DISCIPLINARY ACTION & PENALTIES POLICY

SECTION 1 - PURPOSE AND PRINCIPLES

1.1 Policy Objectives

1.1.1 This policy establishes:

(a) Framework for addressing employee misconduct and policy violations

(b) Categories of misconduct and corresponding consequences

(c) Progressive discipline process for correctable behavior

(d) Grounds for immediate termination without progressive discipline

(e) Investigation procedures ensuring natural justice

(f) Monetary fine structure within legal limits

(g) Appeal and grievance mechanisms

1.2 Disciplinary Philosophy

1.2.1 Discipline aims to:

(a) Correct unacceptable behavior and performance

(b) Maintain workplace standards and productivity

(c) Protect Company's legitimate business interests

(d) Ensure fair and consistent treatment of employees

(e) Comply with statutory requirements

1.2.2 Discipline is corrective, not punitive, except in cases of serious misconduct warranting immediate termination.

1.3 Principles of Natural Justice

1.3.1 All disciplinary proceedings shall ensure:

(a) Employee has right to know allegations and charges

(b) Employee has right to be heard and present defense

(c) Employee has reasonable time to respond (minimum 7 days for serious allegations)

(d) Decision-maker is impartial and unbiased

(e) Decision based on evidence and facts

(f) Employee has right to appeal disciplinary action

1.4 Consistent Application

1.4.1 Disciplinary actions will be:

(a) Applied consistently across all employees

(b) Proportionate to severity of misconduct

(c) Based on objective assessment of facts

(d) Documented in employee's personnel file

(e) Communicated in writing with specific violations and consequences

SECTION 2 - CATEGORIES OF MISCONDUCT

2.1 Minor Misconduct

2.1.1 Examples of minor infractions (typically subject to progressive discipline):

(a) Punctuality Issues: Occasional late arrival to work (1-2 times per month)

(b) Attendance Marking: Failure to mark attendance in system

(c) Dress Code: Minor violations of workplace dress standards

(d) Work Area: Failure to maintain clean and organized workspace

(e) Personal Use: Excessive personal phone use or internet browsing during work

(f) Communication: Failure to respond promptly to emails or messages

(g) Documentation: Minor errors in documentation or reports (non-fraudulent)

(h) Meetings: Late arrival or absence from team meetings without notice

2.1.2 Typical consequences:

(a) First occurrence: Verbal counseling and warning

(b) Second occurrence: Written warning

(c) Third occurrence: Final written warning or monetary fine

(d) Continued violations: Termination

2.2 Moderate Misconduct

2.2.1 Examples of moderate infractions:

(a) Chronic Tardiness: Frequent late coming (3+ times per month)

(b) Unauthorized Absence: Absence without prior approval (1-2 days)

(c) Performance Issues: Substandard work quality despite feedback

(d) Insubordination: Refusal to follow reasonable instructions (non-serious)

(e) Negligence: Carelessness causing minor loss or damage to Company property

(f) Policy Violations: Violations of non-critical Company policies

(g) Unprofessional Conduct: Discourteous behavior toward colleagues or clients

(h) Safety Violations: Minor safety rule violations (non-dangerous)

(i) IT Usage: Moderate misuse of IT resources or internet

2.2.2 Typical consequences:

(a) First occurrence: Written warning

(b) Second occurrence: Final written warning with/without monetary fine

(c) Third occurrence: Suspension without pay or termination

2.3 Serious Misconduct (Grounds for Immediate Termination)

2.3.1 The following constitute serious misconduct warranting immediate termination without progressive discipline:

(a) Fraud and Dishonesty:

• Misrepresentation of facts during hiring or employment
• Falsification of records, documents, or reports
• False expense claims or timesheet entries
• Submission of forged documents or certificates
• Concealment of material information

(b) Theft and Misappropriation:

• Theft of Company or client property
• Misappropriation of Company funds or resources
• Unauthorized use or taking of Company assets
• Embezzlement or financial fraud

(c) Breach of Confidentiality and IP:

