Some of our union contracts specify that certain requirements be met before an employee can be suspended without pay. We can suspend with pay in cases where we want the employee off the shop floor.
In the non-union world, the only suspensions with pay have been while investigations of financial irregularities are ongoing. We have suspended systems access to whole departments, then call in the forensic accountants and temps to sort it out. When we have more evidence about specific offences, the responsible individuals are terminated. The rest return to work as before (hopefully with better controls).
Some years ago about 40 people (an entire large department, Director down to clerks) were suspended. Five were fired, two were eventually prosecuted criminally. Eventually, Controller and CFO were gone as well.
In Thailand, miscreant government officials are forever being “moved to an inactive post.” Lots of Westerners scoff at that, but it really is effective. An official who is moved to an inactive post can no longer command huge bribes, because why bribe someone who can’t do anything for you anymore? He has to make do with his paltry civil-service salary, and those are paltry over here. Eventually, usually before long, the miscreant will go ahead and resign in exasperation, thus saving the government the expense of having to give him severance pay or even enduring an expensive court fight.
I agree with most people who say that leave with pay is not intended to be a punishment. It’s intended to protect the organization by removing an employee who is potentially a liability in some way from active duty, and to protect the employee who is innocent of wrongdoing from financial damage while the issue is investigated.
There is also the residual career damage to consider. One who has recently been on suspension, paid or otherwise, is not likely to be promoted in the near future. In some cases, it could be the kiss of death for a career.