Misconduct is any act or omission that breaches the employment contract, the standing orders or the employer’s code of conduct; disciplinary action is the graded response, from a warning up to dismissal. What decides whether a punishment survives a challenge is less the offence than the process and whether the penalty fits it.

Minor and major misconduct, and the usual ladder

Minor misconduct covers things like occasional late coming or carelessness. Major (often called gross) misconduct covers theft, fraud, wilful insubordination, violence, falsifying records, unauthorised disclosure of confidential information and prolonged absconding. The Model Standing Orders, 2026, notified in May 2026 for manufacturing, mining and services, are reported to add items such as unauthorised access to IT systems and false reimbursement claims, so check the current text of the Model Standing Orders for your sector. Sexual harassment is misconduct too, but it runs through the Internal Committee under the POSH Act, not a general inquiry.

1. Verbal counselling, recorded in a short note
2. Written warning
3. Final warning, or a lawful penalty such as withholding an increment
4. Suspension pending inquiry (not a punishment in itself)
5. Dismissal after a proper inquiry

Serious cases can skip rungs, but a first minor lapse met with dismissal is a classic loser. Fines and deductions are tightly regulated; do not deduct from wages without checking the Code on Wages and your state rules.

Process, suspension and proportionality

The sequence is a show-cause notice or charge sheet, a written reply, an inquiry by an impartial officer, findings, a reasoned order and an appeal. The inquiry mechanics are in the domestic enquiry page. Where standing orders apply, Section 38 of the Industrial Relations Code expects an inquiry after suspension to finish ordinarily within 90 days, with subsistence allowance of 50% of wages for the first 90 days and 75% after that if the delay is not due to the worker. On monthly wages of Rs 30,000, that is Rs 15,000 a month for the first 90 days and Rs 22,500 afterwards. The Code also lists as unfair labour practices a dismissal in disregard of natural justice or with undue haste, and a disproportionate punishment for minor or technical misconduct without regard to the worker’s record. Document every step, and keep copies in the employee file.

Frequently asked questions

Can we terminate for misconduct without an inquiry?

Ending a contract with notice is a different route, but using it to avoid an inquiry into misconduct invites an argument that the exercise was not in good faith. For a serious allegation, hold the inquiry.

Does subsistence allowance apply to every suspended employee?

The statutory rates are tied to establishments with standing orders. Elsewhere your contract, state shops law or policy governs, and paying something is the safer position.

Is suspension itself a penalty?

No. It is an interim step while an inquiry runs, and treating it as punishment before findings undermines the case.

For the full sequence from charge sheet to termination, read the misconduct and domestic inquiry guide.