Dinesh Divekar
Business Mentor, Consultant And Trainer
Industrial Relations And Labour Laws
Working As Assistant General Manager (personnel)
Labour & Industrial Laws
Industrial Labour Laws In Kerala
Raj Kumar Hansdah
Shrm, Od, Hrd, Pms
Director Of Company
Consultant & G.m.
Retired From Air India
Bk Mohanty
Head Of People Excellence
Sr.manager (pa & Ir)
+4 Others

Thread Started by #ramesh_chilapur@yahoo.com

A workman/driver while he driving a tractor he damaged to company\'s property. Damaged cost is Rs.2500-00. The cost of damaged is to be recovered from the workman. How to deduct? from his salary/wages. What is the process to deduct fine or any formalities to be made?
25th December 2012 From India, Bijapur
Dear Ramesh,
Conduct the enquiry and assess the cost of damage (which you say is Rs 2,500/-). You can impose fine on the employee but you cannot recover the entire cost of damage from the employee. The amount recovered from employee has to be deposited in Karnataka State Labour Welfare Fund (KSLWF). You cannot keep the amount with yourself.
it may be noted that Supreme Court and various high courts have given rulings on recovering the entire amount from the employee.
In the recent past, famous news channel "Times Now" had to pay Rs 100 crore as cost of defamation. This was due to the small mistake of their news team. It was not possible to recover even 1% of the amount from the employees. Obviously they had to forego these charges.
Dinesh V Divekar
25th December 2012 From India, Bangalore
In my view, Best thing is to conduct the domestic inquiry and conclude by saying "taking a lenient view that this driver caused this for the first time and hence he shall be left with strong warning not to repeat this, on the condition he shall repair the damage at his cost"
25th December 2012 From India, Bangalore
Dear Ramesh

During the course of work; some damage is inevitable, in any business, industry or manufacturing activity. What is important is the record of that person to ascertain whether it was done intentionally or during the course of work.

A damage of about Rs. 2500 is neglegible for a company and such damages are always taken into cosideration.

However, it would be a sizable portion of the workman's salary. Good companies do not recover such INCIDENTAL DAMAGES from the employees.

I shudder to think if management behaves in such Shylockian ways to recover it from the employees. I have worked in industries where the cost of equipments and even some losses run into several lakhs of rupees.

A workman would have to pawn all his coming generations as SLAVES to the management should it think of recovering such damages from workmen.

As an easy example; think of a driver driving a Rolls Royce which meets with an accident and it is damaged; or a pilot flying a Boeing 787 and by mistake it overshoots the runway and gets damaged. In both these example the employees will take several generations to repay the damages !!

