Labour Law & Hr Consultant
Industrial Relations And Labour Laws
Management Consultancy
Srinath Sai Ram
Hr Manager

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Sir/Madam, I am presenting a Case Study and request to throw light on the issue. The Annual Increment is given on 1st of January every year. An employee has been imposed with a Major Penalty - Reduction by three Stages for three years with Cumulative Effect w.e.f. 03.03.17. The reduced Pay is Rs.35,120. Therefore, the reduced pay will continue till 02.03.2020. The questions are: 1. Whether on completion of the Penalty i.e. 03.03.2020, the Employee is entitled for Rs.36,180 (i.e. Rs.35,120/- + Annual Increment of 3% for 2020). 2. The Pay as on 03.03.2020 shall be Rs.35,120/- and he would draw increment on 01.01.2021. If the Increment is effected on 01.01.2021, does it not tantamount to violation of the Penalty Order that the implementation for three years only has been extended by another 10 months. Please explain.
From India, Hyderabad
Dear MPPK,
Better you could have given the extract of the operative portion of the orders of punishment for the sake of readers' clarity of understanding. Well, the punishment is " Reduction by three stages for three years with cumulative effect from 03-03-2017". As the said punishment is reduction to a lower scale of pay by three stages for a period of three years, it means the employee would be at the reduced scale for three years from 03-03-2017 to 02-03-2020 without annual increments. Because of the cumulative effect of the punishment, he is eligible to draw his next increment from the reduced stage only after 02-03-2020. Since his normal increment falls in the first quarter of every year, i.e., during the period from January1 to March31 and the punishment being reduction to lower scale by three stages and not stoppage of three consecutive increments, there would be no change in the quarter of sanction of normal increment for the year 2020 but its monetary effect would be from 03-03-2020 onwards.

From India, Salem
Dear MPPK,
You may consider this case, either as the terms of 'Employment" or as per standing orders as applicable to the employee.
The fact of the case is given incomplete. If you may provide more facts then we may give better advise.
V K Sharma

From India, Delhi
Please specify the clarity required in the instant case study.
From India, Hyderabad
Dear MPPK, Please upload contents of Punishment Order.Background of the Case in full
From India, New Delhi
Based on the data available, the reduced pay is Rs.35,120/pm and it continues so till 02.03.2020 and from 03.03.20 the pre-reduced salary has to be restored and the employee will draw next increment on 01.01.21. Otherwise the punishment order is breached.
From India, Mumbai
I am not sure (there is no mention) of the reason for which such "Capital Punishment" is prescribed. Normally deviating from the commitment made on Salary in the "Letter of Appointment" is called "unlawfull". There must be some very special reason that might have caused the Employer to take such step. I have a feeling that the Employee is being shown the door for the said reason. I thus called it "Capital Punishment".
I just had read here a Supreme Court Judgement that "no sympathy be shown in case of misappropriation of fund at work place". IF that be the reason my comments here stands withdrawn.
As I do not want to presume any further, I would request for the "Crime" for the prescribed "Punishment"

From India, Pune
Dear MPPK,
This is in response to your reply dt 19-11-17. The replies of the various members responded to your query so far might show you the clarifications they need further. With due respect to them, I infer that this is a case of punishment awarded to an industrial employee either governed by the Standing Orders certified under the IE(S.O) Act,1946 or the service regulations under the contract of employment is the presumption prevailing in their minds. But my inference from your original query is that it is a case involving a Central/State Govt employee governed by the Civil Services ( Discipline)Rules or an employee of a quasi-Government Organization. That's why I generally insist that every query relating to disciplinary action on employees should always contain the relevant particulars like the type of the organization, employee classification, his salary or pay scale, nature of misconduct, Rules under which disciplinary action was taken and punishment awarded and so on.

From India, Salem
I would like to add something else. The wording in the punishment order is like, reduction to lower grade by three stages with cumulative effect and not stoppage of increment for three years. There is no stoppage of increment. If we are putting him in a grade three stages lower than the present scale, why can't we pay him increment annually from that lower stage? Then also he will be reaching the present pay only after three years. Now if we are reducing his pay and again applying stoppage of increment, then will it be challenged by the employee saying that there is nothing in the order which says that increment should be stopped?
In the case of 'stoppage' of increments with cumulative effect, it is very clear that he will start getting increments from 2020 and that also from the pay that he is getting now. Had it been stoppage of increments 'without' cumulative effect he would have received all the three increments not paid to him in 2017, 18 and 19 in 2020 and there would not be any loss to him other than the marginal loss by way of other components of salary which are percentages of the basic salary and the implied interest on the amounts.
Reduction to a lower grade itself is a major punishment and when there is a cumulative effect by which the employee will start getting his increment from the reduced scale only after three years, the gravity of punishment will become more.
For an academic interest we may go through the attached Supreme Court verdict in Punjab State Electricity Broad Vs Raj Kumar Goel.
Madhu T K

From India, Kannur

Attached Files
File Type: pdf Holding of increments with cumulative effect.pdf (129.0 KB, 57 views)

Dear Mr.Madhu,
I fully endorse your view point as far as it relates to the punishment of reduction to a lower grade of pay/rank. But, here it is " reduction by three stages for three years with cumulative effect " effective from 03.03.2017. That implies that reverting back to the third lower stage in the same scale of pay and remaining at that stage continuously for a period of three years. So, there comes an automatic bar on increments during the entire stretch of the afore-said three years starting from 03.03.2017 because of the cumulative effect. Please ponder over and correct me if I were wrong.

From India, Salem

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