Can We Offset Payable Benefits Against Fraud Amounts After Employee Termination?

Hi All, I am working with a bank. We have many cases in which employees are terminated after due process of departmental inquiry. Thus, the amount misappropriated is due towards the terminated employee. We have filed a recovery suit. Some payable benefits are also pending with the bank, i.e., gratuity, leave salary, security deposits of terminated employees, etc. However, the bank has used the word "salary and these benefits are attached" in the termination order.

Question on Adjusting Payable Benefits

Now the question before me is, can we adjust the payable benefits against the fraud amounts, as these amounts are attached by the bank? For adjusting accounting entries, we have to make debits to the Salary & Allowances Account, which affects the profit of the bank. Also, does it mean we are breaching the termination order, i.e., "salary and these benefits are attached"?

Thanks. Your views are highly appreciated.

Regards.

Termination and Recovery of Misappropriated Amounts

An employee can be terminated upon the completion of the inquiry and finding the amount misappropriated by him as the cause of termination. Therefore, final orders should have been issued with directions to the authorities to recover the amount from payable benefits upon termination or in the orders passed on the date. This must have been clearly mentioned by the inquiry officer in his recommendation or passed by the appropriate authority for recovery from the employee.

As this is the case, you have the full right to recover the amount from the employee from payable benefits. There is no question of withholding all benefits or attaching them without taking any action. In the event that the terminated employee goes to court to prove his innocence, the case may take turns and twists; however, the amount is being recovered to make good for the misappropriation and not for the personal benefit of others. In this case, the inquiry and other issues may arise.

Kindly review the final orders and effect recoveries properly while accounting for the same for the misappropriation. In the absence of such orders, you may end up in a dubious state, and you have no right to attach his financial benefits.

(disciplinary proceedings for misappropriation/punishment thereof)

Best of luck...

Dear Nathrao,

Still, the question remains before me: when the bank has used the word "Attached" in the final order of termination as a punishment, is it proper to give effect by showing the payment done by debiting the P&L accounts and reducing the loss? Or would it be proper to recover the loss from the employee separately (without taking into consideration the salary or any other amount payable with the bank - as it is "Attached")?

Thank you.

Understanding the Term "Attachment" in Financial Contexts

The word "attachment" is a tag that represents the amount neither disbursed to the individual nor taken into account for rectifying misappropriation. The absence of final orders in this case indicates that it is still pending, specifically regarding the recovery from the employee. Kindly review the orders again; the authority responsible for issuing the orders may have provided an opportunity to repay or remit the misappropriated amount to the bank. Otherwise, they should have arranged for an alternative method or set a specific time for recovery.

Steps to Process Final Settlements

Additionally, please examine whether final settlements can be processed in this case promptly. If such is the directive, the authorities should undoubtedly adhere to the prescribed procedures. If not, it would be advisable to refer the entire case to the legal department of the branch or seek legal advice on the orders to facilitate appropriate action, aiding the manager in making informed decisions.

Best of luck...

Gratuity cannot be forfeited except for termination due to willful omission or negligence causing any damage or loss to, or destruction of property belonging to the employer, to the extent of the damage or loss caused. You may forfeit the amount and amend your recovery suit to that extent.