Recovering the cost of damage is legal and if the Management is satsified, the same can be done
I saw some comments about depositing the same with Welfare Fund which is not correct. As long as the Management investigates and prove the damage is caused by negligence and a decison taken to recover, the recovered amount comes to the Management and not to welfare fund. In case of levying a fine, then it goes to Welfare Fund
1. Ensure a priper enquiry is conducted to prove the negligence
2. If the negligence is proved, decide whether recovery of cost is a must
3. If the Management still feel recovery is to be made, issue a letter
4. If monthly recovery is to be made ensure, you comply with Payment of wages act
5. If you are levying a fine, the same need to be deposited with Welfare Fund
6. Cost of damage can be rcovered in monthly instalments, or from Bonus or even from gratutity
T Sivasankaran
From India, Chennai
366I saw some comments about depositing the same with Welfare Fund which is not correct. As long as the Management investigates and prove the damage is caused by negligence and a decison taken to recover, the recovered amount comes to the Management and not to welfare fund. In case of levying a fine, then it goes to Welfare Fund
1. Ensure a priper enquiry is conducted to prove the negligence
2. If the negligence is proved, decide whether recovery of cost is a must
3. If the Management still feel recovery is to be made, issue a letter
4. If monthly recovery is to be made ensure, you comply with Payment of wages act
5. If you are levying a fine, the same need to be deposited with Welfare Fund
6. Cost of damage can be rcovered in monthly instalments, or from Bonus or even from gratutity
T Sivasankaran
From India, Chennai
I agree with Comments of Shri T.Sivasankaran except recovery of damages from Gratuity. Because we can’t recover any thing from Gratuity. Ramesh Rao.R
From India, Hyderabad
From India, Hyderabad
HI.
About three yrs back our ground technicians forgot to open the lock clip of the nose wheel of a China airlines aircraft of which we are handling
agents.This clip has to be removed otherwise after takeoff the wheel can not be retracted(folded).After take off the pilot tried to retract the wheel but being locked due to hydraulic pressure the entire wheel assembly got bent.The aircraft some how managed to return and land but was grounded for five days till men and material came from China and the entire nose wheel assembly costing Rs27 lakhs was changed.The client airline claimed the damage from us but the employee concerned was only warned and no money was recovered from him.
From India, New Delhi
About three yrs back our ground technicians forgot to open the lock clip of the nose wheel of a China airlines aircraft of which we are handling
agents.This clip has to be removed otherwise after takeoff the wheel can not be retracted(folded).After take off the pilot tried to retract the wheel but being locked due to hydraulic pressure the entire wheel assembly got bent.The aircraft some how managed to return and land but was grounded for five days till men and material came from China and the entire nose wheel assembly costing Rs27 lakhs was changed.The client airline claimed the damage from us but the employee concerned was only warned and no money was recovered from him.
From India, New Delhi
Dear Team,
As suggested by some of our senior members, find out the root cause through inquiry and if you still feel that a fine is to be imposed on him you may do so as per the guidelines given in The Payment of Wages Act, 1936. I am appending the Section 8 of The Payment of Wages Act, 1936 for your ready reckon.
Section 8 of Payment of Wages Act, 1936 discusses about imposing Fines on Employee/Workmen as follows: -
Sub-Sec (1) : No fine shall be imposed on any employed person save in respect of such acts and omissions on his part as the employer, with the previous approval of the appropriate Government or of the prescribed authority, may have specified by notice under sub-section (2).
Sub-Sec (2) : A notice specifying such acts and omissions shall be exhibited in the prescribed manner on the premises in which the employment is carried on or in the case of persons employed upon a railway (otherwise than in a factory) at the prescribed place or places.
Sub-Sec (3) : No fine shall be imposed on any employed person until he has been given an opportunity of showing cause against the fine, or otherwise than in accordance with such procedure as may be prescribed for the imposition of fines.
Sub-Sec (4) : The total amount of fine which may be imposed in any one wage period on any employed person shall not exceed an amount equal to three percent of the wages payable to him in respect of that wage period.
Sub-Sec (5) : No fine shall be imposed on any employed person who is under the age of fifteen years.
Sub-Sec (6) : No fine imposed on any employed person shall be recovered from him by installments or after the expiry of ninety days from the day on which it was imposed.
