Can We Stop an Employee from Resigning After a Show-Cause Notice? Seeking Advice on Retention and Legal Options

We have issued a show-cause notice to an employee, and now the employee wishes to resign. What can we do to prevent him from leaving the company? He is also unwilling to serve the notice period but is prepared to pay the notice amount. Is there anything we can do to retain him? Are there any laws that prevent an employee from resigning after receiving a show-cause notice?

Thanks

Dear Sathish,

Pending reply to the show cause notice, you can put on hold the resignation. A letter of resignation is no substitute for the reply to the show cause notice. Both are unconnected. Nevertheless, reply to the employee that his letter of resignation has been put on hold till the completion of proceedings of disciplinary action. Possibly he wanted to evade disciplinary action by putting up the letter of resignation. Nevertheless, he must attend his duties per force till the completion of disciplinary action.

If the reply to the show cause notice is not satisfactory or if no reply is received, then you may award him suitable punishment as deemed fit.

Questions to Consider

By the way, what was the misconduct? Was he involved in fraud of any kind? Does the situation merit conducting a domestic enquiry? As an interim measure, tell the employee to deposit company property if it is allotted to him.

Complete the entire process by this month's end. In case you need to forfeit his wages, it should be possible to do from this month's salary.

For info.

Regards,
Dinesh Divekar

Thank you very much, Dinesh. The employee has submitted a notice reply stating that he has not committed any wrongdoing. We also don't have any concrete proof that he has done something wrong. How long can we hold him by stating that we will not accept the resignation letter? By law, I believe any person can resign from any organization whenever they want.

You have not mentioned the reason for issuing a show cause as requested by Mr. Divekar. You yourself stated in the above post that there is no concrete proof of any wrongdoing. Then, may we know why this was issued to the concerned employee in the first place?

Legally, you cannot hold any employee unless you have proof of wrongdoing or their involvement in deliberate, intentional actions to cause loss/damage to company property, harm to personnel, or involvement in anti-social or anti-national activities. In such cases, the employee is terminated, and proper authorities are notified for further proceedings.

The only way, if you really want the employee to stay back and if he is productive enough and worth the effort, is reconciliation through dialogue. In that case, he will have to write a follow-up email withdrawing the resignation.

Take him into confidence, speak with him, and clear the doubts and misunderstandings.

Good luck.

Regards,
Sourabh

Thank you very much, Sourabh. To elaborate, here is the story. There were three people who had done something that caused the company to lose money. One had already resigned and left the organization. When we contacted them and inquired about the issue, the other two individuals claimed that the person who had left must have been responsible for the wrongdoing and that they were innocent. However, we suspected that one person alone couldn't have been solely responsible, so we issued a notice to all three individuals. We have received responses from the two who are still employed with us. Now, these two individuals are expressing their intention to leave the organization. We are currently experiencing a shortage of employees and are reluctant to lose them.

Issuing Notices Without Concrete Proof

Is it appropriate to issue a notice to any individual without concrete proof of wrongdoing?

Of course, yes, Sathish. When you are issuing a Show Cause notice, that means you have enough evidence to back up any alleged misconduct; otherwise, why the notice in black and white? It defeats the purpose.

Suggestion for Handling the Situation

My suggestion would be to call them to your office or, if they are not comfortable, take them out to lunch or dinner. Sit with them and persuade them to rejoin their duties. Tell them that the show cause is just a formality and the management was trying to get the truth to devise a way so that this kind of thing should not happen in the future again. They should write what they have told you, and that would be the end of the issue.

You will have to be very patient in hearing out their grievances and persuading them to stay with the company. Be prepared; you will have to soothe them.

Considerations for Employee Records

Hope they have nothing negative on their past performance in their employee records. This notice and their subsequent responses may or may not be included in their file based on the management's decision of the outcome and the mutually beneficial financial and trust factors.

Handling Lack of Evidence

If you have no evidence or proof, then the matter should have been dealt with verbally in the office via a one-on-one meeting. Even if the said employee(s) are involved, and they know that there is no proof or evidence and no one witnessed their act, then they will simply shrug off any such allegations.

Regards

Handling Employee Resignation During Investigation

An employee can submit a resignation letter at any point in time, irrespective of being under any investigation. It is your duty to acknowledge the resignation letter. If you would like to decide on his resignation after the conclusion of the show cause inquiry, simply reply the same. Conduct the inquiry as soon as possible. If found guilty, adjudicate against him. If found innocent, then request him to continue or relieve him, providing the notice period.

