Pay Increment Confusion After Penalty: How Should It Be Handled Post-Penalty Period?

Dear Sir/Madam,

I am presenting a case study and request insight into the following issue. The annual increment is provided on the 1st of January each year. An employee has been subjected to a major penalty—a reduction by three stages for three years with cumulative effect from 03.03.17. The reduced pay is Rs. 35,120, and therefore, the reduced pay will continue until 02.03.2020.

Questions Regarding Pay Increment and Penalty

The questions are as follows:

1. Upon completion of the penalty on 03.03.2020, is the employee entitled to Rs. 36,180 (i.e., Rs. 35,120 + annual increment of 3% for 2020)?

2. The pay as of 03.03.2020 will be Rs. 35,120, and the employee would receive an increment on 01.01.2021. If the increment is applied on 01.01.2021, does it not amount to a violation of the penalty order as the implementation for the initial three years has been extended by another 10 months?

Please provide an explanation.

Thank you.

Dear MPPK, better you could have given the extract of the operative portion of the orders of punishment for the sake of readers' clarity of understanding. Well, the punishment is "Reduction by three stages for three years with cumulative effect from 03-03-2017." As the said punishment is a reduction to a lower scale of pay by three stages for a period of three years, it means the employee would be at the reduced scale for three years from 03-03-2017 to 02-03-2020 without annual increments. Because of the cumulative effect of the punishment, he is eligible to draw his next increment from the reduced stage only after 02-03-2020.

Since his normal increment falls in the first quarter of every year, i.e., during the period from January 1 to March 31, and the punishment being a reduction to a lower scale by three stages and not stoppage of three consecutive increments, there would be no change in the quarter of sanction of normal increment for the year 2020, but its monetary effect would be from 03-03-2020 onwards.

Dear MPPK,

You may consider this case, either in terms of 'Employment' or as per standing orders applicable to the employee. The fact of the case is given incompletely. If you could provide more facts, we may offer better advice.

Thanks,
V K Sharma

Based on the available data, the reduced pay is Rs. 35,120 per month, and it will continue until 02.03.2020. From 03.03.20, the pre-reduced salary must be restored, and the employee will receive the next increment on 01.01.21. Failure to comply with this order will result in disciplinary action.

I am not sure (there is no mention) of the reason for which such "Capital Punishment" is prescribed. Normally, deviating from the commitment made on salary in the "Letter of Appointment" is called "unlawful." There must be some very special reason that might have caused the employer to take such a step. I have a feeling that the employee is being shown the door for the said reason. I thus called it "Capital Punishment."

I just read a Supreme Court judgment that "no sympathy be shown in case of misappropriation of funds at the workplace." If that is the reason, my comments here stand withdrawn. As I do not want to presume any further, I would request the "Crime" for the prescribed "Punishment."

Dear MPPK, This is in response to your reply dated 19-11-17. The replies from various members who responded to your query so far might indicate the clarifications they need. With due respect to them, I infer that this is a case of punishment awarded to an industrial employee, either governed by the Standing Orders certified under the IE(S.O) Act, 1946, or the service regulations under the contract of employment, which is the prevailing presumption in their minds. However, my inference from your original query is that it involves a Central/State Government employee governed by the Civil Services (Discipline) Rules or an employee of a quasi-Government Organization. This is why I generally insist that every query relating to disciplinary action on employees should always contain relevant particulars like the type of organization, employee classification, salary or pay scale, nature of misconduct, rules under which disciplinary action was taken, punishment awarded, and so on.

Considerations on Increment and Pay Reduction

I would like to add something else. The wording in the punishment order is as follows: reduction to a lower grade by three stages with cumulative effect and not stoppage of increment for three years. There is no stoppage of increment. If we are putting him in a grade three stages lower than the present scale, why can't we pay him increment annually from that lower stage? Then, also, he will be reaching the present pay only after three years. Now if we are reducing his pay and again applying stoppage of increment, will it be challenged by the employee, saying that there is nothing in the order which says that the increment should be stopped?

Understanding 'Stoppage' of Increments

In the case of 'stoppage' of increments with cumulative effect, it is very clear that he will start getting increments from 2020 and that also from the pay that he is getting now. Had it been stoppage of increments 'without' cumulative effect, he would have received all the three increments not paid to him in 2017, 18, and 19 in 2020, and there would not be any loss to him other than the marginal loss by way of other components of salary which are percentages of the basic salary and the implied interest on the amounts.

Impact of Reduction to a Lower Grade

Reduction to a lower grade itself is a major punishment, and when there is a cumulative effect by which the employee will start getting his increment from the reduced scale only after three years, the gravity of the punishment will become more.

For academic interest, we may go through the attached Supreme Court verdict in Punjab State Electricity Board Vs Raj Kumar Goel.

Regards, Madhu T K

Dear Mr. Madhu, I fully endorse your viewpoint as it relates to the punishment of reduction to a lower grade of pay/rank. However, the specific provision states "reduction by three stages for three years with cumulative effect" effective from 03.03.2017. This implies reverting back to the third lower stage in the same pay scale and remaining at that stage continuously for three years. Consequently, there is an automatic bar on increments for the entire duration of the aforementioned three years starting from 03.03.2017 due to the cumulative effect. Please reflect on this and correct me if I am mistaken.

Dear Umakanthan Sir & Madhu Sir,

In the Conduct, Discipline & Appeal (CDA) Rules of major PSUs, one of the punishments listed is "Reduction to a lower grade of pay with or without annual increment accruing during the period of reduction" as a major penalty, and "withholding of increment with or without cumulative effect" as a minor penalty. The interpretation is that unless the punishment order specifies otherwise, the increment in the reduced grade is not withheld. In this case, the intention appears to be a reduction to the lower grade and pay for the period of reduction, i.e., no increment in the meanwhile.