How Should Management Handle Missing Cash and Employee Rights in This Case Study?

Dear All,

I have a typical incident in one of our branches.

We have a cashier "Ramesh" (name changed) and his job responsibility was to handle cash. One day after closing of the day's cash, the next day he saw around Rs.1,08,000 cash was missing from the cash box. He has the locker key, Bureau Key, and also the Cabin Key (both the sets).

Once it was brought to the notice of management the next day, we tried to find out how that could happen, and Mr. Ramesh conveyed that Mr. Suresh (one month old in the organization) - his friend in the accounts Dept - was there with him the previous day evening to help him count the cash. But both people in the preliminary inquiry could not provide any convincing answer for the missing cash and blamed each other for this.

Management kept these two people under "suspension pending inquiry" from the Middle of February 2011. There were other formalities like issuing them a charge sheet, receiving replies happened, and management initiated a domestic inquiry against these two people. The inquiry proceedings are recorded, and we are yet to receive the Enquiry Report from the Enquiry Officer.

In the meanwhile, we have held salaries for these two people for the month of February 2011, and we also confiscated the Motorbike belonging to the cashier - Mr. Ramesh. We shall release this to him on the settlement of this issue.

Now my questions are:

1. Can management hold salaries of such people when there is a ticklish issue, especially with regard to embezzlement of cash? Can we do so?

2. Does Management have the right to hold such personal property of an employee in the above case?

I know when we keep an employee under suspension, we need to pay "Subsistence Allowance" as per the provisions of the law. Whether Ramesh has missed the cash or Suresh has stolen the cash, we do not know. Nevertheless, as a cashier, Ramesh is responsible for accounting for the cash, do you agree? And he is responsible for making good the loss, right? In this circumstance:

a) If we release the subsistence allowance, we would also be losing that money?

b) If we do not, then it would be viewed as a contravention of the act i.e., not paying subsistence allowance.

c) If labor law is strict in paying subsistence allowance very particularly, what the same labor law offers to management in recovering the money from such employees?

3. How to recover the money then?

Experts, please go through this live case study and alert me with points on how to go about it further, and the legal points that I may have to concentrate on.

In the meanwhile, Ramesh has already written a letter to us to release his salary and give back his motorbike, else he will take up this matter legally, it seems.

Balaji

First, check the cash book. Is it closed daily?

Check whether it was closed the previous evening, including the denominations, etc. Who signed the cashbook?

How was this difference noted? Was there any breaking of the cash box, etc.

Why does your office allow so much cash to be kept on-site? What rules does your office follow?

As Ramesh is the cashier, did the company take any indemnity bond from him? Because if Ramesh, as the cashier, absconds with cash, what can be done? However, since he is not absconding, there is a possibility that he is innocent. But holding personal property of employees is not legal unless it is proven that he has stolen the cash.

If Ramesh is proven innocent tomorrow, what sense does it make to hold his motorcycle? Also, when the cash difference was noticed, did your company file an FIR with the police? I feel this should have been reported to the police; they would have conducted a detailed inquiry on the two people. This situation surely seems like the work of an insider, so it should be resolved promptly. Your company appears to be wasting time, in my opinion. Was the cash balance perfect until that day, including denominations, etc.?

Ramesh is much older than Suresh. What is his nature like, and how about Suresh's nature and his past employment details, verification, etc.?

Following are further points:

1. The cash box was not broken; it was intact. The denominations were noted by the cashier, and he kept the cash in the cash box. It appears he was busy talking with his family member over the phone. He did not re-check the cash box on the previous day evening before keeping the same in the bureau and before his friend Suresh left his cabin.

2. There is no indemnity bond. Even if you take an indemnity bond, if someone absconds with cash, what will you do with the indemnity bond?

3. Enquiry is an exercise that will bring out facts and figures. A cashier is responsible for accounting and balancing receipts and payments for the day and also responsible for the safety of cash. Conducting a domestic enquiry, and even if the individual is proved innocent, then there is no problem in handing over the motorbike to him.

4. We did not file any FIR with the police. Had we done that, treatment of the individual by the police would have been different; hence, we did not want him to suffer police torture.

5. Whether the money has been stolen by the insider or outsider is immaterial. I am asking, is it not the responsibility of the cashier to keep the money intact?

Ramesh had reported earlier that some 5000 is missing, and the other day 6000/- is missing, etc. (may be a ploy). He was admonished by his boss for his recklessness, and immediately he used to do something to bring/balance the cash. Probably the cash would not have been missing, and he created a scene to gauge our mental wavelength as to how we (management) react to such situations. He might have projected on those occasions with an intention to swindle money, and if management were to liberally say to write off the missing cash, then he would have been happier doing further. When management was stern, he could keep the money back; that is what it appears.

Balaji

Dear Balaji,

Not filing the police complaint against them will certainly go against you in the future. If they proceed to take legal recourse against you, this point will help them immensely to substantiate the fact that they were innocent. At that point in time, your good approach of avoiding harsh treatment by the police will not help you. It is, therefore, recommended that you should immediately file the police complaint even if it is a bit late. You can inform the police that the domestic inquiry was ongoing and hence the delay in filing the police case.

As far as subsistence allowance is concerned, yes, it needs to be paid during the inquiry, and many courts take it seriously if the subsistence allowance is not paid. Their advocates will surely take this stand to vitiate the inquiry proceedings. However, it can be defended by proving that no prejudice has been caused to the employees. You will have to place the burden of proof on the workmen to show how non-payment of subsistence allowance affected the inquiry proceedings. But this will happen in the Labour Court if they choose to challenge the inquiry proceedings.

It is not advisable to confiscate bikes and other personal belongings of the employees. They can file a case against your company.

I don't know how an organization could write off missing cash. This surely means Ramesh is a part of a gang looting your company. How is it possible that cash goes missing and is written off in the office without any theft or breakage? Also, check Ramesh's personality based on his earlier missing cash of 5k and 6k.