Navigating Settlements for Absconded Employees: Can We Recover Notice Pay?

Guidance on Settlement and Closing Accounts for Absconded Employees

Need guidance to set up a process for settlement and closing accounts for absconded employees in an IT organization. After systematic follow-ups and notifications, when we terminate an employee for being absconded, can we ask for notice pay recovery? Please comment.

Handling Resignation Without Notice Period

In a scenario where an employee is on leave with a genuine reason for some time and later sends a resignation, after contacting for further explanation, he denies serving the notice period and is also not ready to pay the recovery amount. How can this case be treated as it cannot be categorized as either absconding or misconduct? Please share your views on the same.

Understanding Absconding in Labor Laws

There is no term "absconding" under any labor Acts, although this term is widely used. If you look closely, absconding is a derogatory word when it comes to labor laws. However, it can be treated as being absent without permission and/or approval.

Steps to Handle Absenteeism

If an employee is absent without notice, permission, or authorization for an extended period, management needs to:

1. Ask the employee to rejoin the service and/or show cause for such absenteeism.
2. If the employee fails to report for duty or provides an insufficient/unacceptable cause, management needs to initiate a domestic inquiry before taking any steps or terminating the employee's service.

At no cost should the principle of natural justice be violated.

Termination and Notice Pay Recovery

If the company terminates the service (for whatever reason), then the question of recovering any notice pay does not arise since the employee has not left the job.

Genuine Reasons for Absence

If the employee has a genuine reason for their absence (like a medical certificate, etc.), then such absence cannot be treated as misconduct directly if they are not in a position to inform the employer about their illness in due time. However, each case will depend on the factual aspect.

Even if not informing the company about the illness is treated as 'misconduct,' provided that the grounds are genuine, termination for such misconduct would be disproportionate to the misconduct.

Resignation Without Notice

If an employee does not serve the notice period or does not pay in lieu thereof, you still cannot treat their action as misconduct since the employer-employee relationship ends once such resignation is given and accepted.

Regards

Addressing Organizational Challenges Due to Attrition in IT Companies

You mention that yours is an IT company. Besides what Mr. Reitesh observes, the reality remains about how to address organizational challenges resulting from sudden attrition. Gone are the days when individuals worked diligently for years at a single company, advancing alongside the organization, enjoying specific benefits, personal connections, and stability. Presently, what you describe is increasingly becoming the norm, particularly in IT firms.

It appears from your message that the employee in question has left your company and may have joined another organization (likely with a higher salary), leaving you pondering the next steps. While you can always pursue legal avenues to reclaim the notice pay from the departing employee, provided you possess all the necessary documentation, this process is not only protracted and time-consuming but also often unwise due to minimal or no returns. You mention having diligently followed up and sent notifications concerning this employee. This should suffice to demonstrate their lack of response to your communications. If you still wish to take action, consider sending a Registered Post Acknowledgment Due (RPAD) letter to their current address, detailing the situation and closing their file, focusing instead on filling their vacancy.

Please let me know if you need further assistance.

The crux of the case is that the employee, after the expiry of his authorized leave, did not rejoin but submitted his resignation. The employer did not accept the resignation due to the employee's failure to fulfill the notice period obligations. Despite formal communication and refusal to comply with the notice conditions, the employee remains absent. Therefore, the issue of abscondence or abandonment of services by the employee, characterized by the lack of communication following unauthorized absence, is not in question. In this context, what remains is the impact of the resignation submitted by the employee immediately upon the expiration of the sanctioned leave.

Although a resignation is recognized as a form of unilateral termination of the employment contract, it only becomes effective upon acceptance by the employer, subject to compliance with the stipulated notice conditions. The employee's outright refusal to serve the notice period or pay in lieu of notice amounts to misconduct, specifically refusal to obey the lawful orders or directions of the employer. Hence, the employer is not precluded from dismissing the employee after taking appropriate disciplinary action, despite the resignation not being accepted.

It is advisable to have certified Standing Orders for your establishment. Alternatively, disciplinary action can be taken under the provisions of your State's model standing orders. You have the option to accept the resignation and adjust the notice salary in the full and final settlement amount or proceed with legal action for recovery.

Please let me know if you need further assistance or clarification.