Employee Resigned After Breach of Trust: Can We Still Terminate Them Legally?

One of our employees has committed a gross breach of trust, and before we could terminate him, he has resigned. Is there any rule stating that we cannot terminate someone after they have resigned? I kindly request your assistance with this matter as I need to make a decision today.

Regards,
Arpita

You will get some clues from the below judgment of the Supreme Court: Chairman cum Managing Director, Coal India Ltd., vs. Mukul Kumar Choudhuri 2009 (123) FLR 601.

Regards,
Krishnaraj P. R
[Phone Number Removed For Privacy Reasons]

Hi Arpita, you need to let us know the situation and the notice period the employee is serving.

Arpita, as far as my knowledge and experience go, you won't be able to terminate him now as he has already resigned. However, you can take action on the grounds of the agreement if it was signed upon joining, for breaching the rules of employment.

Regards,
nm

If he has submitted his resignation, then let him go. Terminating him would definitely hinder his career.

Termination and Gross Negligence

Termination of any employee is a question of the nature and severity of the gross negligence committed by an employee. There are no hard and fast rules and regulations to deal with such situations. The only guide is the Principle of Natural Justice.

If the gross negligence you are referring to is severe in nature and proven, you can terminate the concerned employee even if he has submitted his resignation.

Regards,
Manoj Thakur

You cannot terminate an employee who has already resigned. A resignation marks an end to the employment with the company. Accepting and relieving are processed post-it, to close the employee records with the company. Once the end has been marked, until and unless it is revoked or taken back by the employee, the employment stands terminated. Hence, at most, you may relieve the employee before the due date. However, the misconduct needs to be resolved. If an incident has been reported, it requires closing. Relieving the employee would require clearance from every area, including financial, legal, and official responsibilities. Please share the background to this case and allow us to brainstorm a solution.

Regards,
Cite Contribution

Dear Senior,

I think termination is a tool to exercise an employer's right in cases of severe gross negligence by an employee. This tool is used to set examples for all employees. Hence, in this context, I do not agree that an employee cannot be terminated after submitting their resignation.

Let's compare this scenario to committing a severe crime and accepting it, then silently preparing for the consequences or punishments. This does not necessarily mean that the judiciary will remain silent. Indeed, the punishment will be confirmed in writing even if the criminal accepts it. These actions are taken to set examples in broader perspectives and serve larger social or corporate interests.

Regards,
Manoj Thakur

I have not gone through the complete judgment. However, the point discussed in that case was that the employee was absent for a long period. He subsequently submitted his resignation. The management did not accept his resignation and charged him for long absence, leading to his termination. The court held that the termination was wrong and that the resignation should be accepted and acted upon.

Regards,
Krishanraj P R

Understanding the Agreement of Service

What is the agreement of service, and how can it be terminated? If the employee has already resigned, it means putting an end to the agreement of service and communicating the same to the other party. So, after that, is the agreement of service still in force? No, it has come to an end after the resignation of an employee.

Even though termination is the employer's tool to address gross misconduct and negligence, there are certain checks and balances in place that need to be exercised with due process, taking into consideration the Principle of Natural Justice.

Until the resignation letter is accepted, the employee's relationship with the employer does not end. However, if the breach of trust does not warrant criminal proceedings or police action, it is advisable to release the employee promptly. Prolonging legal disputes is also unfavorable for the employer.

Regards,

Thank you for all of your suggestions. Let me brief you on the situation. He is working as a delivery manager and is responsible for one of our critical projects. We have information that he, along with the client, has cheated us, and now the project is out of our control. He is planning to join our client and is pressuring other employees to join the client, so they can build the same team directly with the client. We have confirmed this information, as one of our employees has shown us the offer letter he received from the client. Now, the delivery manager has sensed that management is aware of this situation. Before any action could be taken, he submitted his resignation this morning.

Please advise on what we should do in this situation. Should we accept his resignation and let him go, or should we terminate him to make him realize the gravity of his mistake, considering the significant loss to the company?

Best regards,
Arpita

If we go as per Mr. Thakur's suggestion, then we need the employee's case study first to provide proper suggestions. Before giving such a severe punishment to an employee (which is going to block his future, with no consideration of his dependents, etc.), we need to first discuss what the matter is and what he did that was so serious.

