Employees may be fired from their jobs for various reasons, including unsatisfactory work performance or actions and attitudes that disrupt the workplace environment. In many countries, including India, the rules governing termination often depend on the circumstances leading to dismissal. For instance, if an employee is terminated due to misconduct, the employer is not legally obligated to provide prior notice. Misconduct may include serious violations such as dishonesty, harassment, theft, or other behaviors that breach the company’s code of conduct or ethical standards.
NEW DELHI : Termination policies vary across organizations, but most emphasize a balance between protecting workplace standards and respecting employee rights. Employers are encouraged to communicate company policies clearly and enforce them consistently to minimize disputes and ensure a fair working environment for all.
Getting fired refers to the termination of employment due to either unsatisfactory work performance or disruptive behaviors and attitudes that create chaos in the workplace. In such cases, employers may not always be required to provide the standard 30-day notice period, depending on the nature of the termination.
INDUSTRIAL DISPUTES ACT,1947 AND TERMINATION OF EMPLOYEES
The Industrial Disputes Act, 1947, serves as a cornerstone of Indian labour legislation, focusing on the regulation of employment termination and fostering harmonious employer-employee relations.
Its primary aim is to promote industrial peace and stability by establishing a robust framework for addressing and resolving disputes that may arise between employers and workers. The Act lays down detailed procedures and mechanisms to ensure the equitable settlement of conflicts, thereby creating a balanced environment conducive to both industrial growth and the protection of employee rights.
Through its provisions, the legislation seeks to minimise disruptions in industrial operations and uphold social justice, making it a vital instrument for maintaining workplace harmony in India.
The Industrial Disputes Act, 1947, applies specifically to employees classified as “workmen.”
According to Section 2(s) of the Act, a workman is defined–
” an individual engaged in manual, unskilled, skilled, technical, operational, clerical, or supervisory work for hire or reward. “
However, this definition excludes employees primarily working in managerial or administrative roles, as well as those in supervisory positions earning wages exceeding INR 10,000 per month.
For employees falling outside the “workmen” category, termination is governed by the applicable state-specific statutory notice requirements, the terms outlined in the employee’s contract, and the organisation’s HR policies.
Since there is no unified central legislation addressing the termination of non-workmen, these factors collectively dictate the termination process.
Under Indian laws, employees can be terminated for misconduct (refer to “Misconduct” for details). Apart from this, Indian courts generally accept the following as valid reasons for termination:
- Poor performance.
- Redundancy (when a job role is no longer needed).
- Loss of trust in the employee’s ability to carry out their duties.
However, employers must have proper evidence or proof to justify these reasons. This is important to defend against any claims of wrongful termination in Indian courts.
The Industrial Disputes Act,1947 provides for the procedure for retrenchemnt of the employees and not the procedure for firing or termination of the employees.
RETRENCHMENT AND PROCEDURE FOR RETRENCHMENT UNDER INDUSTRIAL DISPUTES ACT,1947
Retrenchment is described under Section 2(oo) of the Industrial Disputes Act, 1947.
As per this definition,
“Retrenchment refers to the termination of a workman’s services by the employer for any reason whatsoever, except if it is a punishment resulting from disciplinary action. However, there are specific scenarios that are not considered retrenchment:
- When an employee voluntarily retires.
- When an employee retires after reaching the age of superannuation due to an agreement between the employer and employee about superannuation at the time of employment.
- When the employment ends because the employment agreement is not renewed.
- When the termination occurs due to the employee’s prolonged ill health.“
Therefore, retrenchment is generally linked to an employee’s termination caused by financial difficulties, organizational restructuring, adoption of new technologies, downsizing, closure of certain units, or similar reasons.
CONDITIONS FOR VALID RETRENCHMENT
The conditions for a valid retrenchment are detailed under Section 25F of the Industrial Disputes Act, 1947. These rules apply only if the employee has completed one year of continuous service.
The requirements for a valid retrenchment are as follows:
Notice to the employees: Before retrenching an employee, the employer must give a written notice at least one month in advance. This notice must clearly state the reason for the retrenchment. Without providing this notice, an employee cannot be retrenched.
No need for notice if an agreement specifies the termination date: If an employment agreement already specifies the date of termination, no additional notice is required before retrenching the employee.
Compensation for retrenchment: If the employer does not issue the required notice, they are obligated to compensate the employee. The compensation must be equal to fifteen days’ wages for every completed year of continuous service, or for any period exceeding six months.
