I am working in Kerla, I just would like to know is there any clause for recovery of property damage / or mishandling of employer's property
In our company we don't have this clause in the offer letter. Can this clause be added.
Warm Regards
Ujwala Kurup

From India, Thiruvananthapuram
Dinesh Divekar
Business Mentor, Consultant And Trainer
Labour Law & Hr Consultant
Insolvency N Gst Professional
Amit Sheth
Hr Manager
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Dinesh Divekar

Dear Ujwala,

On the one hand, you have written this post anonymously. On the other hand, you have written your complete name at the bottom of your post. Is this not contradictory?

Secondly, conditions of employment are mentioned in Appointment Letter and not in Officer Letter. Hope you understand the difference between these two.

A letter of Appointment is issued sooner employee joins the organisation. Right at that stage to include the clause stating that losses incurred because of the damages caused to the company property will be recovered from you will be too negative. It could put off employees right at the time of induction.

Do you have standing orders approved and certified by the labour department of your area? Generally, this clause is included in the standing orders. Therefore, no need to make a special mention in the letter of appointment.

Whether you have standing orders or not, you should conduct the domestic enquiry. Let the Enquiry Officer (EO) consider the following points:

a) Whether the employee was authorised to handle the damaged equipment

b) Whether the employee was adequately trained to handle the damaged equipment

c) Was the equipment damaged inadvertently or out of negligence.

Punishment should vary accordingly to the outcome of the enquiry. Secondly, consider the depreciation of the equipment also.

Losses do occur while running a business. You need to absorb some losses and should not try to recover a cent per cent from the employee. That would be malice. If you do that then possibly it will create scare among the other employees and they may get demotivated. Therefore, you need to strike balance between the motivation of other employees and the recovery charges.


Dinesh Divekar

From India, Bangalore

Dear Ujwala,

Had you mentioned the type of establishment to which your query is related, it would have been easier for others to answer. Causing monetary losses or damage to the property of the employer by an employee is normally associated with the duties and responsibilities assigned to his/her job. For example, the job of a cashier is to collect and pay money as per the directions of his/her employer and in that if he/she makes short collection or excess payment by oversight, apart from the disciplinary action, if any, he/she is liable to make good the loss thus caused by him/her. Similarly, if some valuable articles are entrusted to him for any work relating to his employment or for the sake of safe custody and he causes damage to them in the course of their use in utter disregard of the precautionary steps or loses them for any inexplicable reasons, then he is liable to make good the loss thus caused. In such cases the employer should compute the monetary value of the loss and after affording a reasonable opportunity, proceed to recover it from the employee. But, when the value of the loss is too much to be compensated entirely by the employee concerned, the employer has no option other than a proportionate recovery within the means of the employee as suggested by Dinesh. For jobs involving such a nature of employment risks, it is quite usual to mention in the appointment order when the nature of the job is purely or principally supervisory or managerial. In other cases, you can act as per the provisions of the Standing Orders applicable to such employees. Even otherwise, the provisions of deduction u/s 7(2)(c) of the Payment of Wages Act can be resorted to by the employer to recover the losses if the concerned employee as well as the establishment fall within the purview of the Act. In the case of any other establishment to which the Payment of Gratuity Act,1972 is applicable, if the loss results in the termination of employment of the concerned employee, his gratuity can be forfeited to the extent of the damage or loss so caused as per Sec.4(6)(a) of the Act.

From India, Salem

Yes. You can add a clause that employee is responsible for properly handling employer property entrusted to him/her. Employer must take a signed copy of property list handed over to employee.
From India, Pune
A R Saoji

Dear Ujwala,
The appointment letter need not to have any Clause for Recovery Of Property Damage / Or Mishandling Of Employer's Property and it is sufficient to include that the employee needs to follow all "service regulations" as may be framed by the management as per Firm's HR Policy. There should be detailed provision for dealing with misconducts committed by employees and procedure for dealing with such misconduct alongwith proper delegation of powers to respective officers supervising works of such employees. Recovery for damages of property can be made only after establishing the misconduct of neglegence in duties resulting into such damages either by obtaining the confession in the submission made by employee to the notice of show cause issued or after establishing the neglegence through proper process of domestic enquiry against the employee concerned after giving adequate opportunity for employee to put his defense.
A R Saoji
Techno-Legal Consultant

From India, Nasik

The company has its standing orders or conduct,discipline & appeal rules or service rules. You may follow this and proceed with disciplinary action for bringing damage to company's property. If you do not have these rules , it's better to have it.
From India, Bokaro
Amit Sheth

Generally , these points are mentioned in Employment Agreements or are captured in some policy.
Also check in employee code of conduct (in remote cases) if company has limited documentations published.
Basically individual / group as per case would be liable in case of damage done intentionally or negligence (job role) however if the damage has happened due to causes other than you then you cannot be held liable.

1. What is the procedure if an employee made any damage to the company property intentionally?

2. What is the procedure if an employee made any damage to the company property without any intention or unexpectedly?

In our company, we had the following departments.

It department, maintenance department, hr, cctv operator, factory manager.

The case occurs in maintenance department.

From India , Madras

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