Sub-Sec (7) : Every fine shall be deemed to have been imposed on the day of the act or omission in respect of which it was imposed.
Sub-Sec (8) : All fines and all realizations thereof shall be recorded in a register to be kept by the person responsible for the payment of wages under section 3 in such form as may be prescribed; and all such realizations shall be applied only to such purposes beneficial to the persons employed in the factory or establishment as are approved by the prescribed authority
Explanation- When the persons employed upon or in any railway, factory or industrial or other establishment are part only of a staff employed under the same management, all such realizations may be credited to a common fund maintained for the staff as a whole, provided that the fund shall be applied only to such purposes as are approved by the prescribed authority.
I hope this may clear your doubts on the procedure of imposing fines on employees/workers. Please remember that those employees who are drawing a monthly salary of Rs. 18000/- per months are covered under The Payment of Wages Act, 1936.
Regards,
P. Vathiraj
From India
As suggested by some of our senior members, find out the root cause through inquiry and if you still feel that a fine is to be imposed on him you may do so as per the guidelines given in The Payment of Wages Act, 1936. I am appending the Section 8 of The Payment of Wages Act, 1936 for your ready reckon.
Section 8 of Payment of Wages Act, 1936 discusses about imposing Fines on Employee/Workmen as follows: -
Sub-Sec (1) : No fine shall be imposed on any employed person save in respect of such acts and omissions on his part as the employer, with the previous approval of the appropriate Government or of the prescribed authority, may have specified by notice under sub-section (2).
Sub-Sec (2) : A notice specifying such acts and omissions shall be exhibited in the prescribed manner on the premises in which the employment is carried on or in the case of persons employed upon a railway (otherwise than in a factory) at the prescribed place or places.
Sub-Sec (3) : No fine shall be imposed on any employed person until he has been given an opportunity of showing cause against the fine, or otherwise than in accordance with such procedure as may be prescribed for the imposition of fines.
Sub-Sec (4) : The total amount of fine which may be imposed in any one wage period on any employed person shall not exceed an amount equal to three percent of the wages payable to him in respect of that wage period.
Sub-Sec (5) : No fine shall be imposed on any employed person who is under the age of fifteen years.
Sub-Sec (6) : No fine imposed on any employed person shall be recovered from him by installments or after the expiry of ninety days from the day on which it was imposed.
Sub-Sec (7) : Every fine shall be deemed to have been imposed on the day of the act or omission in respect of which it was imposed.
Sub-Sec (8) : All fines and all realizations thereof shall be recorded in a register to be kept by the person responsible for the payment of wages under section 3 in such form as may be prescribed; and all such realizations shall be applied only to such purposes beneficial to the persons employed in the factory or establishment as are approved by the prescribed authority
Explanation- When the persons employed upon or in any railway, factory or industrial or other establishment are part only of a staff employed under the same management, all such realizations may be credited to a common fund maintained for the staff as a whole, provided that the fund shall be applied only to such purposes as are approved by the prescribed authority.
I hope this may clear your doubts on the procedure of imposing fines on employees/workers. Please remember that those employees who are drawing a monthly salary of Rs. 18000/- per months are covered under The Payment of Wages Act, 1936.
Regards,
P. Vathiraj
From India
The procedure of P of W Act need not be followed if his salary is above Rs18000/pm. Varghese Mathew
From India, Thiruvananthapuram
From India, Thiruvananthapuram
Recovery of cost is different from imposing fine. Fine is a punishment whereas recovery of cost due to negligence is not a punishment. After due enquiry one can recover the cost as well as impose fine. This is legal position. I am not getting into discussion whether it is desirable or not in this forum. The concerence management must apply their collective wisdom in taking a decision. Advices based on some facts given in this forum is not desirable.
I wanted to reiterate that fine is different from recovery of cost due to damages caused by an employee.
EG Cashier takes Rs 10000/ from cash. It is discovered. Management collects money from him. That does not mean action should not be initiated against him. Even after recovery of money from him, he still could be dismissed after enquiry.
T Sivasankaran
From India, Chennai
I wanted to reiterate that fine is different from recovery of cost due to damages caused by an employee.
EG Cashier takes Rs 10000/ from cash. It is discovered. Management collects money from him. That does not mean action should not be initiated against him. Even after recovery of money from him, he still could be dismissed after enquiry.
