Dear Friends,
This is a, very tricky matter. First, for whatever reasons, you pay excess DA to you employees/workers. Then suddenly you wake up and realize this error on your part and have pland to recover the excess amount so paid (by you, I mean the management, please do not take offence to this)
Incidentally, did you try and find out how this excess amount was paid out to workers for three years and how this mistake was identified? I am intersted to know what exactly happened.
Now coming back to the matter at hand, yours being a unionised environment, recovery of the excess amount paid may not be as easy as you may think it is. The Union may object to this.
The best you can do is to have a meeting with Union members and through an agreement with them in writing, come to a settlement of how this recovery can happen. The final outcome of such a meeting will all depend upon how you are able to negotiate with them.
The other alternative, as has been suggested by a fellow member, is to get written consent from each workers individually and then go ahead ahead affect the recovery.
Yet another useful and very practical suggestion that has been made is that the excess amount could be adjusted against any future increase in wages. This also will have to be agreed to in a meeting with your Union Members. The modalities and mode of recovery will depend on the terms of agreement with the Union.
Best Wishes,
Vasant Nair
From India, Mumbai
90This is a, very tricky matter. First, for whatever reasons, you pay excess DA to you employees/workers. Then suddenly you wake up and realize this error on your part and have pland to recover the excess amount so paid (by you, I mean the management, please do not take offence to this)
Incidentally, did you try and find out how this excess amount was paid out to workers for three years and how this mistake was identified? I am intersted to know what exactly happened.
Now coming back to the matter at hand, yours being a unionised environment, recovery of the excess amount paid may not be as easy as you may think it is. The Union may object to this.
The best you can do is to have a meeting with Union members and through an agreement with them in writing, come to a settlement of how this recovery can happen. The final outcome of such a meeting will all depend upon how you are able to negotiate with them.
The other alternative, as has been suggested by a fellow member, is to get written consent from each workers individually and then go ahead ahead affect the recovery.
Yet another useful and very practical suggestion that has been made is that the excess amount could be adjusted against any future increase in wages. This also will have to be agreed to in a meeting with your Union Members. The modalities and mode of recovery will depend on the terms of agreement with the Union.
Best Wishes,
Vasant Nair
From India, Mumbai
Dear All Contributors,
And Mr Saswat Bannerjee........
Those who do not agree with me are free to do so but at the same time those who disagree must do so on the basis of relevant legal provisions and authentic judgments which in this case is absent. Sections of EPF and ESI Act are not restrictive to correct a mistake. If a statute does not permit correction then that statutue must be reviewed by the law making institution.
In this case the question put forward was that "DA was paid excess to unionized employees", what does it mean? The question is not unabmiguous.
How is it that no contributor wants to support the appropriate action of initiating disciplinary action againt the erring staff and internal audit officials. And those who do not see accounting problems, I would like to be enlightened on this aspect. My answer was based on the understanding of the question that there were two set of employees viz one "unionized" and the other "non-unionized". If this is not so, the questioning member must clear his question with proper description of circumstances so that conflicting answers are not posted on the site.
I will seek pardon of all contributing members with due respect to their acumen.
With humble regards.
SRIVASTAVA C.M. LAL
From India, New Delhi
And Mr Saswat Bannerjee........
Those who do not agree with me are free to do so but at the same time those who disagree must do so on the basis of relevant legal provisions and authentic judgments which in this case is absent. Sections of EPF and ESI Act are not restrictive to correct a mistake. If a statute does not permit correction then that statutue must be reviewed by the law making institution.
In this case the question put forward was that "DA was paid excess to unionized employees", what does it mean? The question is not unabmiguous.
How is it that no contributor wants to support the appropriate action of initiating disciplinary action againt the erring staff and internal audit officials. And those who do not see accounting problems, I would like to be enlightened on this aspect. My answer was based on the understanding of the question that there were two set of employees viz one "unionized" and the other "non-unionized". If this is not so, the questioning member must clear his question with proper description of circumstances so that conflicting answers are not posted on the site.
I will seek pardon of all contributing members with due respect to their acumen.
With humble regards.
SRIVASTAVA C.M. LAL
From India, New Delhi
Mr. SRIVASTAVA
The points that you have raised is important, but was not the focus of the original post.
