Retirement and Salary Reduction: Will My Father-in-Law's Pension Be Affected?

My father-in-law is going to retire this month, and he has been given a punishment of salary reduction for three years, which started in September 2018. Will his punishment end when he retires, or will it continue even during his pension payments? Also, what would be the salary consideration for gratuity calculation - the punishment period salary or his regular salary?

It depends on the nature of the punishment of salary reduction awarded. If it has a cumulative effect, it would certainly affect the individual's pension.

Impact of Punishment on Retirement Benefits

What does the punishment order precisely state? Is it a stoppage of increment or demotion? If it involves the stoppage of increment, it will have a negative impact on his retirement, specifically on the increment amount he has already lost for the year 2019. On the other hand, if it was a demotion and his salary has been reduced to a lower basic, it would have a larger impact on his retirement benefits such as Gratuity, Pension, and leave encashment.

He should appeal to his disciplinary and reviewing authority, requesting them to condone the same before his retirement if it seems feasible. Many companies pardon such punishments upon the retirement of an employee to prevent significant long-term losses. Due to the immediate retirement, the severity of the punishment becomes significantly higher than it would have been otherwise. It is possible that the company made an error in issuing an order with a three-year effect when he is retiring the following year.

Regards, Shailesh Parikh
[Phone Number Removed For Privacy-Reasons]
Vadodara

Thank you, Shailesh, for the reply. He has been demoted to a lower basic, and we are worried because his pay is reduced by almost half. If calculations are done based on that, he will lose a lot. He is working in Grameena Bank, and the authority has given him a punishment for 3 years, even though they are aware that he is going to retire in 6 months.

The salary reduction for 3 years will continue until the retirement of the employee. If there is no financial component under the order of punishment, this depends upon the pronouncement of the punishment. There should not be any cut in pension payment.

It would be better if the poster provides an exact description of the punishment awarded. Reduction in salary to a particular lower stage on the pay scale is different from demotion. It is also essential to review the Bank's Service Regulations regarding the award of punishments for grave misconduct.

As mentioned earlier, if the reduction in pay is with a cumulative effect and the employee is superannuated later, his terminal benefits must be computed based on his last drawn salary only. If it is a punishment of demotion, his pay would have been revised to the stage in the scale applicable to the position.

Yes, any suggestion depends on the punishment imposed and also the provisions of the regulations under which the disciplinary proceedings have been held and punishment imposed. It is important to ascertain whether the reduction in pay has been with cumulative effect or otherwise. In any case, the punishment cannot prolong beyond retirement.

There are many remedies available against the punishment imposed in such proceedings, such as filing an appeal or seeking judicial review. Has your father-in-law availed himself of such opportunities?