T Sivasankaran
From India, Chennai
Dear saibhakta
Thanks for providing a real-life case. This is the point I was emphasising.
Even though it was a case of neglegience, the management can not and should not recover the cost from the employees. No courts of law would allow this. At worst the management can dismiss such employees.
Warm regards.
From India, Delhi
Thanks for providing a real-life case. This is the point I was emphasising.
Even though it was a case of neglegience, the management can not and should not recover the cost from the employees. No courts of law would allow this. At worst the management can dismiss such employees.
Warm regards.
From India, Delhi
Before deducting the worker should be informed in writing about the damages caused to the company and he should be asked to show cause why Rs 2500 should not be recovered from him. Then you should get his reply and on the basis of that you can direct that the same may be recovered from his next salary in full or in installments of 5 or ten.
If he does not accept that he has caused damage by his negligent driving, then you will have to prove that there was dereliction on the part of driver/ worker by conducting an enquiry.
Regards,
Madhu.T.K
From India, Kannur
If he does not accept that he has caused damage by his negligent driving, then you will have to prove that there was dereliction on the part of driver/ worker by conducting an enquiry.
Regards,
Madhu.T.K
From India, Kannur
It is a different thing if the management of a company intends to get all their old equipment to be replaced with new ones by RECOVERING the LATEST cost of old equipment which get damaged by employees while working on them. There would be no DEPRECIATION of Fixed Assets, no need to allocate funds for Investment in new equipment and the only cost a company would incur would be the cost of raw materials !! Salary in any case would be accounted out of the recoveries from employees.
However, in my opinion, Courts may come in way of such illegal recoveries from workmen.
In Delhi & NCR I find that company vehicles are routinely bumped and their lights or car body getting damaged in the heavy traffic of the city. However, I am yet to know of a case where all the cost of repairs or replacement has been recovered from the company drivers. Whatever possible is recovered from the Insurance and remaining is borne by the company. In case such incidents are frequent, the driver is warned or removed; but recovering damages is unheard of.
About the other cases like that of employees embezzling cash; then it becomes a criminal offence. To avoid this, the employees may agree to make good the loss. If they refuse; then the management can not forcefully recover money from them.
At best, the management can lodge a criminal case and let the Law take its own course.
To conclude; management can not decide the quantum or the justification of such recovery nor can forcefully recover money from its employees. To do so forcefully would amount to a criminal offence.
As HR professionals we should give proper, just and legal advice to the management on such issues.
Warm regards.
From India, Delhi
However, in my opinion, Courts may come in way of such illegal recoveries from workmen.
In Delhi & NCR I find that company vehicles are routinely bumped and their lights or car body getting damaged in the heavy traffic of the city. However, I am yet to know of a case where all the cost of repairs or replacement has been recovered from the company drivers. Whatever possible is recovered from the Insurance and remaining is borne by the company. In case such incidents are frequent, the driver is warned or removed; but recovering damages is unheard of.
About the other cases like that of employees embezzling cash; then it becomes a criminal offence. To avoid this, the employees may agree to make good the loss. If they refuse; then the management can not forcefully recover money from them.
At best, the management can lodge a criminal case and let the Law take its own course.
To conclude; management can not decide the quantum or the justification of such recovery nor can forcefully recover money from its employees. To do so forcefully would amount to a criminal offence.
As HR professionals we should give proper, just and legal advice to the management on such issues.
Warm regards.
From India, Delhi
Dear Mr Ramesh,
First of all as because the damage was done while driving does not necessarily mean that the this took place due to the negligence on the part of the driver unless and until a proper domestic enquiry is held . It could be that there was defective fitting by the maintenance dept. or the quality of the material was defective which all could be revealed during the enquiry proceedings. Moreover the quantum of punishment if established should be in line with the punishment guide lines of the company or as per the model standing orders.
This is a suggestion only.
bk mohanty
Advisor & Sr Consultant
From India, Bhubaneswar
First of all as because the damage was done while driving does not necessarily mean that the this took place due to the negligence on the part of the driver unless and until a proper domestic enquiry is held . It could be that there was defective fitting by the maintenance dept. or the quality of the material was defective which all could be revealed during the enquiry proceedings. Moreover the quantum of punishment if established should be in line with the punishment guide lines of the company or as per the model standing orders.
This is a suggestion only.
bk mohanty
Advisor & Sr Consultant
From India, Bhubaneswar
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