Can an Employee Fired for Theft Still Qualify for a Bonus? Seeking Guidance on Legal Grounds

Eligibility for Bonus After Termination for Theft

In my query, I have searched through old threads, but I am still uncertain about it. An incident occurred in our organization 3-4 months ago where one of our office boys stole money from the purses/wallets of two employees. When they complained, we reviewed the CCTV footage and clearly saw the office boy taking money from their wallets in their absence. We interrogated him, showed him the footage, and the next day, he confessed. We recovered the stolen money from him before terminating his employment.

My confusion arises regarding his eligibility for a bonus since we have already retrieved the stolen money from him. The management believes we should not pay him a bonus, citing Sec. 9 of the Payment of Bonus Act, which states that an employee shall be disqualified from receiving a bonus under this Act if he is dismissed from service for:

- (a) fraud; or
- (b) riotous or violent behavior while on the premises of the establishment; or
- (c) theft, misappropriation, or sabotage of any property of the establishment.

Please advise if a bonus should be paid to the worker in this scenario.

Kindly guide me on this matter.

Best regards

Did you conduct an inquiry? Was there a written complaint from employees who lost their personal cash? I do hope the relevant CCTV footage is preserved safely.

Did you take any written statements from the office boy who stole money? However, it should be noted that the office boy did not steal any company property and has refunded the amount (perhaps he had no other option).

Strictly speaking, the bonus cannot be denied to the office boy.

In my view, the recovery of the amount/goods stolen does not clear the guilt of the misconduct for which he was dismissed from service. The employee himself has rendered himself ineligible to receive any bonus. The management has all rights to disqualify the guilty employee from receiving the bonus. However, the management "might take a lenient view" on this if there is a good reason for the same (the one you stated above).

I just read what Mr. Nath wrote and confirmed that with the legal department here; theft of other employees' possessions does not amount to theft of company property. So, pay the bonus.

Spot on, Mr. Nath.

Disqualification from Bonus Due to Dismissal

An employee becomes disqualified for a bonus if he is dismissed for fraud or theft, etc. If you terminated his service for theft, then you need to examine whether the employee's actions constitute misconduct under the service rules or terms of employment. You should also consider if you provided him with a charge sheet to give him the opportunity to explain his conduct and whether he admitted his guilt unconditionally during the domestic inquiry. If not, I am doubtful that the termination falls within the purview of dismissal under Sec. 9 of the Act. Other views are welcome.

Regards,
B. Saikumar Navi Mumbai

Doubts on the Nature of the Query

First of all, you have asked an important question anonymously, with reasons best known to you. That instance gives rise to some doubt about whether the case discussed is a real one or just an academic query of a student of law or MBA.

Inquiry and Termination Process

Secondly, you have not discussed anything about the conduct of a formal inquiry and its outcome after giving him the opportunity to defend his position before terminating him. However, all depends upon whether or not the due formal prescribed process was adopted in terminating his services after a formal inquiry in the case of his involvement in theft before resorting to his termination. Otherwise, on assuming all due processes were adopted by the organization, the proposed action is correct as per the legal position.

@Secureplussolutions,

Why are you bringing in the aspect of humanity? The matter being discussed was to find a legal solution to the query - whether a person found stealing employees' personal items can be refused a bonus in terms of Section 9 of the Bonus Act.

And another point, why are you using capital letters like this? It is equivalent to shouting.

Legal Implications of Bonus Forfeiture

Logically, he need not be paid; technically/legally -?? The bonus entitled stands forfeited in the circumstances enumerated under Section 9 of the Payment of Bonus Act, which includes theft. Provided a formal inquiry was instituted and due process of law was enforced, which culminated in termination. However, the forfeiture can be enforced only when the formal inquiry findings also pass a specific/speaking order forfeiting the accrued bonus. If a specific order of forfeiture is not passed or is silent about it, then the bonus due otherwise has to be paid.

"The bonus entitled stands forfeited in the circumstances enumerated under section 9 of the Payment of Bonus Act, which includes theft."

Theft of company property is what is mentioned in the referred section. Here, theft involves the personal money of the employee (totally wrong for the thief to do such things). Technically and legally, there is a distinction.

Mr. Anonymous,

You have not clarified the position, as I pointed out three days ago. Your silence clearly indicates that either your query was a hypothetical academic question, or you have assumed the theft to have been committed without giving the employee an opportunity to defend themselves by following the proper domestic inquiry process. Can you please reveal the reality regarding your query?

Dear Sir,

The provision in the Act states that an employee may be disqualified from receiving a bonus if they are dismissed from service for theft. Therefore, the question is, have you dismissed him for theft? If it is proven that he is guilty of theft, then he is disqualified from receiving the bonus for the relevant year.

Understanding the Query on Bonus Eligibility

The query raised by an anonymous individual does not involve interacting with the members of the opinion, nor does it reveal any reality. In the absence of this, it is difficult to understand whether this is a real incident or hypothetical.

Nowhere is it proven that the boy is guilty. Unless a domestic inquiry is conducted into the charges alleged against the delinquent, we cannot hold anybody guilty and forfeit the bonus amount. The steps for the forfeiture of the bonus amount, as specified by our learned members, are quite clear. In the absence of disciplinary proceedings, I am of the opinion that it is best to keep the bonus payment in abeyance, complete the procedures, and proceed based on the findings of the inquiry officer.

Regards,
Adoni Suguresh
Labour Laws Consultant