-By Jaya Pathak
Dismissal is the point when most organisations cease to pretend they operate under a sense of principle and show what they in reality operate on, which is impatience, convenience, and an unthought-through belief that a well put down email can replace the legal process. This is not something that is usually stated by the senior management, but the majority of people issues that make counsel are not due to difficult employees. They are instigated by those employers who mix authority and impunity.
The modern Indian work place especially within the developing companies has acquired a bizarre dualism. Hiring is a brand-building exercise, in form of structured interviews, culture decks, idealistic discussion of values. Exits on the other hand can be taken as hygienic. Get rid of the problem, cancel the access, cover the dues “soon enough”, and move on. That method can be effective in the course of a week. Then the first-notice comes, or the first labour complaint, or the first reinstatement demand. What is actually expensive is not the legal fee, but the time spent by the management building a story that ought to have been well-written on day one.
There is a question that a serious employer will start with: who is it exactly that is being fired? Not technically, but in legal nature. A workman under the industrial dispute act is a defined term with clear exemptions of which includes, people who work mainly in a managerial or administrative role as well as some supervisory workers who earn above a certain level. Dramatic cases are fought over this classification since it is what arises to get a separation which is just contractual as opposed to becoming an industrial dispute which is subject to a different remedy and a different institutional temper. The Indian-based private sector has over the years feigned an excess of titles; team lead, assistant manager, floor supervisor, etc. and then becomes shocked when a forum cuts through the tomato can wrap and gets at the contents of the role.
Layoffs
It is in this respect that layoffs are particularly contentious, since what boardrooms describe as redundancy may appear, to the law, to be retrenchment. The Act has broadly defined retrenchment as dismissal by the employer of any type and terminates because of any reason; other than the dismissal as a form of disciplinary action, has some special exclusions, including voluntary retirement, superannuation, and as a consequence of prolonged ill-health. Receiving performance rightsizing, role rebalancing, strategic restructuring, and so on as wholly consisting of corporate vocabulary, employers will soon find themselves inoculated against statutory framing. The law has no interest in the story bloom; it is concerned with the character of the termination and the security which comes along with it.
HR Compliance
Under the circumstances that the retrenchment safeguards are used, the centre of gravity is changed to compliance. Section 25F provides conditions which are a precursor to retrenchment of a workman, says; notice (or wages in lieu) and retrenchment pay which is based on length of service as well as the notice to government which is required. Business executives tend to consider them as a technicality, to be addressed by the HR and payroll. That is a category error. Such are not HR hygiene, but risk controls. The retrenchment that takes place in a casual manner, will make a saving initiative into years of litigation, settlement strain, and reputation-induced discomfort, which trickles over into the recruit.
Wrongful Termination
The term wrongful termination is a loose term although the cases of wrongful termination that develop to remain a contention, the anatomy involved is usually familiar. The first is the employer who is attempting to make a clean departure and compel a resignation, either by refusing to give the relieving letters, or by making the notice period part of a hostage negotiation. The second is the employer who considers termination as a disciplinary measure and does not develop the discipline file: there is no explicit charge, significant opportunity to respond, and internal fairness. The third, and possibly the most preventable, is the mismanaged employer who makes wages claims too simple that the employee hardly needs to counter there is anything he can argue.
The law is unashamedly rigid on wages. The timing of payments of wages should be provided under Payment of Wages Act, where the wages should be paid before the 7th day in an establishment that has less workforce of 1,000 workers and before the 10th day in an establishment that has more workers. In the case of termination of employment, it is covered in the Act so that, the amount of a wage earned is required to be paid before the second working day of the termination day (excluding the mentioned provision when it happened due to closure).
Due to the increased mobility of the professional workforce, even in young companies, the element of gratuity disputes has become a matter due to the fact that payroll teams have long believed that the separation is a normal process and that it has only found out too late that the process of separation is exactly what labour law does not hold.
Another clause in the Industrial Disputes Act, which the top-level management tends to take lightly until it is time to take a personal hit, is that a single termination can be regarded as an industrial dispute. Section 2A of states that disputes that arose due to discharge, dismissal, retrenchment or dismissal of an individual workman shall arise to be an industrial dispute despite the absence of a union or other workmen. The same section establishes a direct route of application to the Labour Court or Tribunal after a fixed time passage since an application has been made to the Conciliation Officer, and a deadline period is given for applying to the Conciliation Officer. This is important as it bursts a comforting myth amongst some corporate boardrooms: namely, that without union there is no risk of industrial dispute. It is a procedural not a political risk.
Termination Letter
The termination letter is brief, internal file full, and financial settlement must be timely. They shun melodrama of for cause language unless they are ready to establish cause. They do not succumb to the temptation of explaining too much in writing, since it is by over-explaining that contradictions creep in the record. They also consider full and final settlement as a governance exercise which is not a favour. The last mile requires precision because in mature organisations, HR leaders want to encourage remaining employees to realise that they too can be addressed at random whenever the business mood changes.
There is also the pressure of regulatory consolidation, which is leading to the change of the corporate environment. The consolidation has seen the central government enact many labour laws into four labour codes – on wages, industrial relations, social security, and occupational safety and working conditions and implementation has depended on the synchronization of central and state rules, which have not always followed each other.
Conclusion
The labour law risk is not just a legal one. It is commercial. During diligence, investors look deeper and deeper into the practices of the people, not just to conduct ethical performance, but contingent liabilities. Internal controls are indicated through a history of conflicts, especially with wage delays, friction over gratuities or claims at coercive dismissal.
