Compliance checklist-Ensuring effective distribution of funds for heirs of deceased employees for Medium to Large Private Business Owners

The death of an employee can be emotionally painful and can cause many  practical legal problems at the workplace and for the employer especially if that employee had access to a lot of your key documentation and was responsible for a lot of company/corporate work.

A key question which often comes forward is how to manage the succession dues and salaries (gratuities etc).This issue becomes more visible in medium to large businesses where there are many employees and it is difficult to know each employee and their family life on a close personal level.Then again in Pakistan polygamy is allowed as per Islamic rules, therefore the courts and the employers both have to be careful to ensure that no other wives or their children are left behind or excluded from the succession funds or properties.Many insurance companies and land registries hence insist on seeing a duly court processed succession or ‘heir-ship’ certificate so if there is fraud on the cards, it can come forth during the pendency of the trial.

Below we give some humble suggestions and guidelines for the employer with regards to the the surviving/bereaved family on points of action so that some facilitation can be provided.

(1)  At the point an employee dies, you must endeavor to reach their next of kin, successors and family and clarify that no court document will be accepted unless it specifies the full amount of arrears owed to the deceased.This may include pensions, gratuities and any remaining insurance/salary dues.

(2)  After contacting them you must also send them a full letter explaining the nature and amount of the dues of the deceased from your office records and let them know that this letter must be annexed to any succession proceedings, so the judge can endorse this as a part of the succession property/immovable assets.

Such letters can help avoid any unwanted claims and misunderstandings later on.

(3)  Please keep a record of all communication on paper. Please always include an exclusion clause, that you are only bound to release the funds to those successors, whose names have been included in the court judgement.The courts have developed a wise principle of taking financial security from legal heirs, in case any one legal heir has been excluded.

These simple steps will help you resolve a lot of ambiguities in advance. Please also, if a judgement is received without asking you or or your organisation  for the letter first, ask a lawyer to review the whole documents submitted in court for the same, before releasing the funds. If the judgement is specific enough to include ’employment dues’ (even minus the detailed amounts), then it can , in theory be accepted but with the correct legal checks.

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