Employee Quits Abruptly and Sends Legal Notice: How Should I Respond to These Claims?

Legal Notice from Employee: Request for Guidance

I have a small business. An employee, a car driver who has served only 1.5 years, has suddenly left the job due to a verbal quarrel over time management. He has sent my company a legal notice from the labor side stating:

- His application for a bonus was rejected.
- He was not paid overtime.
- He was told to work on Sundays, etc.

Facts of the Case

- His official application to the company for an advance of ₹8000 was rejected, but a personal loan of ₹5000 was given without a voucher.
- His working hours were from 9:30 am to 7:00 pm. (Overtime?)
- Reviewing the last 2-3 months' attendance record, he has not worked on any Sunday, and for working day absences, we still paid him a full salary.

Please guide me on further action.

Regards,
PSHAH

The following facts are revealed as per your email:

a. The bonus is not subject to application by the employee; it is by default under defined circumstances.
b. The person was not doing overtime, but it is subject to the working hours communicated to him at the time of joining.
c. Have you or your superior ever asked him to work on Sunday? If yes, pay him for that particular day and try to settle the matter at the table.

Regards,

Understanding Your Legal Obligations

Again, you need to provide more substantive information if you need proper advice! Kindly provide replies to the following questions:

1. How old is your company? Are we talking about a factory under the Factories Act or about an establishment under the Shops & Commercial Establishments Act?

2. What is the form of your company, i.e., Sole Proprietorship, Partnership, or a company registered under the Indian Companies Act 1956?

3. How many employees do you employ - on company rolls and through contractors? Is the driver your personal employee or is he on company rolls?

4. Is the Payment of Bonus Act 1965 applicable to your organization?

5. What have you paid to the individual? An advance or bonus under the Act, or have you made an ex-gratia payment? Can you "prove" it through your books of accounts or otherwise?

I am raising all these questions to better appreciate your predicament. Kindly take note of the following:

1. If you are an establishment under the Factories Act, the OT has to be paid (by law) only for the work done "inside" the factory at twice the normal rate of wages and for work done beyond 48 hours.

2. Bonus under the Act has to be a percentage derived from your final accounts following the method stipulated under the Act.

3. Working on Sundays, if outside the factory, is not a critical issue from a legal point of view. We can deal with it based on the facts of the matter!

What you have received is apparently NOT a notice in the conventional sense from a practicing lawyer. I suppose it is a letter from the local department. You should attend to the matter preferably along with a consultant/labor lawyer and deal with the issue. The worst that can happen is that the labor office will have to send the matter for adjudication if no resolution of the complaint takes place with his effort. He is only going to try and scare you with so-called "legal consequences" and attempt working out a financial settlement (of which he may receive a part from the workman!). This happens very commonly in this department. Evidently, either the driver has approached the authorities on his own or through some acquaintance well-versed in such matters.

But there is nothing to worry about!

Regards,
Samvedan

June 3, 2012