Dear Arpita, please post the complete case of the employee's wrongdoing, including his reporting boss's role.

Dear Arpita, please collect the data that you have and proceed with the incident resolution as per your company's guidelines. You need to resolve it before issuing any clearance for him.

At the time of relieving him, please ensure that not only he but all your employees sign an NDA which includes the non-compete clause. This will prevent anyone who has worked in your company from joining your clients for the lock-in period, ideally 3 years or more.

Please consult the legal advisor of your company to design a suitable agreement. Vendor and client poaching is very common, and you need to mitigate this to avoid such events in the future.

Regards, (Cite Contribution)

Considerations for Terminating an Employee After Resignation

First, let us know the position and nature of work of an employee. If he/she is a workman, even if he has resigned and you would like to terminate services due to misconduct, you need to conduct a domestic enquiry to prove that the resignation/explanation was not obtained by force. Terminating the employee would only complicate the issue and might even harm the employee's career. Our judiciary is also taking a lenient view when awarding capital punishment. So, think from the HR angle and make a wise decision.

I have a different perspective on this matter. If an employee submits their resignation before any action is taken, it is the employer's right to decide whether to approve the resignation or not. Instead of approving the resignation, you have the option to terminate the employee if their actions violate the company's termination policies.

I hope this information is helpful.

Regards,
PaTri

Purpose of Termination

What is the purpose of termination? You want to remove him from services. When he himself wants to go, accept his resignation and relieve him forthwith. He then cannot go to court. But if you terminate him, he can file a case against you challenging your action of termination. The court proceedings are lengthy, time-consuming, and involve a lot of expenses. Besides this, the court verdict cannot be predicted. Even if one side wins, there is again a provision of appeal to the high court, further prolonging the litigation.

Please make the wise decision and relieve him forthwith.

Regards,
G Y Suhas

Dear Arpita,
Both ways, the ball is in your court – whether you punish your manager for his misconduct or accept his resignation, as he himself has volunteered to sever ties with your company.

Employers have the right to take action for employee misconduct, and termination is a tool to exercise this right in cases of severe negligence. However, I disagree with Mr. Manoj Thakur regarding the preference of termination over accepting the employee's resignation. The employee has presented their defense by offering to resign, which should be considered before taking any action.

Therefore, the employer's right must be exercised wisely to prevent any future liabilities.

Considerations for Decision-Making

The organization's primary goal is to remove individuals working against its interests, whether through termination or resignation. Consider the pros and cons of both options before making a final decision. Avoid making a hasty choice merely to assert the employer's right.

The damage has already occurred, and the focus now should be on preventing further harm.

If the resignation is not accepted and the employee is terminated, there is a risk of the employee challenging the decision in court, potentially causing more damage to the company. Courts may favor action taken on resignation over termination by the management.

Additionally, even if the resignation is accepted as a peaceful resolution, the organization can still file a complaint with the police for the employee's deceptive acts, including criminal conspiracy and misuse of confidential information. Seeking damages for losses caused by the employee's actions can serve as a deterrent for other employees.

Consider whether you want to defend against a potential lawsuit from the employee following termination or take an offensive approach by seeking legal punishment and damages, while peacefully removing the employee to prevent further harm to the organization.

I hope you find my opinion valuable and easy to implement.

Regards,
PS Dhingra
CEO
Dhingra Group of Management & Vigilance Consultants
New Delhi
[Email Removed For Privacy Reasons]

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Thanks for all your suggestions. Let me provide a brief on the situation. The individual in question is a delivery manager responsible for a critical project. There are indications that he, along with the client, has deceived the company, resulting in the project moving outside our organization. He intends to join the client and is pressuring other employees to follow suit to recreate the team with the client directly. We have received confirmation of this as an employee shared an offer letter from the client. The delivery manager seems aware that the management is informed, and before any action could be taken, he submitted his resignation this morning.

In this scenario, should we accept his resignation and let him go, or opt for termination to make him understand the consequences of his actions, considering the significant loss to the company?

Regards,
Arpita

User Input:

- The purpose of termination in this case is very clear. The employee has acted against the interest of the employer; it is a clear case of breach of trust, and he needs to be appropriately punished. Such action and punishment against the employer will also set an example for other employees in the organization and will act as a deterrent for others.