• Disclosure of confidential Company information
• Theft or misappropriation of intellectual property
• Breach of IP, Confidentiality & Non-Solicitation Policy
• Sharing trade secrets with competitors

(d) Conflict of Interest:

• Undisclosed financial interest in competing business
• Undisclosed business dealings with Company vendors or clients
• Accepting bribes, kickbacks, or improper benefits

(e) Bribery and Corruption:

• Offering or accepting bribes
• Facilitation payments to government officials
• Corrupt practices in procurement or business dealings

(f) Moonlighting and Dual Employment:

• Simultaneous employment with another employer without disclosure
• Working for competitors during employment
• Operating competing business
• Freelancing or consulting without authorization

(g) Gross Insubordination:

• Willful refusal to follow lawful instructions
• Gross disrespect or insolence toward management
• Deliberate undermining of management authority
• Inciting others to disobey Company policies

(h) Violence and Harassment:

• Physical violence, assault, or threats
• Sexual harassment
• Bullying, intimidation, or coercion
• Creating hostile or threatening work environment

(i) Substance Abuse:

• Reporting to work under influence of alcohol or drugs
• Possession or distribution of illegal substances at workplace
• Consuming alcohol during working hours (except authorized events)

(j) Criminal Conduct:

• Commission of criminal offense
• Arrest or conviction for serious crime
• Engaging in illegal activities

(k) Sabotage and Deliberate Damage:

• Willful damage to Company property or systems
• Sabotage of Company operations or projects
• Deliberate destruction of data or information

(l) Abandonment of Employment:

• Unauthorized absence for 7+ consecutive working days
• Failure to report to work without communication
• Deemed voluntary resignation

(m) Repeated Misconduct:

• Continued violations despite written warnings
• Failure to improve after performance improvement plan
• Pattern of policy violations

2.3.2 Serious misconduct results in:

(a) Immediate termination without notice period

(b) Forfeiture of notice period payment

(c) Potential withholding of final settlement to recover damages

(d) No relieving letter or experience certificate until clearances

(e) Possible legal action for recovery of damages

(f) Criminal prosecution where applicable

SECTION 3 - PROGRESSIVE DISCIPLINE PROCESS

3.1 Step 1: Verbal Counseling and Warning

3.1.1 For first occurrence of minor misconduct:

(a) Immediate supervisor discusses issue with employee privately

(b) Explains specific violation and expected behavior

(c) Counsels employee on improvement required

(d) Documents conversation in manager's notes or email

(e) Sets expectation for immediate correction

3.1.2 No formal written record in personnel file.

3.2 Step 2: Written Warning

3.2.1 For repeated minor misconduct or first occurrence of moderate misconduct:

(a) Formal written warning issued to employee

(b) Warning specifies:

• Date and nature of violation
• Previous verbal warning (if applicable)
• Expected corrective action
• Consequences of further violations
• Timeframe for improvement

(c) Employee signs acknowledgment of receipt

(d) Copy placed in employee's personnel file

(e) Warning remains active for 6-12 months

3.2.2 Multiple written warnings for same/similar violations escalate to final warning.

3.3 Step 3: Final Written Warning

3.3.1 For continued violations after written warning:

(a) Final written warning clearly states:

• This is last opportunity before termination
• Specific violations and pattern of misconduct
• Immediate improvement required
• Further violation will result in termination
• No additional warnings will be provided

(b) Employee signs acknowledgment

(c) May be accompanied by Performance Improvement Plan (PIP) if performance-related

(d) Final warning remains active for 12 months

(e) Any further violation during this period = termination

3.4 Step 4: Suspension Without Pay

3.4.1 Suspension may be imposed:

(a) Pending Investigation: During investigation of serious allegations

(b) Disciplinary Suspension: As penalty for serious violations short of termination

