company. Thereafter, you should go for regular disciplinary proceedings followed by charge sheet, consideration of explantion and ordering departmental enquiry, appointing Enquiry Officer and Management Representative, comply with principles of natural justice.
Basing on the out come of the findings of the Enquiry Officer, Disciplinay Authority can impose appropriate punishment.
Besides the above, criminal proceedings can also be inititated against such employee as per the Policy of the Company

From India, Madras
I agree and appreciate the two members views.
my suggestion is unless fraud is recorded, you cannot stop salary payable and punish him with stop payment action. to establish record, initially send a letter seeking expalanation with a stipulated time. upon hearing the whole epsode, you may start domestic enquiry with facts and figures. Then, supend him and pay subsistance allowance during the period.

From India, Hyderabad
Dear All,

I appreciate the comments of all the members. Here the employee is found to be involved in the fraud which is either under investigation or is to be investigated. The employee has been asked to go on leave. Untill he is on leave you can not stop his salary.

As fraud is detected by some discreet enquiry in the company and so after joining of the employee gave him Charge Memo seeking his explaination for the same. If You have approved standing orders with you then go ahead according to the company disciplinary proceedings in consonance with the right of natural justice or otherwise arrange for holding domestic enquiry according to the right of natural justice. Here the Departmental Enquiry need not to be accurately same as is applicable to the employees of the Govt. under Article 311 of the Constitution of India. Just hold an domestic enquiy in consistence with the right of natural justice and decide the case on the findings of the domestic enquiy.

More over untill the employee is under suspension you have to pay subsistence allowances ( Approx. Half Basic + DA) untill he is engaged in the enquiry.

No doubt you can file criminal case against the employee if it substantiated on the proper evidence.

Thanks to all

Raj Singh Phogat

From India, Delhi
So long stories.. you cant do with salary if the person is on approved leaves and have leave balance. in that case you need to hold the salary or may release a part till then the inquiry overs.
Chill HR

From India, Gurgaon
Question Number 1: What is his designation? Is he in a managerial capacity? Supervisory level? Unionised level?

Question Number 2: What is the nature of fraud? Is it misappropriation or taking money from suppliers?

Fundamental Rule:

Whatever may be the level, if you are framing charges on a misconduct, then conducting enquiry is a must

Pending invstigation, you can keep an employee under " Suspension pending enquiry" This need not elborate the charges at this stage. however You need to refer to your Standing Orders if you have or Standing Orders applicabe in your state which normally prescribes time frame for issuing a charge sheet from the date of suspension. It is normally one week.

During this period, the employee need to be paid subsistence allowance which is 50% of the Basic plus Da. If the enquiry continues beyond three months, then the employee has to be paid 75% and after six months it is full. ( Check SO for correct period)

This answers your question as to how the leave is to be treated.

Practical approach:

Normally at supervisory and managerial levels, people are asked to proceed on leave, and after investigation, if he is found guilty, they are asked to resign. Ther may be few variations but this is the genral practice in India. Even at other levels, in case of fraud, if not contested, employees are asked to resign and benefits are given whatever is due. some companies recover the amount involved in the fraud

T Sivasankaran

From India, Chennai
Respected members,
i wish to suggest one or two ways to give treatment for fraudulent or misconducted people
people involved in the fraud will be punished not only in the way of suspension or sending on leave but be may transfer from the place which is presently working where there is not involvement of such possibility.
He may be overloaded with unimportant work which gives mental and physical strain to reform himself.
This type of treatments will help himself and others not to repeat such things in future it is advantage to the organisation by not paying merely the pay to him.

From India, Visakhapatnam
The concept of ' leave' pending investigation/enquiry into an alleged fraud is alien to industrial law. If your establishment is one governed by Standing Orders and the employee involved in fraud is a workman, the standing orders provide for suspension of the workman concerned, pending further action into the matter.If the employee is not a workman and the company is not governed by the Standing orders, then the company must have framed it's own rules of conduct or terms of contract covering procedure for dealing with such acts of misconduct which provide for suspension of the delinquent employee. An employee undersuspension needs to be paid subsistence allowance at the rates specified under your rules or terms of contract.If you have nothing providing for his suspension and you have sent him on leave, you must be having such enabling provision in your policy in the absence of which questions may arise as to how an employee can be asked to go on leave without requesting for it.


Labour Law Advsior


From India, Mumbai
Dear Friends,
Sai Kumar has made a very valid point. How can you ask an employee to proceed on leave without his asking for leave?
Well, fraud is a serious matter and is best attended to with desired haste and urgency.
One the facts of the fraud comiited have been establised and validated, it would be best to confront the employee with the facts and prevail upon him to admit to the fraud comitted by him, get him to resign and relive him ASAP after all exit formalities are completed.
Yes one does have the option of suspending the employee pending enquiry into the charges levelled against him, porving the charges in the Domestic Enquiry and then if all goes well, dismiss him from the services of the Company.
Filing an FIR against the emplyee, getting him arrested and have criminal proceedings launched against him is another option that can be exercised.
All this would take a long time and the eventual outcome may not be what you expect.
The choice lies with you.
Best Wishes,
Vasant Nair

From India, Mumbai
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