- I do not feel the Delivery Manager is a workman, and he is not likely to challenge the termination in court.

- Nobody should be afraid of courts or the legal process. Follow the legal process and do the right things. Lawbreakers should be afraid of the Police, Courts, and Legal System, not a law-abiding upright employer.

- Go into the merits of the case, seek proper legal advice, and take appropriate action.

Appropriate Punishment for Misconduct

Punishment needs to be given in cases of misconduct and crime. At the same time, punishment has to be appropriate and in accordance with the severity and nature of the misconduct and crime.

If termination is deemed appropriate in this case, let it be. A resultant career setback is also a part of the punishment.

Clarification on Resignation Status

Are you asking if "putting down the papers" means he has submitted his resignation or if the resignation has been accepted? I believe this distinction is significant. If the resignation has been accepted, it might be challenging to take further action.

Once there is misconduct, it leads to a domestic inquiry. Once the inquiry is in motion, an employee cannot get clearance. Since we do not know the misconduct, it would be unfair to commit. If the misconduct is financially related, you can allow him to resign after receiving compensation from him. If the misconduct is criminal, other authorities may need to be involved. But if the misconduct is not severe, the inquiry committee can give a suitable punishment and then allow him to resign without termination so that his career is not jeopardized.

How long has he worked for your company? How has his performance been otherwise?

Regards

Employee Status After Resignation

Even after tendering resignation, an employee remains an employee like any other, and all rules will be applicable to him until he is relieved. If he has committed a serious breach of trust and caused monetary loss to the company, the management need not relieve him. Management may reject his resignation, take proper disciplinary action, and dismiss him as punishment after the charges are proved at an inquiry. Even after dismissal, a police complaint could be lodged for the breach of trust causing monetary loss. This is to set an example for others.

If there is no monetary loss but the breach is serious, he can be terminated due to loss of confidence. This will set an example and may affect his career, but one should also learn a lesson. Otherwise, anybody will commit such a serious breach and get away with resignation.

If the misconduct is of a criminal nature, then the law will take its course, and the employee is bound to bear the brunt of it. If it is a minor issue in terms of a verbal spat, then let the case die its own death. The management should not persist in termination to satisfy its inflated ego; I am afraid it may not hold good in court at a later stage.

Regards,
Naresh Kumar

I don't think you can terminate an employee who has already taken ownership of his mistake by resigning from his job. Also, in some instances, a memo should be handed over to the respective employee before termination formalities, depending on the complexity of the breach.

Possibly, you can ask the employee to surrender a penalty amount for his breach. Termination may hamper his career going forward.

Regards,
Sajeev

- I feel Mr. P S Dhingra has given very good advice. He has considered all possible scenarios, and each sentence in his advice is important.

Dear Arpita,

You mentioned, "One of our employees has committed a gross breach of trust, and before we could terminate him, he has put down his papers." You haven't provided us with the complete information needed to offer you a precise solution in accordance with the law.

Considerations for Employee Termination After Resignation

A) Has your management accepted his resignation?
B) If "NO," then you can take action for the breach of trust as per the law's regulations and your company policy, followed by termination.
C) If "YES," then bid him farewell.

Before he departs from your organization, kindly educate him about his mistake so that he will be less likely to repeat it in the future. If you wish, you can share the details of his wrongdoing so that it can serve as a case study for us.

With profound regards,
[Your Name]

In either case, there will be a severance of the employee-employer relationship. Hence, the first question is: why do you want to terminate such an employee? The employee, once relieved after termination, carries a stigma. However, every employee must adhere to the rules/guidelines as per the standing orders/service contract until the last minute of their work, whether normal or during the notice period. If an employee commits grave misconduct during this period, you can terminate their services with due proceedings.

Regards,
Raj Kumar Rai

As per my view, unless and until a resignation is accepted, an employee is deemed to remain an employee. Thus, management has the full right to reject his resignation and may order his suspension followed by a proper inquiry on the subject.

Regards,
Vinay D. Dun

Hi Arpita,

The same situation was about to happen in my office as well. However, we have mentioned in our terms and policy document that an employee cannot join any client of the company for two years. This way, we were secured, and that employee did not join our client.

Please check your company policy document. If this policy is present, none of the employees can do what this person has done. If you don't have this policy, you should add this aspect immediately.

