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Anonymous
1

My company is a manufacturing firm, and I got to know that one of our employees has a self-company separately along with his wife and one person from the store department of the company who is responsible for purchase involved with him and purchasing the items we require as raw material from there without disclosing the identity of the employee and his company and taking a commission from him. And this has been happening for the last 6-7 months. Please suggest as an HR what steps I should take towards them.
From India, Noida
vmlakshminarayanan
929

Hi,

Who is responsible for Stores /Purchase dept is it the same guy who took commission from Vendor ?

There should some SOP for Stores Department and before finalizing the Vendor 3 competitive quotes should have been obtained right ? Whether this criteria was followed in your Organisation ?

The Vendor Company is in the name of your employee name or his wife's name ?

Please check whether raw materials were procured beyond market price in order to pay commission to the Stores guy.

If so Stores guy needs to issued strict warning or disciplinary action to be initiated based on the quantum of loss.

From India, Madras
Babu Alexander
294

Basically the present system and procedure in vogue, gives leverage for anybody in charge of vendor identification, to choose his choice of vendors. The system & procedure is responsible, and reinforce the procedure to curb such practices.
Ensure an effective system and procedure in place, in identifying vendor/ supplier to your manufacturing.
Fix responsibility with a senior members ( as members of the vendor identifying group), to re assess the present vendors.
Ensure a service condition for all employees not to involve any business with the Firm, both directly or indirectly while in service. Make a condition to declare if any involvement. Some organization may encourage, such vendors, considering the quality / quantity and service, based on the organizational need.
Shift the present in charge who had identified the so called vendor (Employee) to another location on job rotation.

From India, Madras
Anonymous
1

Production manager and his wife both are the directors of company. Please tell me what action can take for production manager who became secret vendor of the company.

And the person who is making purchase is responsible for purchase for the store department.

From India, Noida
vmlakshminarayanan
929

Hi,

Please check the Appointment order issued to that Production Manager.

There should be some clause like "during the service period employee should not engage himself/herself , directly or indirectly, in other business or work part time or accept any form of employment, should not engage in any business activity....."

If you have any clause like above then it amounts to breach of contract on the part of the Production Manager which amounts to severe misconduct. Even if the above clause is not there that Production Manager can be charged for running another company while in employment and had secret business relationship with your Company. You may issue a show cause notice to that Production Manager as to why disciplinary action should not be initiated against him.

From India, Madras
Anonymous
1

Thanks so much for the Help ! It will really help me out
From India, Noida
Anonymous
1

I got to know today that the person who is responsible for purchase and the one of the sales manager of company involved in the matter completely as they found guilty of taking commission on the orders we were placing in production manager company.
Please tell me should I proceed further legally and sue these 3 employees? And how can I do that? What's the process?

Or should I just terminate all of three on immediate basis?

From India, Noida
raghunath_bv
158

Hi,

It seems like you're outlining a scenario or requesting advice on a situation related to stores/purchase department practices, vendor selection, and potential conflicts of interest. While I can provide general guidance, it's important to note that specific details may vary based on company policies, industry regulations, and legal considerations. Here are some general points to consider:

Responsibility for Stores/Purchase Department:
In most organizations, the head of the Stores or Purchase Department is responsible for procurement activities.
The person responsible for selecting vendors and negotiating contracts should act in the best interest of the company.

Standard Operating Procedures (SOPs):
Establishing clear SOPs for the Stores Department is crucial. These SOPs should outline the process for vendor selection, procurement, and commission-related activities.
It's common practice to obtain multiple competitive quotes before finalizing a vendor.

Vendor Selection Process:
Following a competitive bidding process helps ensure fair pricing and quality standards.
Transparency in vendor selection can help mitigate the risk of favoritism or conflicts of interest.

Vendor Ownership:
It's generally considered a conflict of interest if an employee or their close associate (like a spouse) owns the vendor company.
Companies often have policies in place to disclose such relationships.

Price and Commission Investigation:
If there are suspicions of raw materials being procured beyond market price for commission purposes, it's essential to conduct a thorough investigation.
Disciplinary actions, warnings, or job rotation may be considered based on the findings.
System and Procedure Reinforcement:

Regular reviews of procurement processes and continuous improvement are essential.
Strengthening internal controls and audits can help prevent and detect irregularities.
Employee Involvement in Business:

Many organizations have policies prohibiting employees from engaging in business with the company directly or indirectly without proper disclosure.
Employees may be required to declare any conflicts of interest.

Job Rotation:
Job rotation can be a good practice to prevent undue influence and maintain transparency in vendor selection.
Rotation should be done based on a well-defined policy and should not be perceived as a punitive measure without proper investigation and it's crucial to consult with legal and HR experts within your organization to ensure that any actions taken align with company policies, employment laws, and ethical standards.

Thanks,

From India, Bangalore
vmlakshminarayanan
929

Hi,

You cannot terminate directly.

Issue them the showcause notice frame the charges against them properly ask for their explanation as to why disciplinary action should not be initiated against them.

From India, Madras
Anonymous
1

And, after issuing a show cause notice to them, what should I do?
Please tell me the entire process after that?
they don't have anything to say in their favour.

Then, what should I do? Do, I need to go to lawyer and take legal action against them?

From India, Noida
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