How Should We Handle a Resigned Employee with Uncollected Customer Payments?

Issue with Marketing Employee's Resignation and Outstanding Collections

This is Pravallika, working as an HR Executive in a Manufacturing Company. Our company comes under the "Shops & Establishments Act."

My query is regarding one of our Marketing employees who is supposed to collect more than 15 lacs from customers. Without collecting the money, he submitted his resignation to his HOD. The HOD informed him that he would not be relieved from the company until he collects the money from the customers. However, it has been 6 months already, and there has been no improvement in collecting the money.

Please suggest how to proceed with this issue. Should we relieve the employee or keep him on the rolls?

Regards,
Pravallika

Please consider filing a police case against the employee; otherwise, we should proceed with recovering the total amount owed from the employee.

Thank you.

Appointment Letter Review

Firstly, have you received any appointment letter from the company? If you have, please carefully review the terms and conditions stated in the letter. I believe the terms regarding the collection of money are not included in your appointment order. Therefore, if that condition is not specified, there is no need to worry. Show the appointment letter to your HR department and request to be relieved as soon as possible.

Thank you for your reply, but the case has been ongoing for a long time with no progress. I agree that we should maintain the employee on the company's payroll; however, if the employee completes five years of service, the company would be required to pay Gratuity. Could you please suggest an alternative approach for us to consider moving forward?

Best regards,
Pravallika

Ok, fine. Please don't file any police case against him as it may create legal and human rights issues. However, is he now eligible for Gratuity? If so, inform him that if he leaves our company without collecting his money, we will not provide his Gratuity and PF Settlement. According to the Gratuity Act of 1972, the settlement of Gratuity claims is at the discretion of the employer. We have the authority to withhold the gratuity settlement due to the employee's non-disciplinary and inappropriate behavior. Additionally, we can delay the PF settlement for up to one year for that employee. Please communicate this information to the employee and advise him to collect his money promptly. We will proceed with his relieving process shortly.

Remove him from the payroll and place him in a temporary or trainee staff position. Provide a stipend payment until he collects the money, meaning he is demoted. Therefore, PF contribution is not required for stipend payments. If his salary is above 15,000 or your establishment is not covered under the ESI circle, ESI contribution is not applicable, so there is no issue for us. Once the target money is recovered, release him. Issue an experience certificate for his on-roll services only. Payment of stipend salary should be in cash only, without issuing a cheque or bank transfer.

Regarding the quoted text, here is the corrected version:

After he submitted his resignation, he did not come to the office, and we stopped paying his salary. His salary is above 15,000. When he stopped coming to the office, we stopped paying his salary and only showed zero contributions for PF. However, the management is asking me how long we will keep him on the rolls and inquiring about the experience certificate and Gratuity issues. I am unable to provide a proper reply to them.

Warm regards.

I have one doubt. Did you issue any appointment order to him? Did you mention any notice period in that appointment order?

Thank you.

Yes, we issued an Appointment Letter, and he has a 2-month Notice Period. He gave his resignation in February '14, in which he mentioned that he would fulfill commitments regarding the dues during that notice period. However, he later did not come to the office.

I think Mr. Prabhukumar has not read Section 4(6) of the Payment of Gratuity Act. A person's gratuity can only be deducted or forfeited on termination for reasons mentioned in that section and not for other reasons like non-collection of dues. Also, read the EPF Act. Only an apprentice under the Apprentices Act or under the standing orders of the company is excluded from the EPF Act, not someone who is re-categorized from salary to stipend.

Regards,
Varghese Mathew
[Phone Number Removed For Privacy Reasons]