Notice to the appropriate authority: The employer must also inform the appropriate government or relevant authority before retrenching employees. This notification should follow the prescribed format mentioned in the official gazette.
Compliance with notice rules: The notice provided to employees must comply with the provisions of Rule 76 under the Industrial Disputes (Central) Rules, 1957, which govern retrenchment notices in labour law.
Employers must ensure their actions comply with legal boundaries while retrenching employees:
- The intent of retrenchment should be genuine and in good faith.
- Employees should not be targeted unfairly or victimized.
- The existing legal provisions must be followed in letter and spirit.
By adhering to these guidelines, retrenchment can be conducted legally and ethically, respecting the rights and interests of employees while meeting the business needs of the employer.
TERMINATION WHICH DOES NOT AMOUNT TO RETRENCHMENT
Section 2(oo) of the Industrial Disputes Act, 1947, defines retrenchment but also specifies exceptions where certain situations do not qualify as retrenchment. These exceptions are outlined below in simple terms:
1.Voluntary retirement:
When an employee chooses to leave their job voluntarily, it is not considered retrenchment. This is because the decision to quit is made by the employee, not the employer. The law clearly states:
“In case a workman or employee retires from his service voluntarily without any other reason, it is not considered retrenchment under labour law.”
2. Retirement after superannuation:
If an employee retires after reaching the age of superannuation as per the employment agreement signed at the time of joining, it is not classified as retrenchment. This is because the retirement happens according to a pre-agreed clause. The law states:
“In case a workman or an employee retires after reaching the age of superannuation due to the presence of the superannuation clause in the employment agreement that was made between the employer and employee at the time of his employment.”
3.Non-renewal of the employment agreement:
If an employee’s contract is not renewed by the employer, and the employment ends as a result, it is not considered retrenchment. This happens when the agreement expires, and both parties do not extend it further. According to the law:
“In case the agreement of employment of the workman or employee has not been renewed by the employer and, as a result, he cannot continue his work further, it is not considered retrenchment.”
4.Termination due to ill-health:
When an employee’s services are terminated because of ongoing ill-health, it is not treated as retrenchment. Ill-health could be due to physical or mental conditions. Whether the employee’s health issues are continuous or not can be determined in court if needed. The Act mentions:
“In case a workman or employee is terminated from his job due to his continuous ill-health, it is not considered retrenchment under labour law. Illness of the body or mind is considered symptoms of an employee’s poor health. To determine whether the employee is suffering for a continuous period of time or not, the parties to the contract have to prove that in court.”
In summary, these exceptions ensure that not every termination is classified as retrenchment. Voluntary retirements, agreed superannuation, non-renewal of contracts, and ill-health-related dismissals are all excluded from the scope of retrenchment under Section 2(oo) of the Industrial Disputes Act, 1947.
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RIGHT OF EMPLOYEES DURING RETRENCHMENT
Employees have several rights during the retrenchment process to protect them from unfair treatment by employers. These rights ensure that retrenchment is carried out in a fair and transparent manner.
1.Right to receive prior notice
Employees have the right to be informed in advance about their retrenchment. Employers must give them notice or compensation in place of notice, as per the terms mentioned in the employment agreement. According to the law:
“It is the right of employees to get prior notice and compensation in lieu of notice, which depends on the employment agreement made between employers and employees.”
2.Right to receive counselling and support
When a company retrenches a large number of employees, it is important for employers to offer support services. This can include counselling sessions or help with finding new jobs. The Act states:
“In case of the retrenchment of a large number of employees from a company, they should be given support services like counselling or assistance for job placement.”
3. Right to severance pay
If the employment contract includes a provision for severance pay, the employees are entitled to receive it. This could include retrenchment compensation or a severance package. As per the rule:
“In case there is an employment agreement where the terms of the contract say that the retrenched employees will get severance pay, the employees are entitled to get retrenchment compensation or severance packages.”
4.Right to representation and consultation
In some areas, employees or their representatives have the right to participate in consultations about the retrenchment process. This ensures transparency. The law mentions:
“In many regions or localities, the employees or their representatives have the right to consultation regarding the process of retrenchment.”
5. Right to know the reason for retrenchment
Employees must be informed of the reason for their retrenchment. Employers need to justify and explain why the retrenchment decision was necessary. According to the Act:
“The employees have the right to know the reason for their retrenchment. They must be given the justification and rationale for the retrenchment decision.”