He did not want to know what he should do against the person who made the mistake.
I assume either that has been dealt with, or that the person who made the mistake is the one posting :)
This being a hr forum, I focused on that part.
Let me clarify, I have not checked back on the exact wording of the payment of wages act (was not in office and didn't have the time to search online). I instead referred to a doctrin in law that is called doctrin of equity. Applied to labour law, the courts in India have been taking a very liberal view of it. Basically they are saying that the courts will support the labour in any case that puts them at a disadvantage or in any attempt to deprive them of their rights.
Here we are talking of a case where a company has made a wrong payment. Yes, If you pay someone wrongly, you can in the next month deduct that money from his salary. Perhaps it it happened for 2 months at a stretch, again, you can recover it. There is even a clause in payment of wages act that can be stretched to allow it (repayment of advances)
However, if you have been paying a higher amount consistently for 3 years, the courts will definately take a stand that it is deemed to be a correct amount. The workers are getting it. Everyone (or a specified portion) of the work force is getting it. You can not suddenly say it was a mistake and I want it back. The court will not allow it. There is also something called doctrin of promisory estoppel, that says when you have acted in a manner that induces people to believe in a certain fact (in this case, that their salary is indeed higher), and that they have acted on that in good faith (here, it is that they have soent it), then you can't say afterwards that it is not a fact (I gave a simplified version. This was a whole chapter in my law book)
Further, what I was saying is that the unions will not allow it. No union worth their salt will allow it or agree it where it has been paid for 3 years. It will be an industrial dispute and definately a ground for a strike. And yes, the conciliation officer, labour officer, factory Inspector, authority under payment of wages act, everyone is going to rule against you on Merit that you have paid it for 3 years and that this is what is due to the workers. In fact they will probably not allow you to change it even now.
The PF and ESIC will also not agree to give a refund. It is money paid, credited to the accounts, etc. I consider it an Impossible event.
From India, Mumbai
The points that you have raised is important, but was not the focus of the original post.
He did not want to know what he should do against the person who made the mistake.
I assume either that has been dealt with, or that the person who made the mistake is the one posting :)
This being a hr forum, I focused on that part.
Let me clarify, I have not checked back on the exact wording of the payment of wages act (was not in office and didn't have the time to search online). I instead referred to a doctrin in law that is called doctrin of equity. Applied to labour law, the courts in India have been taking a very liberal view of it. Basically they are saying that the courts will support the labour in any case that puts them at a disadvantage or in any attempt to deprive them of their rights.
Here we are talking of a case where a company has made a wrong payment. Yes, If you pay someone wrongly, you can in the next month deduct that money from his salary. Perhaps it it happened for 2 months at a stretch, again, you can recover it. There is even a clause in payment of wages act that can be stretched to allow it (repayment of advances)
However, if you have been paying a higher amount consistently for 3 years, the courts will definately take a stand that it is deemed to be a correct amount. The workers are getting it. Everyone (or a specified portion) of the work force is getting it. You can not suddenly say it was a mistake and I want it back. The court will not allow it. There is also something called doctrin of promisory estoppel, that says when you have acted in a manner that induces people to believe in a certain fact (in this case, that their salary is indeed higher), and that they have acted on that in good faith (here, it is that they have soent it), then you can't say afterwards that it is not a fact (I gave a simplified version. This was a whole chapter in my law book)
Further, what I was saying is that the unions will not allow it. No union worth their salt will allow it or agree it where it has been paid for 3 years. It will be an industrial dispute and definately a ground for a strike. And yes, the conciliation officer, labour officer, factory Inspector, authority under payment of wages act, everyone is going to rule against you on Merit that you have paid it for 3 years and that this is what is due to the workers. In fact they will probably not allow you to change it even now.
The PF and ESIC will also not agree to give a refund. It is money paid, credited to the accounts, etc. I consider it an Impossible event.
