Dear Sir/Madam,
I kindly request information regarding F&F settlement benefits eligibility for a dismissed employee due to misappropriation. Could the employee be eligible to claim PF, Gratuity, Payment for PL balance, and other arrears?
The employee held a managerial position with the company for more than 5 years.
As I am new to the HR role, I would appreciate it if you could provide the necessary information.
Regards,
M Sekhar.
From India, Vijayawada
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I kindly request information regarding F&F settlement benefits eligibility for a dismissed employee due to misappropriation. Could the employee be eligible to claim PF, Gratuity, Payment for PL balance, and other arrears?
The employee held a managerial position with the company for more than 5 years.
As I am new to the HR role, I would appreciate it if you could provide the necessary information.
Regards,
M Sekhar.
From India, Vijayawada
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After a domestic inquiry, the employer can recover losses suffered by them on account of the dismissed employee in accordance with the provisions of the Shops and Establishment Act. If applicable, recovery can also be made in accordance with the Payment of Wages Act from the wages or arrears payable. The gratuity of the dismissed employee is liable to forfeiture, but EPF contributions must still be paid.
From India, New Delhi
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225From India, New Delhi
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If guilt of a manager is established by proper inquiry, the employer can restrict amounts from gratuity, PL, and wages. Provident fund amount cannot be appropriated towards the misappropriation.
Read Section 4 of the Payment of Gratuity Act for better information about what and when you can restrict or forfeit gratuity.
From India, Pune
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Read Section 4 of the Payment of Gratuity Act for better information about what and when you can restrict or forfeit gratuity.
From India, Pune
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If we dismissed any employee then we have to notice pay salary of 30 days if he worked for more than six month,he is eligible for claiming PF,Grauity & PL balance in F&F Settlement.
From India, Nagpur
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From India, Nagpur
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Notice pay would not be applicable in the circumstances of misappropriation. And as mentioned earlier, PF balances cannot be touched, and restrictions can be imposed on pay and gratuity to cover losses caused by misappropriation.
From India, Pune
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From India, Pune
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Dear Sirs,
Thank you for your reply. The company has recovered the loss/due amount from the employee. After collecting the due amount owed to the company, the company has issued a dismissal order to the employee.
Now, the employee is claiming payment for his settlements such as gratuity, PL balance, and other entitlements. Is the company obligated to pay these amounts?
Kindly clarify.
Regards,
M Sekhar.
From India, Vijayawada
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Thank you for your reply. The company has recovered the loss/due amount from the employee. After collecting the due amount owed to the company, the company has issued a dismissal order to the employee.
Now, the employee is claiming payment for his settlements such as gratuity, PL balance, and other entitlements. Is the company obligated to pay these amounts?
Kindly clarify.
Regards,
M Sekhar.
From India, Vijayawada
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Having recovered losses from the employee, you are required to pay the PL and other arrears because there cannot be double jeopardy for the same action. However, as far as dues under GRATUITY are concerned, as pointed out by Mr. Nathrao, Section 4 of the Payment of Gratuity Act governs what and when you can restrict/forfeit gratuity. Due to the lack of full information, it is assumed that the employer has passed the dismissal order after conducting the domestic inquiry and in the report, the losses have been assessed pursuant to the finding of misappropriation involving moral turpitude.
The Madras HC observed in the following case that the employer had not made any prosecution against the petitioner for having committed an offense, as it had chosen to proceed only with the departmental enquiry against the petitioner. Thus, forfeiture under Section 4(6)(b)(ii) may not be available without prosecution. It may be pointed out that there may be different opinions of HC on it.
Forfeiture under Section 4(6)(b)(i) is not permissible now, since the employer in the present case has already recovered the losses. There cannot be double jeopardy on the same cause of action.
