Query
Dear Friends, I need your valuable opinion and guidance on the following.

In a manufacturing company one of the supervisor is stealing valuable materials continuously every day for the past 1.5 years. one fine morning from the camera and MIS from the sources it was found. The concerned supervisor also agreed and gave a letter in writing. His gross salary is more than 30 thousand. His basic is less than 10. He was suspended pending inquiry. He agreed to compensate from his gratuity and annual bonus. it works out around 1.5 L. In this case whether domestic inquiry is required for terminating his services? 2. Will it be legally right to adjust the gratuity and annual bonus on his request in writing without conducting inquiry.

Anbu Loganathan
HR Associate

23rd October 2017 From India, Hosur

PARTICIPATING IN DISCUSSION:
Dinesh Divekar
Business Mentor, Consultant And Trainer
Umakanthan53
Labour Law & Hr Consultant
Natraj@sakthimanagement.com
Head - Outsourcing
Bharat Gera
Principal Hr Consultant
KK!HR
Management Consultancy
+2 Others

Dear Anbu Loganathan,

You need to order two types of enquiries. One is to investigate the theft and another domestic enquiry to establish culpability of the accused. Latter is logical sequence of the first.

You need to order enquiry to investigate the theft case as your company needs to investigate procedural flaws. Once stores issues the material to the production, why reconciliation was not done to check whether the material issued was used in the production or not. Issue of the excess material than the production went noticed for 1.5 years! Therefore, you need to investigate whether there was involvement of more than just production supervisor. Secondly, the theft is also a result of laxity of the security.

Once the main enquiry completes, based on the findings and recommendations of the enquiry, you may order the domestic enquiry. Admission of guilt by the accused is no substitute for the domestic enquiry itself. Follow regular process. The statement provided by the supervisor owning responsibility for swindling the company material can be used in the domestic enquiry.

Your last question is "Will it be legally right to adjust the gratuity and annual bonus on his request in writing without conducting inquiry?" I do not think it is advisable to do so nevertheless, legal experts will give reply to your query.

Thanks,

Dinesh Divekar
23rd October 2017 From India, Bangalore
1. Whether domestic inquiry is required for terminating his services?
Yes it is required.

2. Will it be legally right to adjust the gratuity and annual bonus on his request in writing without conducting inquiry.

Gratuity can be forfeited as per Gratuity Act.
But Inquiry is essential.

Regards,
Nethaji
24th October 2017 From India, Chennai
Dear Friend,

Besides correct advice given above, bonus can be adjusted against recovery.

Warm Regards

Bharat Gera
HR Consultant
25th October 2017 From India, Thane
Dear Anbu Loganathan, You have mentioned that the delinquent is a supervisor drawing wages approx. Rs. 30,000/- . Assuming that he is performing supervisory duties (like allocating work, granting leave, requisitioning of materials or store item, does performance evaluation of certain employees etc ) he will not be a workman and hence cannot claim the protection granted to an industrial workman. Be that so, the query says that he was suspended from and he has given categorical admission of guilt (there must be no conditions attached to the admission) you need not go for inquiry and straight away punish him as proposed.
As regards adjustment from bonus & gratuity, there is no problem in adjusting the bonus as per Section 9 of the Act. The provision reads as follows:
(9) Disqualification for bonus.- Notwithstanding anything contained in this Act, an employee shall be disqualified from receiving bonus under this Act, if he is dismissed from service for--
(a) fraud; or
(b) riotous or violent behaviour while on the premises of the establishment; or
(c) theft, misappropriation or sabotage of any property of the establishment. :
As regards gratuity, recovery is possible under Section 4 (6) of the Payment of Gratuity Act 1972 , which reads as follows:
(a) the gratuity of an employee, whose services have been terminated for any act, wilful omission or negligence, causing any damage or loss to, or destruction of, property belonging to the employer, shall be forfeited to the extent of the damage or loss so caused;

So, legally you can take the proposed action. Hope the above clarifies. KK!HR
25th October 2017 From India, Mumbai
Dear Friends,

I agree with the statement by KK!HR which states that the Supervisor cannot claim the protection granted to an industrial workman but I wish to differ with him further.

Here I will not advise that there is no need to go for inquiry and straight away punish the supervisor as proposed.

He can challenge the termination and seek relief in civil/labor court as deemed fit by him and his lawyer.

Without proper inquiry in to alleged charges if you pass termination order it shall be denial of natural justice. On what grounds you shall justify denial of Bonus and forfeiture of gratuity?

