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shanti (partner)     16 March 2011

refusal of final settlement by employers

Hello,

          My husband has wroked with a private ltd. company for 3 years. As the employers were relatives they refused to give him an appointment letter. His designation was Genral manager. In these 3 years he helped the company to increase its turnover to 3 times. He worked efficiently and was promised bonus and manager's commission  which amounts to Rs. X+1 at the time of his resignation. he has proof regarding the same. During these 3 years my husband had borrowed Rs. X from his employers for his medical fees. The employers forced him to terminate his relations with a company without allowing any notice period. He also was given a relieve order in which he signed and declared to not ask for any claim from the company and to pay his dues within some days. Now the company charges 25 per cent interest on his loan. That was the mistake. The employers refuse to pay his bonus. When the balance is calculated the company is required to pay Rs. 1.. to my husband. please advice and answer my queries-

1. Can the company take legal action against the employer?

2. Can the employer fight for his bonus in the labour court?

3. If legal action is taken what can the employer do to defend the case?



Learning

 2 Replies

Jagdish (Manager-Business Coordination)     17 March 2011

Dear madam,

Your case is very much interesting  and it requires a considerable amount of efforts for settlement, as evidences are not available with you in certian vital aspects.

A. EMPLOYMENT 

1.  As per your statement, there is NO Order of Appointment for your husband, but since he was the General Manager of a Private Limited Company, there will be an authority from the management, as he is the signing authority as per various statutes, and  authenticated him to file on behalf of the Company viz. Company Act, Income Tax, Payment of Wages, Factory Act, Insurance, P.F/ESI, banking regulations,  etc.  

2.  As per the statement of employees filed before the Registrar of Companies, his name and emoluments will be incorported u/s 217-2A of the Companies Act 1956 which will be one of the records to establish that he was an employee of the Company.

3.  As per the Income Tax Return of your husband,  the source of income may be shown as salary from employment; will substantiate that he was an employee of the Company.  

4.  As per your statement, you mentioned about a Relieving Order  issued to  him  by the management at the time of his termination, which obviously clear that your husband was  an employee of the Company.  

5.  Once you collect the above details,  juxtapose with relevant statutes you have to ascertain whether your husband falls within the definition of  the workmen as per the Industrial Dispute Act .  Since he was the GM, I think no chance to file claim as per the ID procedure.  So the cases has to be properly studied for ascertaining the  appropriate procedure for legal action.

6.  Since there is NO contract of employment, there is no question of Notice Period as it will be one of the service conditions.  But the management has to observe the Principle of Natural Justice by all means.  

B. BONUS

1.  According to the Bonus Act, the Wage structure is one of the crietariae of his eligibility.  You should have to ascertain the total wages  of your husband, applicable to the Bonus earining, which falls within the statutory limit, he can claim for the Bonus.

2.  Necessary steps has to be taken for re-opening the allocable surplus for Bonus accounted by the Company and once you get that figure, you have to file a separate dispute in this regard before the appropriate forum.

C. FINANCIAL COMMITMENTS

1.  If your husband has signed any agreement or undertaking at the time of borrwing the money from the management, he has to observe the procedures as per the MoU.  If there is no such vouchers or not incorported any conditions later, the rate of interest can be challanged.


D. PROCEDURE

1. Carefully study the facts, ground and the role of your husband with the Company and then only a proper direction can be given.

2.  If the status of your husband is falling within the purview of the I.D Act, then only he can file a dispute before the appropriate authority for Bonus Issue, other wise you have to establish that your husband was an employee of the company and his earnings covers the Bonus limits.

3.  If legal action is being taken by the management against your husband, no other remedy to contest the issues before the appropriate courts.  But you have to take necessary steps now for filing the disputes and do not wait for the action from the managment.

In short, an advocate who has to study your disputes well and then only he can guide you in the appropriate manner, as in the case of your husband, so many factors, grounds etc are co-related with his employment.

ravi shankar sharma (advocate)     06 July 2011

i do agree with mr. jagdish


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