Unauthorized Document Signing by Employee: What Legal Steps Can We Take?

Dear All, In our company, one of our employees is working on-site as a supervisor and does not have any authority to sign any document. However, they have signed one of the documents without being asked to provide authorization.

Legal Actions for Unauthorized Document Signing

Can we take any legal action against them, such as temporary suspension without pay or any other strict action? They have been working with us since 2014. Please advise in legal terms.

Thanks in advance.

Dear Ms. Pravin,

In your post, you have mentioned an incident in your company. Nevertheless, the following information is needed:

a) What is the designation of the employee? Have you given him in writing what documents he is authorized to sign and what documents he is not authorized to sign?

b) What exactly is the "document"? Was it a financial approval? To whom was the document addressed? Did your company suffer a financial setback because the employee made this decision independently? What would any other signatory have done differently?

c) If the employee has been working with you since 2014, then why do you not wish to trust the employee?

d) Have you issued a show-cause notice to the employee for signing a document without proper authority? What is his reply?

e) Why do you wish to take a harsh action like "suspension without pay"? Why is a warning letter not considered sufficient?

f) If you wish to take strong disciplinary action, then on what basis would you like to proceed? Do you have approved standing orders? If yes, have misconduct regarding "signing documents without authority" been clearly defined?

Please clarify the points mentioned above. Suggestions can be given once we thoroughly understand what has happened in your company.

Thanks,

Dinesh Divekar

Ms. Parvin,

Your thread has limited information, and Mr. Dinesh Divekar has rightly sought a few details to provide an appropriate opinion. However, from your query, it is evident that the employee is posted on-site as a Supervisor. In this case, we need to review the job description/charter of duties assigned to him. It is also unclear what type of work he is supervising at the site. Typically, a supervisor is responsible for verifying worker attendance, monitoring work/material quantities on-site, and addressing any site developments or hindrances.

Another question arises regarding how the document reached the Supervisor when it was not intended for him. The Site Incharge is responsible for maintaining proper control and supervision over the staff at the site and should explain how the document was received by the Supervisor.

Based on your inquiry, if the Supervisor was not authorized to sign the document, it is evident that the relevant authority/section/department responsible for further action on the document would not proceed. Therefore, there seems to be a minimal risk of any financial loss to the company.

It is crucial to note that suspension is always temporary, usually for a limited period in compliance with the company's rules/standing orders. During the suspension period, the company is obligated to provide the employee with Subsistence Allowance based on their pay, and therefore, suspension without pay is not permissible.

Considering the employee's 14 years of service, it is likely that he has built credibility within the company. Therefore, taking strict action may not be advisable unless the company has incurred financial losses or damage to its reputation in the industry.

In my view, it would be appropriate to request an explanation and subsequently issue a formal warning letter.

It seems that the company should review its promotion policies for employees, redefine their charter of duties with specific roles, and establish clear Conduct Rules outlining misconducts for employees.

I hope you find this information helpful.

Regards, Chandramani Lal Srivastava
[Email Removed For Privacy Reasons]
Master Consultant - [Phone Number Removed For Privacy-Reasons]
New Delhi

Unauthorized Signing of Documents: Disciplinary Action Considerations

Merely for signing a document unauthorizedly, does it call for disciplinary action? Has it caused any prejudice to the company? Was it in the interest of the organization, or out of sheer enthusiasm to show his confidence, competence, and credibility in the organization?

If there is no malafide intent, then disciplinary action is not called for, though it was highly improper, and he has to be taken to task. More than signing the document, it is really unpardonable to suppress that information. Yet, taking disciplinary action would send a message to all to stop taking initiative and walking the extra mile, which would discourage everyone from going beyond their boundaries, even if it costs customer satisfaction.

So, looking at all these factors and only after seeking his explanation, formally or, better yet, orally, decide on the action to be taken.

Dear colleague, I refer to the reply of Chandramani Lal Srivastava wherein he stated, "You cannot suspend without pay."

Types of Suspension

Under Model Standing Orders, suspension is of two types: one is suspension pending and completion of the domestic enquiry subject to payment of the subsistence allowance as applicable, and another is suspension without pay by way of punishment up to a maximum of four days after having issued a show cause notice or the charge sheet calling for the worker's written explanation.

Therefore, to say that one cannot suspend without pay is not a correct legal position.

Regards,
Vinayak Nagarkar
HR and Employee Relations Consultant

Reference the clarification kindly provided by our respected member, Shri Vinayak Nagarkar ji. The relevant provision of Model Standing Orders, Clause No. 14 (1)(2) under Industrial Employment (Standing Order) Rules stipulates as follows:

Clause on Misconduct

"(2) A workman may be suspended for a period not exceeding four days at a time or dismissed without notice or any compensation in lieu of notice if he is found guilty of misconduct."

It may be noted that the condition "without any compensation" is linked to dismissal with the underlying principle that there shall be neither any notice nor any compensation in lieu of notice. The term compensation is not linked to suspension. The legal term for suspension is "Subsistence Allowance," not compensation.

Subsistence Allowance During Suspension

Furthermore, the clause stipulates as follows:

"(b) A workman who is placed under suspension shall be paid subsistence allowance in accordance with the provisions of section 10A of the Act."

It may be seen that an employee is entitled to Subsistence Allowance during the suspension period, which shall not exceed four days at a time. Clause No.17 stipulates suspension during the pendency of inquiry, in which case the rule of a maximum of four days may not apply.

Please correct me if there are any misunderstandings in my interpretation.

Regards and respect,

Chandra Mani Lal Srivastava
Master Consultant
[Phone Number Removed For Privacy-Reasons]
[Email Removed For Privacy Reasons]
New Delhi.

Mr. Srivastava's clarification is correct. I referred to the suspension without wages in cases where certified standing orders or service rules expressly provide for it. In the absence of that, the suspension by way of punishment is with wages (not subsistence allowance).

Thanks, Mr. Srivastava.

Regards,
Vinayak Nagarkar
HR and Employee Relations Consultant

Dear Parvin, as many people have already mentioned, some vital details are required to answer this question.

Anyway, a suspension without pay is not an appropriate step since the employee has been associated with your company for more than 14 years. If this mistake has happened for the very first time, he should be given a chance.

On the other hand, if he has made the same mistake in the past, you can give him a warning, either verbal or written. Most importantly, make sure to have a word with him and explain his duties and rights clearly.

Not to forget, if he commits the same mistake in the future, you can think of suspending him without a second thought. I hope this answer helps you.