To my understanding, Principles of Natural Justice are part and parcel of civilised society and it forms the very basis of Labor Laws in India. That is why Indian Employment Laws provide for conducting enquiries when employer observes that an employee has committed misconduct. Though the supervisor is not subjected to certain Labour Laws in India, you can not be denied the Principles of Natural Justice - right of being heard.

You need to look at the most reasonable and balanced solution. You can explore the option of sitting with the Supervisor and persuade him to quit/resign without any heartburn and financial and legal burden on any party.
29th October 2017 From India, Mumbai
Sir, I agree with Korgaonkar Sir that the better option is to hold enquiry, but in private sector there is some amount of risk taking and the Civil Court does not have the powers vested in the Labour Court, it can give the relief of declaration that the termination is bad for violation of principles of natural justice and grant compensation for the illegality committed . But this is not as good a relief as is possible in the Labour Court where reinstatement with back wages and consequential benefit is possible and the categorical admission of guilt would come very heavily against the delinquent .
29th October 2017 From India, Mumbai
Thank you Mr.Korgaonkar for inviting me to participate in this discussion.
Though there is no such thing as domestic enquiry in the process of disciplinary action taken by the employer against his erring employee elsewhere in the world, it has become an integral part of disciplinary proceedings in the realm of employment in India. Even though under the contract law, pure and simple, an employee may be liable to dismissal, without anything more, Courts will set aside the order of dismissal and direct reinstatement of the employee when the dismissal is not preceded by a fair and proper enquiry affording all reasonable opportunities to the delinquent to defend himself. Thus in India, the conduct of domestic enquiry presided by an independent enquiry officer into the charges of misconduct against an employee before the disciplinary authority inflicts any punishment including dismissal has acquired judicial recognition as an inevitable phase of judicious dispensation of the Principles of Natural Justice.
At the same time, dispensing with the enquiry by the employer before awarding punishment is also recognized by the Judiciary under certain circumstances. If a workman against whom disciplinary proceedings are instituted admits his guilt, there is no necessity for the employer to hold any enquiry. This position is clear from the following decisions:
Central Bank of India v. Karunamoi Banerjee [ 1967 (2)LLJ 739 SC ], The Associated Cement Co.Ltd v. Abdul Gaffar[ 1980 LIC 683 ], Hindustan Aeronautics Ltd v. B.Gulab Singh [1986 (2) LLJ 95], State Bank of India v.Kannabiran [ 1986 (1) LLN 462 ], TN Handloom Weavers Co-op Society Ltd v. Dy Commissioner of Labor ( Appeals) [ 1998 (92) FJR 179 ].
But the admission of guilt by the delinquent workman must be in clear terms and should not be vague for the Supreme Court had already held categorically in Jagdish Prasad v. State of Madhya Pradesh [ 1961 SC 1070 ] that in the absence of clear or unambiguous admission of the guilt, dispensing with the conducting of an enquiry would constitute serious infirmities in the order inflicting punishment. In this regard it would be useful to go through the following legal position explained by the Andhra Pradesh High Court in K.Venkateswaralu v. Nagarjuna Grameena Bank and another [ 1995 (2) LLJ 492 ]:
(1) In the face of an unconditional and unqualified confession of guilt by the delinquent employee, there can be no argument that the procedure of enquiry should have been followed notwithstanding such admission or confession.
(2) If a misconduct is admitted then this is the anti thesis to the violation of the principles of natural justice or victimisation.
(3) If the workman admits the charges in his reply to the charge-memo or before the enquiry officer, there is no obligation on the part of the employer to hold enquiry or lead evidence on merits for it would be an empty formality.
(4) In case of confession by the employee prior to the charge, it should be in his own hand writing to rule out the possibility of coercion or inducement.
(5) Since enquiry in a disciplinary proceedings commences with the issuance of charge-memo and ends with the final orders, the admission of guilt by the delinquent in his reply/explanation to the charge memo should be considered as admission in the course of enquiry and not in pre-enquiry.
Decision is with the Management of the poster.
1st November 2017 From India, Salem
Dear Mr Anbu
In Anil Kumar Haldar v Saraswathi Press Ltd, the Calicut HC had held that Gratuity can be adjusted against dues when the employee has given an unconditional consent. Regards.
N Nataraajhan, Sakthi Management Services (Hp : + 91 94835 17402 ; E-mail : )
2nd November 2017 From India, Bangalore
Thank you all friends,

We have started domestic Inquiry, during the inquiry came to understood that his co-staff (both higher and lower level)are also availing the benefit accrued in this transaction. Will it be possible to pull all the staff, but as a company we don't have any evidence except this supervisors voice during the enquiry. How to proceed in this case.

Regards,

Anbu Loganathan
HR Associate & Consultant
Ph: 9962231344/mail:
2nd November 2017 From India, Hosur

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