Thanks,
Riddhi

What is the content written in the resignation letter submitted by him? If he himself apologized and agrees to the mistake committed in the resignation letter, then based on your analysis/results and manager consent, you can terminate him with immediate effect. However, it would be better if you take another letter from the employee stating, "Release me with immediate effect," and you can accept his resignation letter and release him (not terminate). On the letter of agreement of termination against the contract letter (issued at the time of his joining), you can write the cause of his resignation/termination of the contract letter with your organization.

Dear HR Managers,

My friend has also come across a similar incident. He has been working in one of the leading private banks in India for the last three years. As he got another opportunity to work, he resigned from his earlier company after clearing all their dues on the first of February 2011. He then asked his senior to accept his resignation, but his senior did not accept it. He also received the salary for the month of February.

In the first week of March 2011, his senior came and handed him his termination letter in the wake of an issue for which my friend was questioned in October 2010.

Is this the right way to terminate somebody, and what legal courses of action are open for my friend? Please reply ASAP.

It would not be wise to comment on the legality or illegality of the termination without understanding the nature of the offense your friend is supposed to have committed in October. Therefore, it is premature to provide a proper solution without the details of the incident for which he was previously questioned.

You may want to provide complete details of the incident your friend faced, the management's approach to handling the offense, the circumstances surrounding his resignation, any correspondence exchanged with the management during the resignation process, and the contents of the termination letter.

The case should be evaluated in its entirety rather than solely based on the termination letter.

Regards,
PS Dhingra
Chief Executive Officer
Dhingra Group of Management & Vigilance Consultants
New Delhi
[Email Removed For Privacy Reasons]

The reply to your question has to be dealt with in two parts:

1. The resignation submitted by the employee is not complete until it is accepted by the employer.
2. Termination of employment is the outcome of two circumstances:
- After serving a notice if stipulated in the terms of employment with the grounds of termination.
- After providing natural justice to the employee to defend himself against the allegations stipulating the misconduct by way of a charge memo followed by a domestic enquiry, proving him guilty of the misconduct, and then terminating him.

In the circumstances explained by you, mere acceptance of his resignation will serve your purpose of keeping him out of your employment.

Regards,
Partha Chakrabarty

There is no law that states you cannot take disciplinary action against someone who has committed misconduct. An individual remains an employee until officially relieved, but it is important to assess the breach of trust and the extent of damage it has caused to the organization. If the breach is significant, then taking action is necessary as it serves as a lesson for all.

However, the legal process can be lengthy and cumbersome, involving commitment from both parties, and the outcomes may be subject to questioning in courts. If the breach of trust is not severe, it may be advisable to release the individual promptly. When providing a service certificate, you can mention that the performance was below satisfactory or use similar wording.

I have followed this approach even in cases involving theft and misappropriation of funds. This method can save time, energy, and money for the organization.

Regards,
Dr. Nagaraj
[Email Removed For Privacy Reasons]

You have not specified the act leading to the breach of trust. Still, if you have substantial evidence, you may move to the court of law for breach of trust.

Since the employee has resigned from the services, termination does not make sense except for holding his legal dues.

Regards,
R D Watve

Mr. Dhingra is absolutely right. Without being in the know of all facts of the matter, an off-the-cuff opinion will not be most appropriate. If all the facts of the matter are furnished, one can give a proper opinion/advice.

However, in the present case where the employee has resigned for whatever reasons, it will not be a great idea to terminate his services. It will clearly appear to be a vindictive act.

Here it seems that the management is peeved with the employee and just wants to "fix" him, good.

Since the employee has already resigned, the best course of action would be to accept the resignation and arrange to relieve him at the earliest.

To address the situation further, you may decide not to provide him with a good experience certificate/reference.

I know of a real-life situation where the MD of the company issued a termination order under his signature, and in the said letter, he actually terminated the services of the said employee "three times." Some venom that!!! (misplaced?)

Best Wishes,

Vasant Nair

If the resignation papers acknowledged by the employer have been received, there is no way to terminate the resigned person.