6. Right to access grievance mechanisms
Employees have the right to challenge the retrenchment decision if they believe it is unfair or arbitrary. This ensures their rights are safeguarded. The Act states:
“The employees must be given the right to challenge the retrenchment decision if they think that they are being retrenched in an unfair way. They are removed in an arbitrary manner, and their rights have been violated.”
7. Right to unbiased retrenchment
Employees cannot be retrenched based on personal biases or discrimination. Employers must ensure that the retrenchment process is fair and justified. As per the law:
“The employees must be retrenched based on fair and justified grounds. No kind of personal bias or discrimination will be involved while retrenching the employees by the employers.”
8. Right to re-employment opportunities
If employers decide to hire new staff for a position, retrenched employees should be given priority. They may also be offered training or re-employment opportunities within the company. The rule states:
“If employers think of employing individuals for a post, they should give priority to the retrenched employees. They should be provided with re-employment opportunities or retraining opportunities within the company.”
By understanding these rights, employees can ensure they are treated fairly during the retrenchment process. Employers must also follow these guidelines to maintain a lawful and ethical workplace.
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IS IT LEGAL TO FIRE EMPLOYEES IN INDIA?
Now, the main question that arises is whether is it legal to fire employees in India, , when it comes to the retrenchment and termination of employees , it takes place because of the financial constraints of the company , however firing is termination due to numerous reasons such as misconduct, behavioural issues and various other reasons.
But in such a case it is explicit to mention that, the employee being fired has the right to know the reason for such termination and also , if he is liable to get any amount for the work done , the company should pay the money to the employee. Modern termination in big companies is mainly dealt with by the HR policies and in such a case , the employee can file a civil suit for the recovery of the salary due in case the termination was illegal or based on baseless grounds.
SOCIAL MEDIA AND TERMINATION OF EMPLOYMENT
Moving ahead , new points have come in for consideration , wherein social media plays a key role for the termination or firing of the employees in the current scenario, as companies have started becoming conscious of their social image. Some of the points are as follows:
1.Employment Contracts and Social Media Usage
Many companies now include specific rules about personal social media use in their employment contracts. For example, employees may be restricted from using social media during work hours. Violating these rules can have serious consequences. The law mentions:
“Companies may include clauses limiting personal social media usage during work hours. Violations could result in termination.”
2.Unprofessional or Inappropriate Images
Posting inappropriate or unprofessional images on social media can harm an employee’s career. For instance, sharing pictures of drug use, excessive partying, or anything that could damage the company’s image might lead to dismissal. Employers are particularly concerned about posts that reflect poorly on the organization. The principle is clear:
“Posting unprofessional or inappropriate images, such as those depicting drug use or partying, could harm one’s job. Employers may view such posts as damaging to the company’s image.”
3.Defamation on Social Media
In India, defamation is considered a serious offense under the Indian Penal Code (IPC). Making defamatory posts on social media about an individual or a company can lead to both legal action and dismissal from the job. The rule emphasizes:
“In India, defamation is punishable under the IPC and BNS ,2023 , and defamatory social media posts can lead to legal action or termination of employment”
4.Excessive Social Media Usage During Work Hours
Spending too much time on social media during office hours can signal a lack of focus on the job. Many employers monitor social media activity to ensure productivity is not impacted. Excessive usage can result in disciplinary action. The rule states:
“Excessive usage can indicate a lack of focus, prompting some employers to monitor activity and take action if productivity is affected.”
5.Non-Disclosure Agreements (NDAs) and Social Media
Breaching confidentiality agreements by sharing sensitive company information on social media is strictly prohibited. Such actions can lead to termination and legal consequences under the Indian Contract Act. The rule specifies:
“Breaches of NDAs under the Indian Contract Act can lead to termination and legal action.”
6.Confidentiality and Company Policies
Sharing private company information, trade secrets, or sensitive data on social media is strictly against company policies. Employees found guilty of such actions may face immediate termination. The rule states:
“Employees who disclose personal data or trade secrets online may face termination.”
Conclusively , with the emergence of new scenarios , the Industrial Disputes act,1947 has taken a back seat and all the other supporting laws have come into picture for both the support of the employers and employees in case of any baseless actions taken by the employer or the employee.
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