Can the management terminate employees whenever it wants?

This entry is part 2 of 10 in the series IT Life

Most of lay-offs in IT sector take place based on appraisal ratings. The targeted employee is given poor rating; their manager and HR inform the employee about the poor rating and ask and force them to resign voluntarily. If the employee does not agree, HR will threaten them “if you resign yourself, you will get 2 months salary. if not, we will terminate you and you won’t even get 2 months salary. If you are terminated, you won’t get any other job. So, the only option for you is to resign”.

Many employees, fearing the loss of even the severance package, end up resigning and finally end up jobless.

If the management can terminate the employees whenever it wants, as they claim, why do they give the severance package? Why do they threaten and force the employees to put papers.

The reason is simple. For some reason, such as cost cutting, if a company wants to retrench certain number of employees, they have to follow legal procedure.

  1.  A company with more than 100 employees has to approach the labour department, justify and ask permission for such retrenchment.
  2. Labour officer, after studying the case, may allow or deny the retrenchment.
  3. The company can carry out the retrenchment only based on this permission.
  4. It can only lay-off the lesser experienced employees. For e.g. if someone named X is working for 1 year and other named Y is working for 5 years in this company, the company can first retrench X, not Y.
  5. Such retrenched employees should get a compensation equal to 15 days salary for each year of service in that company. For e.g., if Y has worked for 10 years, he/she should get 5 months salary. In addition, salary of 2 months notice period should be added.
  6. After some period, if the company recruits new employees, the retrenched employees should be given preference.

These are the rules a company has to follow for retrenchment. To circumvent these hurdles, HR people indulge in illegal measures and extract forced resignations. When an employee resigns on their own, there are no legal troubles. The company need not fear any legal disputes and it need not pay a severance package (15 days salary). That is why they resort to forced resignations from the employees.

Terminating an individual employee is also not that easy. In order to terminate someone, the company has to prove gross misconduct by the employee. In case of alleged misconduct show-cause notice should be issued, the employee should be given opportunity to respond, internal enquiry committee should investigate and submit report, even then it need not lead to termination of employment. (In criminal law, not all crimes attract death penalty, punishment is commensurate with the crime. Similarly, not all misconducts may not lead to termination.)

As being threatened by HR to terminate someone for alleged performance issue, the standing order issued to all employees should clearly specify that “under performance” or ‘low rating” can lead to termination of employment. And alleged under-performance should be documented with data points by the management. The employee should be given opportunity to present their side. All these should be documented by the company before termination. Ramesha vs HCL case is a clear example of this.

Ramesha’s services were terminated by the company. The reason stated was that his performance was not satisfactory and he had not shown any improvement despite counselling. Ramesha questioned his removal and his counsel argued that no explanation was sought by the company, no charge memo served on him, and no inquiry conducted before the termination order was issued.

The order by the judge in that case reads

The company has not produced any evidence to show that failure to improve the performance or failure to measure up to the expectations or standing orders of the company would amount to misconduct. It is not known whether the company has any service rules and regulations and it has not produced any materials to show what acts constitute misconduct. In clause 6 of the appointment order, it is stated that the service of the petitioner can be terminated by giving 30 days’ notice or by payment of one month’s salary in lieu of notice without assigning any reasons. But the appointment order of the company does not contain any provision to show that failure to improve the performance would result in dismissal of the employee. Nor is there any provision to show that failure to improve the performance is tantamount to misconduct. Even assuming that it is an act of misconduct a punishment of dismissal is too harsh to sustain.”

A company can not therefore terminate an employee that easily. We should not give in to the empty threats and refuse to resign and thus safeguard ourselves from ending up jobless.

– Shyam Sundar

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    • K.V Sreenivasan on June 29, 2018 at 10:37 pm
    • Reply

    In India, every rule is only in the book. Nobody will follow the rules. Even the Article 311 is fully protected the government servant from illegal retrenchment, but the management without following the principles of Natural Justice and not followed the Article 311 terminated the services of even 30 years honest executives from the government service. If it is so , the private companies action cannot be questioned in India. It is the fate, no law, no court will help the honest persons.

    • Shyam sundar on June 30, 2018 at 10:51 am
    • Reply

    That is true. But unity among IT employees will break this attitude. Now i know atleast 30 cases filed against different companies. Awarness among IT employees is created to certain extent. When i face this layoff issue, i have very few reference in internet in favour of employees. Thats the reason we took initiative on creating awarness. As i mentioned if nearly 30% of employees take legal route, IT company will stop. Infact layoff reduced considerably this year itself and these 30 cases play very vital and awarness on IT companies. If 10 employees affected with layoff, now NDLF is getting calls atleast from 4 employee. This is good changr

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