3.4.2 Suspension terms:

(a) Duration: Typically 1-15 days

(b) Employee notified in writing with reasons

(c) Employee barred from premises and systems during suspension

(d) No salary paid for suspension period

(e) Suspension period does not count toward notice period

3.4.3 Compliance with Payment of Wages Act:

(a) Maximum suspension: Not to exceed statutory limits

(b) Proper authorization and documentation required

3.5 Step 5: Termination of Employment

3.5.1 Termination follows:

(a) Exhaustion of progressive discipline steps, OR

(b) Serious misconduct warranting immediate termination

3.5.2 Termination procedures:

(a) Termination letter issued stating reasons

(b) Effective date specified

(c) Notice period or payment in lieu (if applicable)

(d) Final settlement calculation provided

(e) Exit formalities and asset return process initiated

3.5.3 See Separation & Exit Management Policy for full termination procedures.

SECTION 4 - MONETARY FINES AND PENALTIES

4.1 Legal Framework (Payment of Wages Act, 1936)

4.1.1 Monetary fines permitted only within statutory limits:

(a) Total fines cannot exceed 50% of wages in any month

(b) Individual fine amount subject to reasonable limits

(c) Fines for acts and omissions causing damage or loss

(d) Prior notice of fine with opportunity to explain required

(e) Fine amounts specified in employment terms or standing orders

4.2 Fine Structure for Common Violations

4.2.1 Late Coming / Tardiness:

(a) First 3 occurrences per month: Verbal warning (no fine)

(b) 4-6 occurrences per month: ₹200-500 per occurrence

(c) 7+ occurrences per month: ₹500-1,000 per occurrence + written warning

(d) Chronic tardiness (10+ per month): Final warning or termination

4.2.2 Unauthorized Absence:

(a) 1 day unauthorized absence: Loss of 2 days wages + written warning

(b) 2-3 days unauthorized absence: Loss of 3x days wages + final warning

(c) 4-6 days unauthorized absence: Loss of wages + termination consideration

(d) 7+ days consecutive absence: Deemed abandonment = termination

4.2.3 Failure to Mark Attendance:

(a) First 2 occurrences per month: Verbal reminder (no fine)

(b) 3-5 occurrences per month: ₹100-300 per occurrence

(c) 6+ occurrences: ₹300-500 per occurrence + written warning

4.2.4 IT Policy Violations:

(a) Accessing blocked/inappropriate websites: ₹500-2,000 + warning

(b) Installing unauthorized software: ₹1,000-5,000 + warning

(c) Disabling security software: ₹2,000-10,000 + termination consideration

(d) Data security violations: ₹5,000-50,000 + termination (depending on severity)

4.2.5 Negligence Causing Minor Damage:

(a) Damage to Company property (negligence): Cost of repair/replacement + ₹500-5,000

(b) Loss of Company assets (negligence): Depreciated value + ₹1,000-10,000

(c) See Financial Accountability & Asset Management Policy for comprehensive asset liability

4.2.6 Policy Violations:

(a) Code of Conduct violations (minor): ₹500-5,000

(b) Safety violations (non-dangerous): ₹1,000-10,000

(c) Confidentiality breaches (minor): ₹5,000-50,000

(d) Serious policy violations: Termination + liquidated damages

4.3 Fine Imposition Process

4.3.1 Before imposing fine:

(a) Notice issued to employee specifying violation and proposed fine

(b) Employee given 3-5 working days to provide explanation

(c) Employee's explanation considered

(d) Fine imposed if explanation unsatisfactory

(e) Employee notified in writing of final decision and fine amount

4.3.2 Fine deduction:

(a) Deducted from next month's salary

(b) Does not exceed 50% of wages that month

(c) Documented in salary slip with reason

4.4 Maximum Fine Limits

4.4.1 Cumulative limits:

(a) Single violation: Maximum ₹10,000 (except for specific liabilities under other policies)

(b) Per month: Not to exceed 50% of that month's wages

(c) Serious violations with liquidated damages: As specified in respective policies (IP: ₹10-50L, Non-solicitation: ₹5-25L)

