A Manufacturing Company had employed 2 employees (do not fall under the definition of workmen) at one of its Distributor Office at Kolkata. Their salary being paid by Company. Their duty was selling Company’s product to Retailers in Distributor territory. Company stop paying salary to them since February, 2020 as both the employees were unable to recover the dues from Retailers & they also stop rendering services to the Company. Though Company had made a payment of Rs.20,000/- in July, 2020 for their conveyance charges to follow up Retailers to make payment. Till date Company have not issued termination letter to them neither they had come to ask for salary.

Ques - What precautionary measures have to be taken by the Company so that liability of paying salary to the employees who had stops rendering services to it for more than 10 months, would not arise in near future?

From India, Lucknow
Dear Manish,

You have written, "Company stop paying salary to them since February 2020 as both the employees were unable to recover the dues from Retailers & they also stop rendering services to the Company."

Did you inform the employees that their salary will be linked to the recovery of the dues from the retailers? If yes, how did you inform and have they acknowledged the receipt of the letter? Whatever the fault of the employees, you cannot stop 100% salary of the employees. You should have paid the minimum wages. Otherwise, you have suspended the employees and because of their suspension, they would have become eligible to get the subsistence allowance.

If the inability to recover the dues from the retailers was part of the Job Description (JD) of the employees then you could have issued them a warning letter and thereafter a show-cause notice. After withholding the wages since Feb 2020, what correspondence has been done with the employees?

Further, you have written, "Though Company had made a payment of Rs.20,000/- in July 2020 for their conveyance charges to follow up Retailers to make payment. "

Was a payment of Rs 20,000/- against reimbursement of the conveyance allowance or any other allowance? Did the employees raise the claim? Was it on actual bills produced by them or just "on account"? Anyway, the reimbursement claim cannot be linked to the monthly salary as such.

Ques - What precautionary measures have to be taken by the Company so that liability of paying salary to the employees who had stops rendering services to it for more than 10 months, would not arise in near future?

Reply: - There appears to be a goof-up from your side also, however, I recommend you order the domestic enquiry. I doubt whether the employees will depose before the enquiry. However, if the employees do not depose before the enquiry, give a fresh date. If the employees fail to depose even for the second time then take a disciplinary action which could be the termination of their services.

Ordering the enquiry, sending the letters by a Speed Post, all this may sound bureaucratic, however, to generate the proper records, following the correct procedure is necessary. You may send the scanned copies of the letters by email also. Take a printout and preserve in the file.

Maintaining the meticulous records is the essence of the disciplinary procedures. Therefore, do not give any shortcuts.

Thanks,

Dinesh Divekar

From India, Bangalore
I believe there was shortfall in maintaining and exercising control over the performance of employees and escalation for recovering the amounts from retailers etc.
In any case the salary can not be stopped but disciplinary action can be intiated with proper care and records at hand.
Interaction with employees and initiating corrective actions and proper eatblishment of SOPs would help in future.

From India, Vadodara
nathrao
3096

What precautionary measures have to be taken by the Company so that liability of paying salary to the employees who had stops rendering services to it for more than 10 months, would not arise in near future?

Coordination between HR,Accounts and concerned department.

When employee of X department has submitted resignation,his ledge/accounts and personnel record needs to be flagged and monitored for date of acceptance of request to exit and for actual date of exit.

HR and Finance department must work out his dues and intimate individual as well as a finance department to avoid over payment or under payment.

Obviously some slip up or lack of system has allowed employees who are no longer working for last 10 months to be still in rolls of company.

a review of system is needed to ensure employees are monitored well enough to record presence/absence/exit etc

Monitoring of dues to cokpany also need specific monitoring-which dealer has not paid full or has to pay some balance etc

Holistic review keeping your working environment in mind needs to be evolved.

From India, Pune
Dear colleague,
Your two non- workman category of employees employed at the Distrbutor's place have been absconding from duty since last ten months and you have stopped their salary.
It is not known whether you had sent them any communication to report for work ( at least three times) during this period. If not do so now and inform them that if they do not report for work within seven days , they will be treated as having voluntarily abandoned the employment and their names will be struck off from the muster roll.
Since they don't fall in the category of the 'workman', as stated by you ( although this point is contestable) , the above action suggested should be an adequate precaution.
Keep proper records of the communication and continue to hold their all legal dues.
In my view , there is no necessity of any disciplinary action except what is suggested above.
Since ten months have elapsed without any communication from them, it is unlikely that they will revive their interest in continuing their employment.
On record , they will continue to be treated as ' absconded employees'.
Regards,
HR and Employee Relations Consultant

From India, Mumbai

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