Dear Mr. Ranjeet,
Presume that this employee, X, is retiring on June 14. Please prepare a final settlement or determine what his final settlement could be. Inform the court of your total liability towards the employee and request necessary orders on who should be the beneficiary. As there is a court order for you to pay Rs. 2.65 lakhs, you can deposit this employee's final settlement and present it to the court.
His gratuity, PF, and any other benefits should also be presented to the court since there is a directive for you to recover the mentioned Rs. 2.65 lakhs. The employer is not liable for anything beyond what is due to the employee.
Regards.
From India, Bangalore
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43Presume that this employee, X, is retiring on June 14. Please prepare a final settlement or determine what his final settlement could be. Inform the court of your total liability towards the employee and request necessary orders on who should be the beneficiary. As there is a court order for you to pay Rs. 2.65 lakhs, you can deposit this employee's final settlement and present it to the court.
His gratuity, PF, and any other benefits should also be presented to the court since there is a directive for you to recover the mentioned Rs. 2.65 lakhs. The employer is not liable for anything beyond what is due to the employee.
Regards.
From India, Bangalore
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Hi,
Dear Sirs,
Some experts and seniors, in their previous comments, have suggested the recovery of an amount of Rs. 2 lakh from the full and final settlement of the retiring employee, including from his Gratuity and Provident Fund. I would like to point out that, in my view, such a recovery is not feasible according to the provisions of the law, as detailed below.
Section 7(2)(h) of the Payment of Wages Act, 1936, authorizes the employer to deduct amounts from the wages of an employee as per the order of a Court or other competent authority. However, such deductions must not exceed 50% of the employee's wages (Section 7(3)). The scenario is different concerning amounts from Gratuity and Provident Funds.
Section 13 of The Payment of Gratuity Act, 1972, prohibits the jurisdiction of any Honorable Court to order an attachment of the gratuity amount due to an employee. Similar provisions exist under section 10 of the Employees' Provident Fund & Miscellaneous Provisions Act, 1952. The situation may vary for other amounts payable at the time of the full and final settlement of the retiring employee.
If an order from the honorable court is issued for the attachment of Gratuity or Provident Fund amounts, it can be challenged in higher courts. In such a case of delay, the retired employee may rightfully demand compound interest from the employer for the delay, as per section 8 of the Gratuity Act, 1972.
Therefore, I kindly request seniors and HR experts to reconsider the issue.
Thank you.
From India, Noida
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Dear Sirs,
Some experts and seniors, in their previous comments, have suggested the recovery of an amount of Rs. 2 lakh from the full and final settlement of the retiring employee, including from his Gratuity and Provident Fund. I would like to point out that, in my view, such a recovery is not feasible according to the provisions of the law, as detailed below.
Section 7(2)(h) of the Payment of Wages Act, 1936, authorizes the employer to deduct amounts from the wages of an employee as per the order of a Court or other competent authority. However, such deductions must not exceed 50% of the employee's wages (Section 7(3)). The scenario is different concerning amounts from Gratuity and Provident Funds.
Section 13 of The Payment of Gratuity Act, 1972, prohibits the jurisdiction of any Honorable Court to order an attachment of the gratuity amount due to an employee. Similar provisions exist under section 10 of the Employees' Provident Fund & Miscellaneous Provisions Act, 1952. The situation may vary for other amounts payable at the time of the full and final settlement of the retiring employee.
If an order from the honorable court is issued for the attachment of Gratuity or Provident Fund amounts, it can be challenged in higher courts. In such a case of delay, the retired employee may rightfully demand compound interest from the employer for the delay, as per section 8 of the Gratuity Act, 1972.
Therefore, I kindly request seniors and HR experts to reconsider the issue.
Thank you.