4.5 Fine Records and Appeals

4.5.1 Record keeping:

(a) All fines documented with violation details

(b) Maintained in employee personnel file

(c) Summary provided in salary slip

4.5.2 Employee may appeal fine within 7 days (see Section 7).

SECTION 5 - INVESTIGATION PROCEDURES

5.1 When Investigation Required

5.1.1 Formal investigation conducted for:

(a) Allegations of serious misconduct

(b) Complaints of harassment, discrimination, or violence

(c) Suspected fraud, theft, or financial misconduct

(d) Data breaches or security incidents

(e) Client complaints about employee conduct

(f) Any matter that may result in termination

5.2 Investigation Process

5.2.1 Preliminary inquiry:

(a) HR or designated officer conducts preliminary review

(b) Determines if prima facie case exists

(c) If yes, formal investigation initiated

(d) If no, matter closed with documentation

5.2.2 Suspension pending investigation:

(a) Employee may be suspended during investigation if:

• Risk of evidence tampering
• Risk to safety or security
• Continued presence disruptive

(b) Suspension with or without pay at Company's discretion

(c) Investigation completed within reasonable time (typically 15-30 days)

5.3 Show Cause Notice

5.3.1 If investigation reveals potential misconduct:

(a) Show Cause Notice issued to employee

(b) Notice includes:

• Specific allegations and charges
• Evidence or facts supporting allegations
• Request for written explanation
• Deadline to respond (minimum 7 days)
• Consequences if explanation unsatisfactory

(c) Employee must respond in writing within deadline

(d) Failure to respond = admission of guilt or waiver of right to defend

5.4 Inquiry Hearing (if required)

5.4.1 For serious allegations requiring detailed inquiry:

(a) Inquiry officer appointed (unbiased person)

(b) Employee informed of inquiry hearing date

(c) Employee may present:

• Written statement and defense
• Witnesses (if relevant)
• Documents or evidence supporting defense

(d) Inquiry officer may:

• Examine witnesses
• Review documents and evidence
• Seek clarifications from employee
• Visit site or location if relevant

(e) Principles of natural justice followed throughout

5.4.2 Inquiry report:

(a) Inquiry officer prepares detailed report with findings

(b) Report includes facts, evidence, analysis, and conclusion

(c) Report submitted to management for decision

5.5 Decision and Communication

5.5.1 After investigation/inquiry:

(a) Management reviews findings and decides disciplinary action

(b) Decision based on:

• Evidence and facts
• Severity of misconduct
• Employee's explanation and defense
• Past record and conduct history
• Mitigating or aggravating circumstances

(c) Decision communicated to employee in writing

(d) Decision letter specifies:

• Findings of investigation
• Misconduct established
• Disciplinary action imposed
• Effective date
• Right to appeal

5.6 Confidentiality

5.6.1 Investigation maintained confidentially:

(a) Shared only with those who need to know

(b) Witnesses instructed to maintain confidentiality

(c) Employee's privacy protected to extent possible

(d) Information disclosed only for legitimate purposes

SECTION 6 - PERFORMANCE IMPROVEMENT PLAN (PIP)

6.1 When PIP Applied

6.1.1 Performance Improvement Plan used for:

(a) Consistently substandard work performance

(b) Failure to meet performance objectives

(c) Quality issues in deliverables

(d) Productivity concerns

(e) Skill or competency gaps

6.1.2 PIP is for performance issues, not misconduct (misconduct follows progressive discipline).

6.2 PIP Structure

6.2.1 PIP document includes:

(a) Specific Performance Deficiencies: Clear description of issues

(b) Expected Performance Standards: What employee must achieve

(c) Measurable Goals: Specific, measurable, achievable objectives

(d) Timeline: Duration of PIP (typically 30-90 days)

(e) Support Provided: Training, resources, mentoring available

(f) Review Schedule: Regular check-ins and progress reviews

(g) Consequences: Outcome if performance does not improve

6.2.2 Employee signs acknowledgment of PIP.

6.3 PIP Process

6.3.1 During PIP period:

(a) Employee works toward achieving specified goals

(b) Manager provides regular feedback and support

(c) Progress reviewed at scheduled intervals (weekly/biweekly)

(d) Employee documents efforts and improvements

(e) Adjustments made if needed (extending timeline, modifying goals)