Warm regards.
26th December 2012 From India, Delhi
punishment will not correct a man. if he is exceptional in his profession, the issue may be considered leniently. a nominal amount and descend on promotion panel is reasonable. make sure it do not lead to a psychological horror.
26th December 2012 From India, Bangalore
Dear Ramesh
I appreciate the comments of some seniors where they are suggesting not to recover. Being an industry some damage / accident or mishaps are bound to happen. The decision taking of the company's management seemed to have gone biased and trying to teach the worker some lesson through this recovery blah blah ... But all that does not work in real world
In place of this you can give japanese style punishments - say not allowed to drive for 6 months or a 3 month ban on regular activity and doing some non routine work at the place where the damage happened. This way Japanese teach the culprit to respect the exisitence of the surrounding at others place and instill a sense of responsiobility of all his on duty actions. Training and learning is another way you can keep on doing to improve the responsibility showcase of the employees - not a single one.
Empathy while taking disciplanary actions is good idea - as some times these are required but
26th December 2012 From India, Mumbai
Dear Ramesh,
First of all we shall understand the moto of Penalty either it is recovery or lesson teaching for avoiding recurrence. Commonly one can understand that Rs 2,500/- is not huge amount that employer can not bear, So the part remains 'lesson teaching for avoiding recurrence.' which can be confession in common meeting, Advisory Note, Charge Sheet etc.
Try any source as mentioned in Disciplinary Actions for misconduct Under Model Standing Orders
26th December 2012 From India, Mumbai
As our members commented/opined, review the situation whether the driver had acted in negligent manner or otherwise. If the accident/damage had occured in beyond the driver's control then take a lenient view.
If accident/damage occured in violation of rules or in negligent driving, recovery to certain extent as this should be message for other violaters.
26th December 2012 From India, Tiruchchirappalli
You can levy penalty for a damage caused by 'intent', but it is very difficult to prove the same. A written warning seems enough in such cases. Why waste time & effort in meaningless investigations, I am sure there are some important business issues in your company which deserve an investment in time.
26th December 2012 From India, Delhi
Recently our company lost around 15 Lakhs due to negligency of some workers. We have levied a fine of Rs 500-1000 only to showcouse their mistake and as a warning for them to be careful in future.
26th December 2012 From India, Bangalore
Recovering the cost of damage is legal and if the Management is satsified, the same can be done
I saw some comments about depositing the same with Welfare Fund which is not correct. As long as the Management investigates and prove the damage is caused by negligence and a decison taken to recover, the recovered amount comes to the Management and not to welfare fund. In case of levying a fine, then it goes to Welfare Fund
1. Ensure a priper enquiry is conducted to prove the negligence
2. If the negligence is proved, decide whether recovery of cost is a must
3. If the Management still feel recovery is to be made, issue a letter
4. If monthly recovery is to be made ensure, you comply with Payment of wages act
5. If you are levying a fine, the same need to be deposited with Welfare Fund
6. Cost of damage can be rcovered in monthly instalments, or from Bonus or even from gratutity
T Sivasankaran
26th December 2012 From India, Chennai
I agree with Comments of Shri T.Sivasankaran except recovery of damages from Gratuity. Because we can’t recover any thing from Gratuity. Ramesh Rao.R
26th December 2012 From India, Hyderabad
About three yrs back our ground technicians forgot to open the lock clip of the nose wheel of a China airlines aircraft of which we are handling
agents.This clip has to be removed otherwise after takeoff the wheel can not be retracted(folded).After take off the pilot tried to retract the wheel but being locked due to hydraulic pressure the entire wheel assembly got bent.The aircraft some how managed to return and land but was grounded for five days till men and material came from China and the entire nose wheel assembly costing Rs27 lakhs was changed.The client airline claimed the damage from us but the employee concerned was only warned and no money was recovered from him.
26th December 2012 From India, New Delhi
Dear Team,

As suggested by some of our senior members, find out the root cause through inquiry and if you still feel that a fine is to be imposed on him you may do so as per the guidelines given in The Payment of Wages Act, 1936. I am appending the Section 8 of The Payment of Wages Act, 1936 for your ready reckon.

Section 8 of Payment of Wages Act, 1936 discusses about imposing Fines on Employee/Workmen as follows: -

Sub-Sec (1) : No fine shall be imposed on any employed person save in respect of such acts and omissions on his part as the employer, with the previous approval of the appropriate Government or of the prescribed authority, may have specified by notice under sub-section (2).

Sub-Sec (2) : A notice specifying such acts and omissions shall be exhibited in the prescribed manner on the premises in which the employment is carried on or in the case of persons employed upon a railway (otherwise than in a factory) at the prescribed place or places.

Sub-Sec (3) : No fine shall be imposed on any employed person until he has been given an opportunity of showing cause against the fine, or otherwise than in accordance with such procedure as may be prescribed for the imposition of fines.

Sub-Sec (4) : The total amount of fine which may be imposed in any one wage period on any employed person shall not exceed an amount equal to three percent of the wages payable to him in respect of that wage period.

Sub-Sec (5) : No fine shall be imposed on any employed person who is under the age of fifteen years.

Sub-Sec (6) : No fine imposed on any employed person shall be recovered from him by installments or after the expiry of ninety days from the day on which it was imposed.

Sub-Sec (7) : Every fine shall be deemed to have been imposed on the day of the act or omission in respect of which it was imposed.

Sub-Sec (8) : All fines and all realizations thereof shall be recorded in a register to be kept by the person responsible for the payment of wages under section 3 in such form as may be prescribed; and all such realizations shall be applied only to such purposes beneficial to the persons employed in the factory or establishment as are approved by the prescribed authority

Explanation- When the persons employed upon or in any railway, factory or industrial or other establishment are part only of a staff employed under the same management, all such realizations may be credited to a common fund maintained for the staff as a whole, provided that the fund shall be applied only to such purposes as are approved by the prescribed authority.

I hope this may clear your doubts on the procedure of imposing fines on employees/workers. Please remember that those employees who are drawing a monthly salary of Rs. 18000/- per months are covered under The Payment of Wages Act, 1936.


