Can We Legally Withhold Payment from an Ex-Employee Over Alleged Misconduct?

Dear All,

I have a query. One of my senior (D.G.M.) level ex-employees has left the job. My management does not want to pay him due to his misguidance to management at the time of his joining.

Case Details

The person joined our company 3 months ago. At the time of his joining, he was asked to submit his resignation approval or relieving letter, wherein he claimed his previous employer did not provide any kind of acceptance letter. We believed him and hired him. Now, after 3 months, he has resigned and returned to the same organization where he was working. According to our sources, we found out that he had applied for long leave in his previous employment due to his ill health and then joined our company.

We now believe that he may have taken our process knowledge and technology to his current employment. However, we do not have any concrete evidence on record; it is all based on assumption. Despite this, my management wants to take legal action against him.

Furthermore, we have issued him his full and final dues cheque. We have instructed our accounts department to withhold the payment until the matter is resolved.

My query is, if we proceed with this action, could this employee file a case against us, and on what grounds?

Thank you.

As per my understanding and knowledge, nowhere in the law is it written that dual employment is a crime or illegal. Yes, it is considered an unethical practice.

Forms of Dual Employment

Dual employment can take the form of part-time work, which is also called dual employment, where you earn income from two or more companies.

Unless it is clarified in the appointment letter that an employee's full-time attention is required in the company and the employee is not allowed to undertake any other full-time or part-time assignments in any other organization, dual employment is acceptable.

Even the following wording is found in employee appointment letters: While employed by the company, you: (1) Will not engage in any external activities of a commercial nature. (2) Will not engage in activities of a non-commercial nature without prior written approval of the company.

Your case is very clear. If your ex-employee has not resigned from his previous company (and applied for long leave) and joined your company while getting a salary from both companies, it will fall under dual employment. If your appointment letter has an objection to this, then you can file a case for dual employment.

Regards,
BrainLight HR Solutions

Thank you for the prompt reply. Yes, as per our appointment letter, it is mentioned that the person cannot enroll in another employment with or without remuneration.

Furthermore, my query is, if we do not pay his dues, will he file a case against us under the Payment of Wages Act? Does this person being D.G.M. come under the Payment of Wages Act?

Regards,
Raj

I suggest you issue a show cause notice to this person, clearly stating that he was in dual employment. Therefore, he has cheated and violated the service norms of both employers. This is misconduct and illegal, and therefore deserves appropriate legal action. Until we receive your satisfactory explanation, we are advising accounts to keep your full and final settlement in abeyance. You have not mentioned if there was a notice clause before leaving; otherwise, this misconduct may also be added.

Depending on industry practice, a copy of this letter along with employee feedback should be sent to his current HR as well, with these negative remarks about his conduct. It depends on the industry or the utility of that person there; otherwise, a good HR/organization shall never tolerate any such misconduct by any employee.

Dear Raj,

In the post, you have made no allegation against him that he was also working with another company. You have also stated that, "According to our sources, we have received information that he applied for extended leave in his previous employment due to his ill health before joining our company."

So, according to you, he had submitted a leave letter to his previous employer and is currently working for only one company, which is not against the law. The DGM will not fall under the definition of a worker as per the Payment of Wages Act, but he can face legal consequences according to the standing orders of your company.

Legal Considerations

In my opinion, you can consider sending a legal notice threatening legal action against him and causing harassment by making him chase you for his full and final settlement. However, I believe that filing a case against him may not serve any purpose.

Regards,