From India, Noida
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Dear friends,
This is to clarify certain opinions in this respect. As an employer, he is duty-bound to obey the orders of the court even if it is related to the F&F settlement. Having said that, courts will not appreciate the stand of the employer raising objections, quoting all case laws which went against recovery/attachment from F&F settlement. The court might direct the employer to deposit the kitty to the respective Appropriate Officials under the Gratuity Act and EPF Act pending disposal of the litigation from the decree holder and the employee. This could be the safest way to avoid all repercussions. I don't think Hon'ble Civil Courts are not aware of the judgments of higher courts which prohibited recovery from F&F settlement, but still, injunctions are passed. I personally faced such attachment orders despite the fact they are passed relating to "all payments accrued and payable to the employees concerned," which means, without saying, includes F&F also. The surprise is that it included EPF payment also (which was ultimately struck down by the Session court). Moreover, it is needless for employers to go on thankless appeals to the higher courts citing all the landmark judgments by which action the employer may be branded as taking sides with the employee and denying the share of legitimate stakeholders. Therefore, it is necessary to play safe from the employer's point of view.
From India, Bangalore
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This is to clarify certain opinions in this respect. As an employer, he is duty-bound to obey the orders of the court even if it is related to the F&F settlement. Having said that, courts will not appreciate the stand of the employer raising objections, quoting all case laws which went against recovery/attachment from F&F settlement. The court might direct the employer to deposit the kitty to the respective Appropriate Officials under the Gratuity Act and EPF Act pending disposal of the litigation from the decree holder and the employee. This could be the safest way to avoid all repercussions. I don't think Hon'ble Civil Courts are not aware of the judgments of higher courts which prohibited recovery from F&F settlement, but still, injunctions are passed. I personally faced such attachment orders despite the fact they are passed relating to "all payments accrued and payable to the employees concerned," which means, without saying, includes F&F also. The surprise is that it included EPF payment also (which was ultimately struck down by the Session court). Moreover, it is needless for employers to go on thankless appeals to the higher courts citing all the landmark judgments by which action the employer may be branded as taking sides with the employee and denying the share of legitimate stakeholders. Therefore, it is necessary to play safe from the employer's point of view.
From India, Bangalore
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Dear Mr. Harsh,
Your points raised are valid, but these issues should have been raised before the court when the summons were received. Raising them now, especially when the employee is retiring, is of no use. It is a fact that more than 50% is deducted and paid to the wife through the court. Therefore, after obeying the court order, the employer has very limited scope to change his stance. The employer can raise the issue presented here even now, but what is the use when the employee is retiring? Ultimately, the courts are supreme, and their orders are binding on citizens, including employers. The issue at hand is how to proceed with the court order, not what legal remedies are available. Bringing up remedies at the fag end is not an issue when the court orders have already been complied with.
From India, Bangalore
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Your points raised are valid, but these issues should have been raised before the court when the summons were received. Raising them now, especially when the employee is retiring, is of no use. It is a fact that more than 50% is deducted and paid to the wife through the court. Therefore, after obeying the court order, the employer has very limited scope to change his stance. The employer can raise the issue presented here even now, but what is the use when the employee is retiring? Ultimately, the courts are supreme, and their orders are binding on citizens, including employers. The issue at hand is how to proceed with the court order, not what legal remedies are available. Bringing up remedies at the fag end is not an issue when the court orders have already been complied with.
From India, Bangalore
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Dear Chandrashekharji,
Thank you for expressing your views on my remarks from yesterday. As per the facts of the case, the court had ordered recoveries from the wages of the employee. The Honorable court perhaps has not ordered recoveries from the retirement benefits of the employees. The retirement benefits, such as amounts of Gratuity and Provident Funds, are funds and amounts that cannot be attached by any decree or order of the Honorable court.
This is what I have tried to convey regarding the legal position to the HR community participating in this discussion. I am not aware of the defense the affected employee wishes to take in the case. However, if desired, the employer can explain the legal position to the Honorable court on the next date of hearing.
From India, Noida
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Thank you for expressing your views on my remarks from yesterday. As per the facts of the case, the court had ordered recoveries from the wages of the employee. The Honorable court perhaps has not ordered recoveries from the retirement benefits of the employees. The retirement benefits, such as amounts of Gratuity and Provident Funds, are funds and amounts that cannot be attached by any decree or order of the Honorable court.
This is what I have tried to convey regarding the legal position to the HR community participating in this discussion. I am not aware of the defense the affected employee wishes to take in the case. However, if desired, the employer can explain the legal position to the Honorable court on the next date of hearing.
