Employee Resigned After Extra Leave Payment: How Can We Recover the Overpaid Money?

Hi, I had an issue come up in a class discussion. There is an employee who left the company without serving a notice period. Before resigning due to a communication issue, they were paid extra Casual Leaves, after which they resigned. As a company, how can we recover the overpaid money?

Regards

Dear Rohit Kumbhar,

If the employee has abandoned their duties, did you send them an official letter to return to work? Otherwise, disciplinary action will be initiated against them.

Send two warning letters to urge them to return to work. If the employee does not comply, you may order a domestic inquiry.

If the employee does not appear before the inquiry, the management may take an *ex parte* decision and award a suitable punishment, which could be termination of their services.

Before abandoning their duties, the employee must have worked a few days in that month. I don't think you have paid the salary for that period. Since the employee availed of more leave than they were eligible for, you can recover those days' salary. This recovery can be made from the salary outstanding against them. For the recovery of payment for the excess leave, obtain sanction from the competent authority.

Correspondence related to this incident should be preserved in the employee file. As a cross-reference, additional copies may be preserved elsewhere too.

Notwithstanding the recovery process, the question arises as to why the employee was sanctioned leave beyond their eligibility. Why did this lapse occur, and how can such a lapse be prevented in the future? This is a lesson to be learned from this incident.

Thanks,

Dinesh Divekar

Casual Leave and Payment Recovery

There is no payment for casual leave as it is not an encashable leave. The very name "casual leave" indicates that it is allowed for the purpose of a sudden requirement. The unavailed casual leave lapses after the availment period is over, and it is also not carried forward. It is quite possible that the employee may have availed casual leave in excess of entitlement thus far.

Any overpayment on any account can be recovered from the wages or the final dues payable to the employee. There is a specific provision in the Payment of Wages Act 1936 (Section 7 (2) (f)) that allows for the recovery of excess payment from the wages payable to an employee.

Dear Sir,

The employee has already left the company. Due to a communication barrier within the management, the employee received extra paid casual leave. Is there any way to recover the money for those extra paid casual leaves from the employee, considering that they have already joined another company?

Casual leave is not encashable. First of all, I do not understand how your company encashes casual leave. Recovering the amount depends on the relationship the company had with the employee. If the ex-employee refuses to repay, you will have to write off the amount.