Regards,
A. Krishnamoorthy

Dear All, It may be all right in politics to commit corruption and resign before the public outcry. It is also good for a saint to take a lenient view and forgive a wrongdoer. But in society, particularly in industries, stern action must be taken against gross indiscipline. I appreciate the feelings and goodness of Namobita Ji and would agree to take a lenient view only if the concerned employee apologizes for his misdeeds and promises good behavior in the future; otherwise not. If the chapter is closed with mere acceptance of his resignation, it is likely that he would repeat it elsewhere with more boldness. To the best of my knowledge and belief, no law prevents any employer from rejecting a resignation letter and dismissing the culprit from service after due process of the law, i.e., serving a charge sheet, conducting an inquiry, etc., which deprives him of his gratuity.

If this act is affecting the company's image, then consult your advocate who will be able to give clear legal guidance. Act accordingly, taking into account the quantum of damage. Normally, these advocates guide us well; it is up to us to deal with the case in a firm and fair way.

Regards,
R. Srinivasan

I suggested appropriate action on the breach and NDA, which can include a non-compete agreement. In this agreement, an employee cannot join a client or a vendor and start a business within the lock-in period, which is three to five years. Punishment would not remain valid if the right course for the future is not defined.

Regards,
Cite Contribution

One can certainly understand your frustration at having spent so much time and money on recruiting someone, only to have them resign. However, terminating someone (except on grounds of illegal activity) also has a negative impact on the brand value of the company in the market. As long as this person studied for his MBA examination during his leave as promised, he has fulfilled his ethical and moral obligations to the company.

One cannot really prevent an employee from searching for better opportunities elsewhere. As for attending the interviews, he could have done that anyway, whether or not he was on leave. Even if this person has attended interviews, I would gently submit that you perhaps need to reconsider your decision on terminating this person. A better way would be to simply let him resign.

Please find the concerned Coal India Ltd. vs. Mukul Kumar Choudhuri 2009 (123) FLR 601 judgment from the Supreme Court of India.

Hi to all HR members or seniors,

This is regarding the same situation that happened to my friend. He was initially asked to change his designation or job role from Project Manager (Audit) to Mgr-Admin in the education industry after 3 months of joining, without any valid reason. This change was motivated by a senior employee's jealousy towards his performance, constantly belittling him for having less experience while holding the same profile. This situation involved some politics, and my friend had to accept the change due to his probationary status and career concerns. Consequently, he was relocated to their Saharanpur office for an administrative role. However, after just 1 month, he was terminated on grounds of being distracted from work and displaying job laziness, which was not the case as he had been performing well, a fact I can attest to.

Seeking Advice on Proper Relieving and Service Certificate

Can you suggest ways for him to be properly relieved and obtain a service certificate? He has not yet accepted the termination letter and needs to respond by today (28th March 2011).

If anyone experiences such situations, what should one do as it impacts one's career and life significantly?

Please suggest some solutions. Looking forward to a positive reply ASAP!

Regards,
Aashi

Understanding the Judgment in CMD, CIL Vs Mukul Kr Choudhary

The judgment in the case titled CMD, CIL Vs Mukul Kr Choudhary is peculiar to the facts of that case. It does not have an all-weather application. It would be absolutely naive to assume that the judgment can be applied in each and every case. It will hold good in the cases of identical facts.

In that particular case, the charge on which the employee was dismissed from service was of unauthorized absence after submitting resignation, which was not accepted. The said employee, in his defense, pleaded that he had no intention of defying the order of the management to report back for duty, but his overwhelming personal problems stood in the way.

The Apex Court, in essence, did not deal with the issue of the right of the management to take disciplinary action against an employee who volunteers to quit his job but with the issue of the proportionality of the punishment awarded in the case. It was of the view that the punishment of dismissal awarded to the employee was disproportionately high, particularly when he himself wanted to quit the job and possibly had justifiable reasons for his prolonged absence.

Considering Different Scenarios

Now, think of a different case in which the fraud committed by an employee surfaces after he submits his resignation. Would it be prudent to let the employee go, particularly if the fraud involves a substantial amount or damages the business image/reputation of the organization? It would be very comfortable for a fraudster to commit a serious fraud and then submit his resignation.

The Philosophy Behind Disciplining

The philosophy behind disciplining is to set an example so as to deter others from indulging in acts contrary to the discipline and accepted norms of conduct. In any case, resignation has to be accepted by the employer. The employee/employer relationship does not come to an end merely on the submission of resignation. If circumstances warrant, acceptance of resignation may be denied. It is well within the rights of an employer.