Madras HC, A. Padmanabhan Vs. Joint Commissioner of Labour, W.A. Nos. 118 and 144 of 2009, decided on Mar-30-2010
In this context, we may also refer to the object of labor laws, which are social welfare legislations, to afford certain basic entitlements and consequent protection. Such laws cast upon the employer certain obligations for meticulous, impeccable, and timely compliance. The law entitles an employee to the benefits which he must receive from the employer unless restricted. The Payment of Gratuity Act is a welfare legislation to provide a scheme for the payment of gratuity to all types of employees engaged in establishments employing ten or more employees. In terms of Sub-section (1) of Section 4, gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years, on his superannuation, or on his retirement or resignation, or on his death or disablement due to accident or disease. Nevertheless, Sub-section (6) of Section 4 is somewhat an exemption for the restriction imposed for payment of gratuity in respect of an employee on termination. The legislature, with a clear intention, has laid down the provision of Sub-clause (a) to Sub-section (6) of Section 4, empowering the employer to forfeit the gratuity of an employee to the extent of the damage or loss so caused in the event the service of such employee is terminated for any act, willful omission, or negligence causing any damage or loss to, or destruction of, property belonging to the employer. Likewise, as per Clause (b) of the said provision, the gratuity payable to an employee may be wholly or partially forfeited, (i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part and (ii) if the services of such employee have been terminated for any act which constitutes an offense involving moral turpitude, provided that such offense is committed by him in the course of his employment.
As far as the second limb of Sub-clause (ii) of Clause (b) to Sub-section (6), viz., the proved misconduct should be in the course of the employment, there is no dispute. As far as the first limb, viz., whether the act constitutes an offense involving moral turpitude, it may be mentioned that for the falsification of accounts and the consequential financial gain, the respondent had not made any prosecution against the petitioner for having committed an offense, as the respondent had chosen to proceed only with the departmental enquiry against the petitioner. Even otherwise, the proved misconduct should be considered on a fact-to-fact basis to determine whether such misconduct would be 'moral turpitude'. In the present case, the allegation is only falsification of accounts and thereby making some financial gain. In view of our above discussion and keeping the facts of this case in mind, we are of the opinion that the respondent cannot apply the provision of Section 4(6)(b)(ii) of the Act to deny the gratuity to the petitioner. To this extent, we do not find any justification to interfere with the order in the writ petition.
As far as the writ appeal filed by the petitioner himself regarding the denial of interest, we may point out that the discrepancies relating to the receipt of empty cylinders which led to the falsification of accounts came to light during March 1990. Within a period of four months, a charge sheet was issued on 17.7.1990; an enquiry was completed, and a second show cause notice was issued on 22.8.1991, and a final order of dismissal was passed on 10.9.1991. On the very same day, a show cause notice for forfeiture of gratuity was issued to the petitioner. The petitioner submitted his explanation on 13.9.1991, and on 9.10.1991, an order was passed forfeiting the gratuity.
Even if the employer now intends to pursue the forfeiture of the gratuity, partially or fully, then as held by the Kerala HC, once the employee is terminated from service, a right accrues to the employer to either exercise the right of forfeiture either wholly or partially. In the case of persons terminated from service, a right to forfeit gratuity shall be passed within a reasonable time. Therefore, you are required to issue a notice to withhold the gratuity, which cannot be dispensed with. You are required to exercise the option for forfeiture of the gratuity within a reasonable time.
As is evident from para 11 of the above A. Padmanabhan case, a show cause notice for forfeiture of gratuity was issued on the same date when the dismissal order was passed.
Kerala High Court
HDFC Bank Ltd vs The Regional Labour ...