Regards

If we want to take any disciplinary action against an employee who has submitted their resignation, we will have to keep them under suspension; otherwise, they will not have any employee status and will go out of employment at the expiry of the notice period. In that case, we cannot take any action against them.

Regards,
N. Nataraajhan
Sakthi Management Services
[Phone Number Removed For Privacy Reasons]
Email: [Email Removed For Privacy Reasons]

Thank you for sharing this valuable information. I would also like to know its legal implications in case an employer suspends an employee "after" the employee has submitted a resignation. Will it stand in a court of law? Won't it be wrongful to intentionally and deliberately hold an employee against their will to work with the respective employer/organization? Legally, are we denying their constitutional right to find employment? I would like to see some clarification on this.

Regards,
Sourabh

Suspension and Disciplinary Action

Suspension is only to keep the employee on your rolls in case you want to take serious disciplinary action for misconduct. Long ago, the Madras High Court gave a verdict in which the Court held that an employee, after leaving the services, cannot be given any punishment (Judgment copy not readily available - but it relates to an employee of M/s Mettur Spg Mills). You may make a decision after considering all relevant factors.

Regards,
N. Nataraajhan
Sakthi Management Services
HP: [Phone Number Removed For Privacy Reasons]
Email: [Email Removed For Privacy Reasons]

Important Judgment on Disciplinary Action and Suspension

Please find attached a copy of the judgment in Mettur Spg Mills v Dy Com of Labour by the Madras High Court (1982), wherein the Honorable Judge held that to award any punishment after disciplinary action, the employee has to be in service and therefore will have to be kept under suspension. I am sure that this important judgment will be useful for our fraternity.

Regards,
N. Nataraajhan
Sakthi Management Services
HP: [Phone Number Removed For Privacy Reasons]
Email: [Email Removed For Privacy Reasons]

We have given a show cause notice to an employee, and now the employee wants to resign. What can we do to stop him from leaving the company? He is also not ready to serve the notice period but is willing to pay the notice amount. Is there anything we can do to stop him? Is there any law that prevents an employee from resigning after receiving a show cause notice?

Considerations for Employee Resignation

When an employee wants to leave, why do you want to keep him, especially when he is willing to pay the notice pay, which is a right for the employee under standard conditions of employment? The only thing you can do is not release him without the clearance of concerned departments. He must hand over the company's property in good condition before being relieved.

Thanks

Understanding Employee Resignation Amidst Fraud Allegations

From your statement, it is understood that three employees were said to be involved in fraud, which could not be attributed to any particular person among these three. Further, you mentioned that one of the above three has already left your company. How did he leave? Did he tender his resignation after receiving a show-cause notice? If so, why did management accept his resignation when the show-cause notice was pending? Or has he gone on unauthorized absence from duty upon receipt of your show-cause notice?

If the person who left your company is absent from duty, we have to doubt his integrity and accordingly, we need to take disciplinary action against him on the grounds of not only fraud/financial loss to the company but also unauthorized absence from duty. However, you mentioned that you gave notices to all three employees and out of that, one left. The remaining two claim they are innocent and that the third person who left the service is guilty.

Steps to Address the Situation

To get the facts of the case, you need to issue a charge sheet by framing relevant charges to all three, including the person who stays away from duty. Upon receipt of an explanation from these three, you need to conduct an inquiry if necessary to establish the charge. The inquiry officer can decide who is guilty of misconduct and accordingly, you can award punishment to the person or persons responsible for committing fraud.

Without following the procedure, you cannot establish the charge against any of the above three employees. Furthermore, you mentioned that management does not want to lose the services of the other two employees due to a shortage of manpower. This indicates that your management is having a dual stance regarding employees alleged to have committed financial irregularities. If manpower is short, then they might take a lenient view on any employee who commits misconduct and fraud in connection with company business. Does this not lead to further indiscipline among other employees in your organization? If the management's stance is like this, why have they issued show-cause notices to the three employees under reference?

I strongly suggest that the person who is said to have committed financial irregularity should not be kept in the services of the company any longer, which may prove detrimental to the interests of the company in the long run. This is my advice, and let us have an expert opinion from our learned members.

Regards