In government service, resignation may not be accepted if disciplinary action is either initiated or contemplated against an employee. A step ahead still, disciplinary action initiated while in service can continue even after superannuation.

Yes, this is what I had insisted on earlier; I strongly agree with Rajeev. Lessons need to be taught, and examples need to be set forth. This is what we call Industrial Jurisprudence, and it has nothing to do with a particular case or looking at a narrow scope of the future of a particular defaulter. These instances should be dealt with keeping in mind the larger interests of the industrial community and the principle of natural justice; of course, we all are an integral part of it.

Understanding Company Actions in Cases of Employee Fraud

What compels a company to file a criminal case against an employee if they are involved in serious fraud? Additionally, in government organizations, according to government rules, in the event of serious fraud, a police report is filed as a primary step, with any other actions being considered secondary. Furthermore, there are significant differences between government employment and employment in the corporate sector. The government has a highly structured and robust set of rules for each department. However, even in such cases, when a fraud issue arises, they do not take the risk of handling it internally. Instead, they promptly report it to the local police or the CBI for investigation and trial in a court of law.

Case Analysis: CMD, CIL Vs Mukul Kr Choudhary

The verdict in the case involving CMD, CIL Vs Mukul Kr Choudhary is specific to the circumstances of that case and does not have universal application. It would be naive to assume that the judgment can be applied in all cases; it is most relevant when the facts are identical. In that particular case, the employee was dismissed for unauthorized absence after submitting a resignation that was not accepted. The employee argued that personal problems hindered compliance with the management's order to return to duty. The Supreme Court mainly addressed the proportionality of the punishment in this case rather than the right of the management to take disciplinary action against an employee who intends to resign voluntarily.

Handling Fraud After Employee Resignation

Consider a scenario where a fraud committed by an employee surfaces after they resign. Would it be wise to let the employee depart, especially if the fraud involves a significant amount or damages the organization's image/reputation? Allowing a fraudster to commit a serious offense and then resign would create a loophole. Disciplinary actions are meant to set an example and deter others from misconduct. The employer must accept a resignation, and the employee-employer relationship does not automatically terminate upon resignation. If circumstances warrant, an employer can refuse to accept a resignation. In government service, resignation may not be accepted if disciplinary action has been initiated or is under consideration. Moreover, disciplinary action initiated during employment can extend even after retirement.

Regards

You can terminate his services for gross misconduct. Reject his resignation letter as it has no other purpose than to defeat the cause of justice, i.e., resolving the case of gross misconduct. The employer should resolve the case of gross misconduct to avoid any future occurrence that will disrupt the workplace. Write to him acknowledging receipt of his resignation and rejecting it, and instead replace it with a termination.

Handling Employee Resignation After Breach of Trust

What is it that you are expecting? He might have realized that he made a mistake, and it is difficult to continue; hence, he resigned. If the loss is not significant, then it is better to let him go and close the issue. In case you want to terminate him, you need to issue a charge sheet, conduct a domestic inquiry by giving him ample opportunity to defend himself, and based on the inquiry report, you can proceed with termination. Finally, if your management wishes to dismiss him, as I mentioned earlier, if the situation is not too critical, it is better to let him go.

Obtain the opinions of the employees indirectly and act accordingly. If you act against the employees' opinions, they may feel that the management is victimizing them, leading to a decrease in their confidence levels, and a majority may choose to leave.

Considering the above, it is better to discuss the situation with the senior management/Heads of the Departments and then take appropriate action.

If he is leaving you quite easily, what would be your gain in punishing him? That is another thing if your ego is satisfied by damaging his career. Any disciplinary action would be unethical on your part if he has voluntarily resigned.

You should also not forget that during the notice period he can also withdraw his resignation notice. If, upon receiving punishment, he decides to take revenge on you and the company, it could lead to more losses for the company.

You cannot prevent anyone from resigning from their position in the organization. However, it is at the discretion of the management whether to accept or refuse the resignation. Whatever decision the management makes should be communicated to the concerned employee in writing.

When conveying the refusal, the employee can be informed that certain serious issues regarding them have come to light, and an explanation can be requested from them. Subsequently, appropriate action may be taken against the employee.

Please understand that without the complete facts of the matter, it is not possible to provide comprehensive advice.

Thank you,

Vasant Nair