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR. JUSTICE A.M. SHAFFIQUE
FRIDAY, THE 29TH DAY OF NOVEMBER 2013/8TH AGRAHAYANA, 1935
WP(C).No. 16283 of 2011 (I)
In the present case, the contention is that the services of the employee were terminated for an act which constitutes an offense involving moral turpitude. A Division Bench of this Court in K.C. Mathew v. Plantation W.P.(C) Nos. 16283 of 2011-I & 16286 of 2011 - I Corporation of Kerala Ltd. (2000) III LLJ 637) held that the gratuity being a statutory right cannot be forfeited unless the services of the employee have been terminated for the reasons stated under S.4(6) of the Act. It is not in dispute that if no loss has been caused to the employer, there cannot be any forfeiture under S.4(6)(a). Even in respect of forfeiture under S.4(6)(b), there is a discretion with the employer to forfeit the gratuity either wholly or partially. It depends upon the facts and circumstances of each case. Therefore, once the employee is terminated from service, a right accrues to the employer to either exercise the right of forfeiture either wholly or partially. It again depends upon whether the employee is involved in the commission of an offense involving moral turpitude. Normally, an employee is entitled to gratuity on the date of his retirement or superannuation as the case may be or at least within a reasonable period. In the case of persons terminated from service, a right to forfeit gratuity shall be passed within a reasonable time. Therefore, the issuance of a notice to withhold the gratuity is a requirement that cannot be dispensed with. In Gujarat State Fertilisers and Chemicals Ltd. v. Surendra T Amin (2005) 1 LLJ 400) the Gujarat High Court has held that the contention regarding forfeiture cannot be raised for the first time before the authority on account of the fact that an exception is carved out in S.4 to protect the damage caused to the employer. Further, this issue is covered by a judgment of the learned Single Judge of this Court in Dhanalaxmi Bank Ltd. case (supra). In light of the aforesaid view taken by this Court, I am of the view that the respondent authorities were justified in directing payment of gratuity as the petitioner Bank did not exercise the option for forfeiture of the gratuity within a reasonable time.
Thanks
Sushil
From India, New Delhi
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The Madras HC observed in the following case that the employer had not made any prosecution against the petitioner for having committed an offense, as it had chosen to proceed only with the departmental enquiry against the petitioner. Thus, forfeiture under Section 4(6)(b)(ii) may not be available without prosecution. It may be pointed out that there may be different opinions of HC on it.
Forfeiture under Section 4(6)(b)(i) is not permissible now, since the employer in the present case has already recovered the losses. There cannot be double jeopardy on the same cause of action.
Madras HC, A. Padmanabhan Vs. Joint Commissioner of Labour, W.A. Nos. 118 and 144 of 2009, decided on Mar-30-2010
In this context, we may also refer to the object of labor laws, which are social welfare legislations, to afford certain basic entitlements and consequent protection. Such laws cast upon the employer certain obligations for meticulous, impeccable, and timely compliance. The law entitles an employee to the benefits which he must receive from the employer unless restricted. The Payment of Gratuity Act is a welfare legislation to provide a scheme for the payment of gratuity to all types of employees engaged in establishments employing ten or more employees. In terms of Sub-section (1) of Section 4, gratuity shall be payable to an employee on the termination of his employment after he has rendered continuous service for not less than five years, on his superannuation, or on his retirement or resignation, or on his death or disablement due to accident or disease. Nevertheless, Sub-section (6) of Section 4 is somewhat an exemption for the restriction imposed for payment of gratuity in respect of an employee on termination. The legislature, with a clear intention, has laid down the provision of Sub-clause (a) to Sub-section (6) of Section 4, empowering the employer to forfeit the gratuity of an employee to the extent of the damage or loss so caused in the event the service of such employee is terminated for any act, willful omission, or negligence causing any damage or loss to, or destruction of, property belonging to the employer. Likewise, as per Clause (b) of the said provision, the gratuity payable to an employee may be wholly or partially forfeited, (i) if the services of such employee have been terminated for his riotous or disorderly conduct or any other act of violence on his part and (ii) if the services of such employee have been terminated for any act which constitutes an offense involving moral turpitude, provided that such offense is committed by him in the course of his employment.
As far as the second limb of Sub-clause (ii) of Clause (b) to Sub-section (6), viz., the proved misconduct should be in the course of the employment, there is no dispute. As far as the first limb, viz., whether the act constitutes an offense involving moral turpitude, it may be mentioned that for the falsification of accounts and the consequential financial gain, the respondent had not made any prosecution against the petitioner for having committed an offense, as the respondent had chosen to proceed only with the departmental enquiry against the petitioner. Even otherwise, the proved misconduct should be considered on a fact-to-fact basis to determine whether such misconduct would be 'moral turpitude'. In the present case, the allegation is only falsification of accounts and thereby making some financial gain. In view of our above discussion and keeping the facts of this case in mind, we are of the opinion that the respondent cannot apply the provision of Section 4(6)(b)(ii) of the Act to deny the gratuity to the petitioner. To this extent, we do not find any justification to interfere with the order in the writ petition.
