Employee Commits Fraud Right Before Leaving: What Disciplinary Steps Can We Take?

One of our employees has resigned, and as per the terms and conditions of the appointment, his one-month notice period is ending the day after tomorrow. Yesterday, he committed a serious misconduct (financial fraud). What disciplinary action could be taken at our end against him?

Seniors, kindly advise.

DHAMIJA

He is on the notice period and getting relieved in 2 days. You have not mentioned what kind of serious misconduct he has committed but still to my mind, you can stop his full and final settlement as one of the steps, or you can deny him the Relieving/experience letter. These are some practical ways.

I am not exactly aware of what the law says about disciplinary actions during the notice period. Waiting for someone's comment on whether there is any clause for the same!

Regards,
Chaitali

If it is financial fraud, then as Chaitali has said, hold his full and final settlement along with other documents like relieving letters, etc. If the amount is small, it can be recovered from his settlement.

If your management is strong and proactive, you can also file a police complaint and initiate legal action against the individual. It ultimately depends on your management's perspective.

Ashok

Dear Dhamija,

In addition to holding his full and final settlement, you must register a police complaint regarding this case. This will help you to solve all the problems, and the organization will be on the safer side.

Keep smiling.

Mahesh K Prasad

In most companies, financial fraud leads to termination from the job as no company tolerates such behavior. Although the individual may have resigned, the Full and Final settlement (F&F) is still pending.

The best approach to recover the company's money would be to offer the individual a choice: either pay back the amount and receive a relieving letter or face termination without a relieving letter and hold the Full and Final settlement (F&F) process.

Is your employee a workman under the Industrial Dispute Act? If yes, then you need to follow the principles of natural justice before taking any action, i.e., follow the disciplinary procedure. (Better relieve him with immediate effect.)

If he does not fall under the definition of workman, simply terminate his services and issue a service certificate and dues accordingly, if the misconduct is so serious.

ANIRUDDH

Your action will depend on the nature of misconduct. If it is a serious misconduct, initiate the domestic enquiry proceedings and withhold his full and final settlement, but you should have a good reason for doing so. Please also remember to follow the principle of natural justice. He should be relieved only after receiving the enquiry report, which will also determine your future course of action.

Regards,
S. Gaur

Dear Dhamija,

If you may withdraw his resignation acceptance and simultaneously chargesheet him, you may also lodge a police complaint. Finish the enquiry fast, and if the charges are proved, you may forfeit his terminal benefits, including gratuity.

Mohan.

Dear Friend,

To decide on cases with legal consequences, the facts must be specific. Otherwise, the many answers received could be misleading, confusing, or worthless, despite the sincere contributions of friends and well-wishers. Moreover, these matters can only be commented upon based on agreed-upon conditions. It would also serve as a good case study if the fundamental agreement is known.

A general law dictates that not all agreements are valid if they are one-sided (lopsided). Additionally, only agreements not void in the eyes of the law can be enforced. Though I am not a lawyer, my understanding is that a one-sided agreement like a service bond is not valid or enforceable. The term "bond" itself is disputable. It is more appropriately termed a service agreement and is acceptable. A company may rightfully seek compensation for the investment made in developing an individual to serve for a mutually agreed-upon period in said company. Otherwise, in all scenarios, no party should have an overbearing right over the other, and none should be forced to waive their valid rights, including that of separation.

Perhaps some of our HR friends with law degrees can facilitate discussions by referencing the latest judgments on these matters.

M.A. Ganju

Don't relieve him. However, keep him under loss of pay and conduct an inquiry to prove his misconduct. Then, proceed with civil and criminal cases for the recovery of money and punishment. Although the process may have some practical difficulties, you should still pursue it to instill fear in other employees. This will make them think twice before engaging in similar activities, knowing they will face the same consequences.

Dear All,

I inadvertently posted my reply to a different query here by mistake. Please excuse me if the above answer of mine is a bit confusing. This response was actually provided in answer to the query about what an employee under a service bond could do to exit a company if the company is refusing to release them or accept the notice period amount from the employee.

Regards,
M.A. Ganju