From India, Noida
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How many years of service did the employee put in at your company? Please note that Provident Fund and Gratuity cannot be attached. Hence, as suggested by experienced members here, please submit to the court a worksheet by your company about the probable amount the employee would be getting (by way of his salaries, leave encashment benefits, any contributions by him in Staff welfare fund, bonus) along with your application intimating the court about his retirement date, by referring to the Honorable Court's direction to your company. If his Full and Final (F&F) amount will be more than the recoverable amount as directed by the court, no problem. You can straight away offset this amount and pay the balance to the employee.
Thanks,
R K Nair
From India, Aizawl
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Thanks,
R K Nair
From India, Aizawl
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Dear Seniors,
Thank you for your valuable guidance. I would like to inform you that the employee has almost completed more than 30 years with the company. Presently, he is on leave on medical grounds. Besides a very small number of leave encashment, there is nothing which the employer has to pay towards the full and final settlement.
If the court directs us to deduct the amount from PF and gratuity, what is the next course of action that management as well as the employee can take? Surely, we are going to present a letter about his retirement in court.
Ranjeet
From India, New Delhi
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Thank you for your valuable guidance. I would like to inform you that the employee has almost completed more than 30 years with the company. Presently, he is on leave on medical grounds. Besides a very small number of leave encashment, there is nothing which the employer has to pay towards the full and final settlement.
If the court directs us to deduct the amount from PF and gratuity, what is the next course of action that management as well as the employee can take? Surely, we are going to present a letter about his retirement in court.
Ranjeet
From India, New Delhi
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If his F&F amount is likely to be very less, it is better to send communication to the Court about his retirement and his nominal dues from the company well in advance, and wait for the Court's further orders.
Thanks,
R K Nair
From India, Aizawl
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Thanks,
R K Nair
From India, Aizawl
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Dear Jeeni,
After going through all the posts, my suggestion to you, given the circumstances explained, is as follows:
1) As many friends have suggested, work out all the amounts, including the final settlement such as gratuity, leave encashment, salary, PF (who has to pay this - are you an exempted establishment maintaining your own PF Trust, or have you been remitting all the PF contributions to the EPFO and distributing the annual statement to the employees? If you don't have your EPF Trust, then PF settlement is not your headache), bonus, and other payments. Submit an affidavit to the court and seek directions from the court.
2) Inform the retiring employee to produce a NOC from the Court or bring the court order vacating/cancelling the injunction/decree. This is necessary because once you pay him fully or partly, recovering any money from him is practically not possible. So, proceed with caution.
3) PF and gratuity cannot be withheld, delayed, or attached, so you have to issue necessary forms for final settlement to him. Collect them duly filled and forward to the concerned authorities, with a remark quoting from the operating portion of the Court orders verbatim. Attach a copy of the court order and state that the matter is subjudice. How about gratuity? Do you pay from your funds or through LIC or other agencies?
Following these steps might help you to avoid overdue interest accruing after one month of his retirement.
From India, Bangalore
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After going through all the posts, my suggestion to you, given the circumstances explained, is as follows:
1) As many friends have suggested, work out all the amounts, including the final settlement such as gratuity, leave encashment, salary, PF (who has to pay this - are you an exempted establishment maintaining your own PF Trust, or have you been remitting all the PF contributions to the EPFO and distributing the annual statement to the employees? If you don't have your EPF Trust, then PF settlement is not your headache), bonus, and other payments. Submit an affidavit to the court and seek directions from the court.
2) Inform the retiring employee to produce a NOC from the Court or bring the court order vacating/cancelling the injunction/decree. This is necessary because once you pay him fully or partly, recovering any money from him is practically not possible. So, proceed with caution.
3) PF and gratuity cannot be withheld, delayed, or attached, so you have to issue necessary forms for final settlement to him. Collect them duly filled and forward to the concerned authorities, with a remark quoting from the operating portion of the Court orders verbatim. Attach a copy of the court order and state that the matter is subjudice. How about gratuity? Do you pay from your funds or through LIC or other agencies?
Following these steps might help you to avoid overdue interest accruing after one month of his retirement.
From India, Bangalore
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