From India, Mumbai
Dear Mr Saswat Bannerji,
I really demonstrate my sincere thanks and deeply wish to appreciate that you perceived my statement with good spirit. I must also appreciate the arguments put forward to support the labour wing in general. The doctrine of equality in the present case will be a question of fact and the doctrine of promissory estoppel, generally applicable to future contingencies, will be a matter of review. I will certainly pay due regard and respect to your legal acumen and expertise and at the same time seek your permission to say that question in the present case related to payment of excess DA. The fact here is that DA is matter of State jurisdiction i.e. it is controlled and notified by the Govt. Hence it is not an element of employer's prerogative over salary but a benefit given through mechanism of statutory implementation. Accordingly the amount of DA is always a verifiable complonent and excess payment is not debarred from recovery. Adjustment is also an acceptable option. In my knowledge there has been no such case and therefore the doctrine of res judicata may not be evoked to state as to whether the courts will allow such action or not.
I also appreciate your concern that this is a HR site. I may be permitted to add that disciplinary measures are integral part of HR regime. Though the EPF and ESI may not permit recovery but at the same time there is no bar to pay reduced contribution by way of various reasons.In the end I would thank all and put forward my request that we may consider to give a balanced opinion after taking a holistic view of all the aspects involved in a question.
With due respect and warm regards.
C.M. LAL SRIVASTAVA
From India, New Delhi
I really demonstrate my sincere thanks and deeply wish to appreciate that you perceived my statement with good spirit. I must also appreciate the arguments put forward to support the labour wing in general. The doctrine of equality in the present case will be a question of fact and the doctrine of promissory estoppel, generally applicable to future contingencies, will be a matter of review. I will certainly pay due regard and respect to your legal acumen and expertise and at the same time seek your permission to say that question in the present case related to payment of excess DA. The fact here is that DA is matter of State jurisdiction i.e. it is controlled and notified by the Govt. Hence it is not an element of employer's prerogative over salary but a benefit given through mechanism of statutory implementation. Accordingly the amount of DA is always a verifiable complonent and excess payment is not debarred from recovery. Adjustment is also an acceptable option. In my knowledge there has been no such case and therefore the doctrine of res judicata may not be evoked to state as to whether the courts will allow such action or not.
I also appreciate your concern that this is a HR site. I may be permitted to add that disciplinary measures are integral part of HR regime. Though the EPF and ESI may not permit recovery but at the same time there is no bar to pay reduced contribution by way of various reasons.In the end I would thank all and put forward my request that we may consider to give a balanced opinion after taking a holistic view of all the aspects involved in a question.
With due respect and warm regards.
C.M. LAL SRIVASTAVA
From India, New Delhi
Sir,
To a large extend, I think we are talking on similar terms.
Argument from various angles helps all of us to improve our knowledge, which is why we are all here :)
I agree that action must be taken against the person who was responsible for the mistake. I think it must have been made. I wait for a conformation from the original poster. I was saying - most of us did not reply on that side as we assumed it was done and also that the post was not about that. I think you have brought an important angle that a reader at a later date will definately factor in
About the recovery part, my experiance is that courts will take a view depending on how good your lawyers are. So we cant be sure of which way a judgement will go. (unfortunately judgements are today completely uncertain and luck). However, judges will in general take a pro labour stand
My point again, is the fact that it was dine for 3 years and therefore has become the norm and courts will disallow recovery (will ? May ? May not too). If the error was for 3 months (for example), recovery would be automatic and not disputed. But as I said, if the lawyer is good, he can get it approved, if the union has a good lawyer, who knows, he may even have the court declare that the company has to continue paying g wrong da for future ;)
From India, Mumbai
To a large extend, I think we are talking on similar terms.
Argument from various angles helps all of us to improve our knowledge, which is why we are all here :)
I agree that action must be taken against the person who was responsible for the mistake. I think it must have been made. I wait for a conformation from the original poster. I was saying - most of us did not reply on that side as we assumed it was done and also that the post was not about that. I think you have brought an important angle that a reader at a later date will definately factor in
About the recovery part, my experiance is that courts will take a view depending on how good your lawyers are. So we cant be sure of which way a judgement will go. (unfortunately judgements are today completely uncertain and luck). However, judges will in general take a pro labour stand
My point again, is the fact that it was dine for 3 years and therefore has become the norm and courts will disallow recovery (will ? May ? May not too). If the error was for 3 months (for example), recovery would be automatic and not disputed. But as I said, if the lawyer is good, he can get it approved, if the union has a good lawyer, who knows, he may even have the court declare that the company has to continue paying g wrong da for future ;)
From India, Mumbai
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