As far as the writ appeal filed by the petitioner himself regarding the denial of interest, we may point out that the discrepancies relating to the receipt of empty cylinders which led to the falsification of accounts came to light during March 1990. Within a period of four months, a charge sheet was issued on 17.7.1990; an enquiry was completed, and a second show cause notice was issued on 22.8.1991, and a final order of dismissal was passed on 10.9.1991. On the very same day, a show cause notice for forfeiture of gratuity was issued to the petitioner. The petitioner submitted his explanation on 13.9.1991, and on 9.10.1991, an order was passed forfeiting the gratuity.
Even if the employer now intends to pursue the forfeiture of the gratuity, partially or fully, then as held by the Kerala HC, once the employee is terminated from service, a right accrues to the employer to either exercise the right of forfeiture either wholly or partially. In the case of persons terminated from service, a right to forfeit gratuity shall be passed within a reasonable time. Therefore, you are required to issue a notice to withhold the gratuity, which cannot be dispensed with. You are required to exercise the option for forfeiture of the gratuity within a reasonable time.
As is evident from para 11 of the above A. Padmanabhan case, a show cause notice for forfeiture of gratuity was issued on the same date when the dismissal order was passed.
Kerala High Court
HDFC Bank Ltd vs The Regional Labour ...
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR. JUSTICE A.M. SHAFFIQUE
FRIDAY, THE 29TH DAY OF NOVEMBER 2013/8TH AGRAHAYANA, 1935
WP(C).No. 16283 of 2011 (I)
In the present case, the contention is that the services of the employee were terminated for an act which constitutes an offense involving moral turpitude. A Division Bench of this Court in K.C. Mathew v. Plantation W.P.(C) Nos. 16283 of 2011-I & 16286 of 2011 - I Corporation of Kerala Ltd. (2000) III LLJ 637) held that the gratuity being a statutory right cannot be forfeited unless the services of the employee have been terminated for the reasons stated under S.4(6) of the Act. It is not in dispute that if no loss has been caused to the employer, there cannot be any forfeiture under S.4(6)(a). Even in respect of forfeiture under S.4(6)(b), there is a discretion with the employer to forfeit the gratuity either wholly or partially. It depends upon the facts and circumstances of each case. Therefore, once the employee is terminated from service, a right accrues to the employer to either exercise the right of forfeiture either wholly or partially. It again depends upon whether the employee is involved in the commission of an offense involving moral turpitude. Normally, an employee is entitled to gratuity on the date of his retirement or superannuation as the case may be or at least within a reasonable period. In the case of persons terminated from service, a right to forfeit gratuity shall be passed within a reasonable time. Therefore, the issuance of a notice to withhold the gratuity is a requirement that cannot be dispensed with. In Gujarat State Fertilisers and Chemicals Ltd. v. Surendra T Amin (2005) 1 LLJ 400) the Gujarat High Court has held that the contention regarding forfeiture cannot be raised for the first time before the authority on account of the fact that an exception is carved out in S.4 to protect the damage caused to the employer. Further, this issue is covered by a judgment of the learned Single Judge of this Court in Dhanalaxmi Bank Ltd. case (supra). In light of the aforesaid view taken by this Court, I am of the view that the respondent authorities were justified in directing payment of gratuity as the petitioner Bank did not exercise the option for forfeiture of the gratuity within a reasonable time.
Thanks
Sushil
From India, New Delhi
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Dear Sekhar,
You must have genuine inquiry documents and a Charge sheet of the employees who have been terminated from your end. Ensure that you have followed all the legal steps that are mandatory for the employer. Employees can claim all the benefits that you have to pay if you don't have any genuine documents to produce in the compliant file to the legal court.
From India, Mumbai
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You must have genuine inquiry documents and a Charge sheet of the employees who have been terminated from your end. Ensure that you have followed all the legal steps that are mandatory for the employer. Employees can claim all the benefits that you have to pay if you don't have any genuine documents to produce in the compliant file to the legal court.
From India, Mumbai
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