Law says Termination Letters by Cognizant, Wipro, Tech Mahnidra Clearly Illegal

I mentioned in my “IT employee life – Fun or problem series 2” any company can carry out separation process for an employee based on the following scenarios:

  1. Employee submits resignation on his/her own.
  2. Resignation is obtained due to pressure from management/HR officers
  3. Employee is terminated by the company quoting reason like compliance, notice period clause.

This is an update about various terminations happening in different companies in recent times. Issuing termination letter is the last weapon taken by company. The reason for using this weapon is to create panic among other employees who are resisting to resign. They feel legally it takes several years for employee to fight and are taking a chance of using this last weapon occasionally in some cases.

The only way to counter this to call their bluff and go for strong legal action. The law is clearly against this type of terminations. Let us see how.

We have seen more than 20 different termination letters given by different companies. The following are the reasons quoted by companies as reason for termination:

  1. Some companies terminated based on offer letter clause that both parties can end the employment contract with 2 months notice period. In this case, company settles 2 month salary by crediting in advance to employee account and then issues the termination letter.
  2. Some companies terminated quoting reason as employee in bench for more than 300+ days. “We have given sufficient timelines for the employee to find project on their own. As employee was not able to find projects for more than 300+ days, it proves that employee skillset is out dated. So we are terminating the employee, citing long bench as the reason”.
  3. Some companies terminated quoting reason as employee getting bad appraisal ratings. They issue termination letter stating that “as per company policy, if employee got 2 subsequent bad ratings, company reserves the right to terminate. So we are terminating the employee based on the company policy.”
  4. Some companies even portray false compliance issues as reason. One particular company has quoted that “the employee has thrown duster on supervisor and this is physical violence. So to ensure safety in work place, we are issuing termination letter.”
  5. Some companies give employment opportunities in different locations. For example, if an employee is working in Chennai, he will be offered for projects in Gurgaon. This particular employee is kept on bench for several months or even years with profile locked and no job offered during these days. Suddenly company gave 3 opportunities. If employee did not take the assignment, this will be first warning letter and within a week the company sends termination with reason as “employee not taking any assignments so terminated”.
  6. Compliance issue on employee manipulating time is shown as reason for termination in some cases.

Interestingly the pattern of all terminations in different companies is these employees are not given any time to respond, which is not only illegal it is not even a fair practice. For example, profile will be blocked and access will be restricted to the employees and termination letter will be send later by registered post.

Applies in Tamil Nadu to establishments employing 20 or more persons (G.O.Ms.No.2272 , 11th November 1986). Model Standing Orders has been provided under the Rules. Certification to be obtained. Difference between Model and Certified Standing Orders.

The company HR after issuing the termination letter will try to convince the employee if in later stage the employee wants to resign on their own and withdraw the termination letter, he/she can approach them. Some of the employees after receiving termination letter got afraid as termination letter will stop getting future employments and agree with HR demands. In that case, company gets signature from employee and revokes the termination letter and give a new relieving letter as if the employee resigned on their own.

Many people might feel that company has every right to terminate employee based on compliance issue. For example, if employee proved to be involved in criminal incidents which is punishable by law, it is difficult for company to retain the employee.

Yes, the company has the right to terminate employee for valid reasons. But, the model standing order clearly defines the various reasons which allow the company to terminate employees. These reasons are common for all sectors and industries and to employees of all these sectors and industries.

If an employee committed compliance issue as detailed in standing order, company has to do an investigation with internal grievance mechanism team. The company has to record the minutes of meeting of these investigation. Based on the recommendation of the committee, the company can take further action. Even then, the company has to give sufficient warning to employee. If employee did not change his/her behavior and repeatedly doing the same issue, company can terminate the employee. In this case, company has to inform labor department about details of termination.

If you see the current wave of terminations, there is no time given to employees. But some companies involve internal grievance team for investigation to show that the compliance is investigated by the internal team. A famous company even involved a retired judge as ombudsman for termination cases. As part of termination letter, it specifies retired judge name and if employee has any queries, they can approach the internal judicial person within 15 days of time. But in any case these retired judicial judge is now part of the company itself and chances of justice is less in this scenario is what we have observed.

The most important thing is to analyse whether terminations based on offer letter or based on being in bench etc can be quoted as reason for termination. The Model Standing Order does not have any such provision to terminate employees quoting these reasons. In simple words, as per current model standing order, company does not have the right to terminate employee quoting reason as bad performance, bad ratings in appraisal, being in bench for long time etc.

But companies have the right to add reasons for termination by modifying the model standing order. For example, if a company wants to have a policy to terminate employees based on appraisal ratings, company should amend the model standing orders and get it certified by the government.

But there is a high chance that the company will not be allowed to have a clause to terminate an employee based on performance as there is high chance companies can misuse this reason. For example, if legally a company can terminate for 2 bad performance rating, every company will give 2 bad ratings to send employees out and cut down cost as per their wish. So legally it is not possible to amend the standard termination clauses by adding some arbitrary unfair one sided clause by the company.

We checked with labor office if any of the IT companies applied for amending model standing order for termination rules. But none of the companies have applied for certified standing order. So terminations quoting such reasons are illegal and not valid. If these employees approached court, the chance of reinstatement is very high.

Many employees who are forcefully terminated has taken the legal route. The interesting observation on what is happening in this legal cases gives an insight to people on what is happening overall:

  1. Generally labor officers advise the company representative that termination based on offer letter clause is clearly illegal. They ask the company to reinstate the employee or settle with the employee as their case will not stand in labour court.
  2. Some companies offered immediate spot payment as settlement. They are offering up to 9 months salary. If employee agrees, he/she has to withdraw the case. The company will release the relieving letter in favor of employee. Employee has to submit legal resignation and case will be closed with reason as attrition. This shows that the company has no legs to stand on in case of issuing such termination letters.
  3. Another interesting fact is that any medical expenses employee incurred after termination will be paid by company insurance. This is very useful information for many. If employee is terminated, we can ask for medical benefits until insurance cycle closure. This part may vary based on company policy and can be cross checked on a case to case basis.

Ramesha vs HCL is the only legal case which is the benchmark case for many IT employees. Some of the other cases are almost in the finishing stage now. The judgement in these cases matter a lot in deciding the way forward on future of IT employees. It is very important that all employees to join hands to support employees fighting these cases in court.

The final conclusion is that an employee cannot be terminated based on appraisal ratings. No IT company has certified standing orders and hence the model standing order applies. As per model standing order termination on these grounds is not permitted.

– Shyam Sundar, President,
NDLF IT Employees Wing

Please read the book “IT Life Fun or Problems” by Shyam Sundar.

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    • Indian, Tamil nadu on November 17, 2018 at 9:21 pm
    • Reply

    Labor offices are the bigger culprits, they run cases for years together, the hearings they conduct is for adjournments.

    These companies know how to bribe labor offices, at Chennai, in the first week of November, 2018, the DVAC conducted raids at labor office. If you want to name the officers, I can do.

    The Labor officers do not respect the Court orders, typical public sector mindset.

    • Shyamsundar on November 18, 2018 at 9:00 pm
    • Reply

    Thats one side. But I know more than 200 people job saved by complaining in Labour office. Approaching labour office with help of unions matters a lot. Company can bribe for 1 employee case. There are minimum 20000 layoffs minimum hahappening every year. If everyone approaching lc and court, company cannot do anything

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