Handling Employee Arrests: Can Companies Proceed with Termination During Legal Proceedings?

Dear Seniors, In a scenario where an employee is arrested for criminal acts against a co-worker either inside or outside the company premises and may or may not be released on bail, the following questions arise:

When this matter is referred to a civil court, can the company proceed to chargesheet the employee, potentially leading to termination, or initiate the chargesheet and begin the inquiry process ex-parte, eventually reaching a decision?

Any guidance on this matter would be greatly appreciated.

Regards, K. Laxman

The question itself is not correct.

1. You have mentioned that the employee is arrested for a criminal act. If so, where is the question of referring to the civil court? Please check your facts.

2. You cannot have two situations in a criminal act. Is the act committed inside the work premises or outside the work premises?

3. I do not understand the meaning of "Charge sheet the employee with termination"? When you charge sheet, obviously you start inquiry proceedings. I would request you to correct/rephrase your question to enable us to provide you with the correct response.

Regards,
T. Sivasankaran

Legal Actions in Case of Criminal Acts

Legal positions will vary based on actual facts.

If there is a criminal act inside the premises, two parallel actions may be taken:

1. A charge sheet and disciplinary action by the Management.
2. Based on the complaint lodged by the affected party, the police might file an FIR and initiate criminal action.

A person may be acquitted in the Police Action; however, the law does not state that the Management's action should be based on the Police Case. The Supreme Court has held that the Enquiry Officer is not guided by the Indian Evidence Act, and hence his findings need not be dependent on the Criminal Court's findings.

If there is a criminal act outside the factory premises in connection with employment, and if there is a provision in the Standing Order, a similar rule will be applicable.

Criminal Proceedings Unrelated to Employment

If the criminal proceeding is not connected with employment but was committed outside the premises:

- If the Police file an FIR and register a case, the employee can be suspended pending inquiry. The option is the employer's. However, the employee will be paid Subsistence Allowance for the period. If he is found guilty, then he can be terminated by quoting the same. Follow the procedure as prescribed in the Certified Standing Order or Model Standing Order, whichever is applicable. If he goes on appeal, then you need to wait for the verdict. There is no need to pay Subsistence Allowance if he is acquitted from the charges. The employee will be treated as though he was on duty from the day of suspension, and he needs to be paid full wages after adjusting the Subsistence Allowance paid.

If you can provide the actual facts of the case, we can offer our views.

Regards,
Sivasankaran