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Anonymous
Hi, I'm a dealer for an automotive brand and One of the employees has allegedly incorporated a partnership firm with his wife and has been indulging in selling local spares to customers whom we serve for the past 2 yrs. We found the same and the employee has resigned.

As I do not wish to go for legal, I just wanted to withhold PF and Gratuity for the loss made to the firm due to his misconduct.

Please clarify how to go with this.


vmlakshminarayanan
919

Hi,

You cannot withhold PF and employee have the option of either transfer or withdrawal through UAN Portal and as a Employer you need to approve through Employer Login.

Whether the employee sold local spares with your brand name or he/she had diverted your Client for their business.

What was the quantum of loss?
What disciplinary / legal action initiated by you as an Employer?
Any show cause notice issued to him ?

As per your statement employee has resigned. So with no proper legal documentation in place how will you justify the withhold of Gratuity if the employee approaches legal forum ?

As per Gratuity Act


"The gratuity of an employee whose services are being considered to be terminated on the accountability of an act of wilful omission/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/vandalisation so caused


The Gratuity Payable to an Employee May Be Wholly or Partially Forfeited
if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part, or
if the services of such employee have been terminated for any act which constitutes an offence involving debauchery/ turpitude/ degeneracy or lewdness, provided that the offence taken in regard has been committed during the tenure of his employment.

Pre-requisite for Forfeiture of Gratuity of an Employee by an Employer
the damages suffered by the employer should be quantified
principles of natural justice must be adhered to, and the concerned employee must be given an opportunity to being
the employer must pass an order to forfeit the gratuity, whole or partial, following law and its legal proceedings.

So without any legal proceeding it is not advisable to hold the Gratuity as the employee may file a case with Assistant Commissioner of Labour of your office jurisdiction.

From India, Madras
KK!HR
1530

Since the employee has resigned and it has been accepted, the precondition for attachment of gratuity is not fulfilled that the services of the employee have to be terminated for an act of wilful omission/negligence causing any damage or loss to, or destruction of, property belonging to the employer. Pl check whether the employee completes five years of continuous service
to claim gratuity.

From India, Mumbai
alok-singh1
78

Hello,
Employer can not hold PF and Gratuity benefit amount of anyone because as per the act company is liable to pay gratuity amount to an employee who has worked for the organisation for 5 years or more. PF is also under social security act and employer have no authority to hold PF contributions.
If you hold the Gratuity amount of concerned employee then he can take legal action against you.


ashok1987
As informed, and questioned, my replies are as follows
vmlakshminarayanan:
What was the quantum of loss?
To be approx 20Lkhs
What disciplinary / legal action initiated by you as an Employer?
Not taken as he gave a resignation letter on the day of he was found gulity.
Any show cause notice issued to him ?
No

As per your statement employee has resigned. So with no proper legal documentation in place how will you justify the withhold of Gratuity if the employee approaches legal forum ?
We have not gone for legal as of now.


ashok1987
to: alok-singh1 He been working for approx 10 yrs. Having said that the we have the proof that hes indeed a partner in the company doing parallel business similar to the company. Hence need advice.

vmlakshminarayanan
919

Hi,

As per your statement that particular employee indulged in other business while working with your organization and had supplied spare parts to your Client. So the primary charge against the employee was engaging in other business while in full time employment with your Company. So the nature of misconduct is limited to this only.

Your statement Rupees Twenty Lakhs loss to your Organisaton is just a projection which needs to be proved before the judicial system. My assumption is that your ex-employee might have formed the Company in the name of his Wife only and any individual has the right to form a company and to enter into business relationship with any potential Client. Even if you proceed legally the employee will defend that the Company is managed by his wife and no way he is connected with that business. You cannot prohibit a third party not to do business which is similar to your business.

As long as employee is not demanding for Gratuity you may hold it but if he makes a legal representation then your side is weak ( in the absence of any legal proceedings from your end) as per my assessment.

From India, Madras
ashok1987
vmlakshminarayanan
Sir, Thanks a lot for your advice and

To clarify your reply,

"My assumption is that your ex-employee might have formed the Company in the name of his Wife only" -

Answer: NO, He's also one of the partner along with his wife in the company which has been verified from GST Portal.

Your advice and guidance on this will be of immense help for our company.


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