6.4 PIP Outcomes

6.4.1 At end of PIP period:

(a) Performance Improved: PIP successfully completed

• Employee continues in role
• Monitoring may continue for additional period
• Recognition of improvement

(b) Partial Improvement: PIP extended

• Additional time given to achieve goals
• Typically 30-60 day extension
• Modified goals if appropriate

(c) No Improvement: PIP unsuccessful

• Termination of employment
• Notice period applicable per employment level
• Final settlement processed

6.4.2 Outcome communicated to employee in writing.

SECTION 7 - APPEAL PROCESS

7.1 Right to Appeal

7.1.1 Employee may appeal:

(a) Disciplinary action (warning, fine, suspension, termination)

(b) Outcome of PIP

(c) Findings of investigation

7.1.2 Appeal does not apply to:

(a) Termination for serious misconduct (fraud, theft, violence)

(b) Summary dismissal for criminal conduct

(c) Abandonment of employment

7.2 Appeal Submission

7.2.1 Employee must:

(a) Submit written appeal within 7 working days of disciplinary action

(b) Address appeal to next level manager or HR Head

(c) State specific grounds for appeal

(d) Provide supporting evidence or explanation

(e) Specify relief or outcome sought

7.2.2 Late appeals may be rejected unless exceptional circumstances.

7.3 Appeal Review

7.3.1 Appeal review process:

(a) Appeal reviewed by senior management or HR Head (not involved in original decision)

(b) Original investigation and employee's appeal considered

(c) Additional investigation conducted if new evidence presented

(d) Employee may be called for meeting or clarification

(e) Review completed within 15-30 days

7.4 Appeal Decision

7.4.1 Possible outcomes:

(a) Appeal Upheld: Disciplinary action reversed or reduced

(b) Appeal Partially Upheld: Disciplinary action modified

(c) Appeal Rejected: Original disciplinary action stands

7.4.2 Decision communicated to employee in writing with reasons.

7.4.3 Management's decision on appeal is final.

7.5 Grievance Mechanism

7.5.1 If employee believes disciplinary action was:

(a) Discriminatory or biased

(b) Retaliatory

(c) Procedurally unfair

7.5.2 Employee may file grievance per Grievance Redressal Policy (if applicable) or escalate to senior management.

SECTION 8 - DOCUMENTATION AND RECORDS

8.1 Personnel File Documentation

8.1.1 All disciplinary actions documented in employee's personnel file:

(a) Written warnings (original signed copy)

(b) Final warnings

(c) Suspension orders

(d) Fine notices and deductions

(e) Investigation reports and findings

(f) PIP documents and outcomes

(g) Appeal submissions and decisions

(h) Termination letters

8.2 Record Retention

8.2.1 Disciplinary records retained:

(a) During employment: All records maintained

(b) Post-employment: 5 years from separation date

(c) Longer if subject to litigation or legal proceeding

8.2.2 Confidentiality maintained per data protection requirements.

8.3 Expiry of Warnings

8.3.1 Written warnings expire:

(a) Verbal warning: No formal expiry (documented only)

(b) Written warning: 6-12 months from issuance

(c) Final warning: 12 months from issuance

8.3.2 After expiry, warning not considered for future disciplinary actions unless new similar violation occurs.

SECTION 9 - SPECIAL CIRCUMSTANCES

9.1 Probationary Employees

9.1.1 Probationary employees subject to this policy with modifications:

(a) Progressive discipline may be abbreviated or bypassed

(b) Termination during probation requires less process

(c) Notice period for termination may be shorter

(d) Appeal rights may be limited

9.2 Senior Management and Leadership

9.2.1 Disciplinary actions for senior employees (Level 7+):

(a) Handled by senior management or Board

(b) Higher standard of conduct expected

(c) Violations may have greater reputational impact

(d) Progressive discipline may not apply for certain violations

9.3 Whistleblower Protection

9.3.1 No disciplinary action for:

(a) Reporting violations in good faith

(b) Cooperating with investigations

(c) Refusing to participate in illegal or unethical activities

9.3.2 Retaliation against whistleblowers = serious misconduct subject to termination.