P. Vathiraj
26th December 2012 From India
The procedure of P of W Act need not be followed if his salary is above Rs18000/pm. Varghese Mathew
27th December 2012 From India, Thiruvananthapuram
Recovery of cost is different from imposing fine. Fine is a punishment whereas recovery of cost due to negligence is not a punishment. After due enquiry one can recover the cost as well as impose fine. This is legal position. I am not getting into discussion whether it is desirable or not in this forum. The concerence management must apply their collective wisdom in taking a decision. Advices based on some facts given in this forum is not desirable.
I wanted to reiterate that fine is different from recovery of cost due to damages caused by an employee.
EG Cashier takes Rs 10000/ from cash. It is discovered. Management collects money from him. That does not mean action should not be initiated against him. Even after recovery of money from him, he still could be dismissed after enquiry.
T Sivasankaran
27th December 2012 From India, Chennai
Dear saibhakta
Thanks for providing a real-life case. This is the point I was emphasising.
Even though it was a case of neglegience, the management can not and should not recover the cost from the employees. No courts of law would allow this. At worst the management can dismiss such employees.
Warm regards.

27th December 2012 From India, Delhi
Before deducting the worker should be informed in writing about the damages caused to the company and he should be asked to show cause why Rs 2500 should not be recovered from him. Then you should get his reply and on the basis of that you can direct that the same may be recovered from his next salary in full or in installments of 5 or ten.
If he does not accept that he has caused damage by his negligent driving, then you will have to prove that there was dereliction on the part of driver/ worker by conducting an enquiry.
27th December 2012 From India, Kannur
It is a different thing if the management of a company intends to get all their old equipment to be replaced with new ones by RECOVERING the LATEST cost of old equipment which get damaged by employees while working on them. There would be no DEPRECIATION of Fixed Assets, no need to allocate funds for Investment in new equipment and the only cost a company would incur would be the cost of raw materials !! Salary in any case would be accounted out of the recoveries from employees.

However, in my opinion, Courts may come in way of such illegal recoveries from workmen.

In Delhi & NCR I find that company vehicles are routinely bumped and their lights or car body getting damaged in the heavy traffic of the city. However, I am yet to know of a case where all the cost of repairs or replacement has been recovered from the company drivers. Whatever possible is recovered from the Insurance and remaining is borne by the company. In case such incidents are frequent, the driver is warned or removed; but recovering damages is unheard of.

About the other cases like that of employees embezzling cash; then it becomes a criminal offence. To avoid this, the employees may agree to make good the loss. If they refuse; then the management can not forcefully recover money from them.

At best, the management can lodge a criminal case and let the Law take its own course.

To conclude; management can not decide the quantum or the justification of such recovery nor can forcefully recover money from its employees. To do so forcefully would amount to a criminal offence.

As HR professionals we should give proper, just and legal advice to the management on such issues.

Warm regards.
27th December 2012 From India, Delhi
Dear Mr Ramesh,
First of all as because the damage was done while driving does not necessarily mean that the this took place due to the negligence on the part of the driver unless and until a proper domestic enquiry is held . It could be that there was defective fitting by the maintenance dept. or the quality of the material was defective which all could be revealed during the enquiry proceedings. Moreover the quantum of punishment if established should be in line with the punishment guide lines of the company or as per the model standing orders.
This is a suggestion only.
bk mohanty
Advisor & Sr Consultant
27th December 2012 From India, Bhubaneswar
Dear Mr. Ramesh,
As far as Payment of Wages concerned, only a certain percentage of amount is permissible to recover in the Head Fine and it should be deposited with the State Welfare Fund Board,.
In your case, you are in order to conduct a Domestic Enquiry by giving every opportunity to the delinquent employee observing the Principles of Natural Justice.
It is your prerogative to decide a suitable punishment as per the findings of the Enquiry Officer, ranging from warning, suspension or dismissal as the case may be, but if you give a chance to correct the concerned delinquent employee it is well and good.
w. regards,
Jagdish.K Kochi
27th December 2012 From India, Kochi
Dear Remesh,
It is true that the damages can be recovered by the Workman. But before that the company has to get approval from the appropriate authority ( in Kerala it is labour commissioner) all the Acts which are liable for fine and damages from the workmen salary. At the same time the company has to display the acts which is liable for fines and damages as per the prescribed format in the premises in which the employment is carried out. If the damages caused by the employee is mentioned in the list of acts liable for fines and damages, then the company can deduct the amount from the salary. If it is not mentioned then you cannot deduct the amount from the workmen.
The amount deducted shall not be more than 3% of the monthly salary given to the workmen. The amount deducted has to be deposited in the common fund for the welfare of the workmen.
28th December 2012 From India, Kochi
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