Rights of Employees After Job Termination: Recent news coverage of mass layoffs at various information technology businesses has been extensive. This demonstrates that unexpected job losses are still possible in these sectors. However, few employees are aware of their rights when they are fired suddenly or terminated with little pay. Everyone working should be aware of their rights.
Pioneer Legal Partner Sanket Jain explains, “Usually, the agreements that workers make when they first start working are what govern them.” However, employment contracts are superseded by regulations about labor and employee welfare, which are inviolable. There are now several laws about the welfare of workers, but the Industrial Dispute Act of 1947 and the Shops and Establishments Act of 1954 are among the most notable. However, these rules are inconsistent and insufficient to handle labor-related difficulties.
The structure of employment contracts is not dictated by labor regulations. As a result, the contract will take precedence over any areas where the labor laws are silent (such as compensation due in the event of termination).
According to Jain, the provisions of the relevant labor law will take precedence over the terms of the employment contract if the employment contract states that the employee is entitled to compensation equal to 30 days’ wages in the event of a layoff but the applicable labor law specifies that 90 days’ compensation is payable. However, if the employment contract specifies payment of 60 days’ compensation but the law only requires payment of 30 days’ wages, the employment contract will take precedence over the law. He specifies that the larger of the two sums will be paid to the employee.
Employment contracts
“Labor laws were formed after independence in major part to safeguard the rights of workers, who frequently had less negotiating leverage,” says Abhishek Mathur, a partner at the Indian law firm Luthra & Luthra. The legal framework classifies employees as “tradesmen or workers whose nature of the job is neither managerial nor administrative” in the context of labor relations and conflicts, which often comprises workers at the bottom of the hierarchy. The other category consists of those who hold managerial, executive, or other higher-level positions.
However, for other employees with managerial, administrative, or higher-level responsibilities, the legal system allows the parties to determine their own membership rules, including dismissal, subject to certain overriding provisions under any relevant laws, such as the Shops and Establishments Act. Labor laws strictly regulate the termination or retrenchment of such non-managerial workers and supersede the terms of their employment agreements.
According to Mathur, these employment contracts typically contain two different kinds of termination clauses: one that allows the employee or employer to end the employment at any time, with or without cause, by giving notice; and another that allows the employer to end the employment for a specific reason, as specified in the contract if an employee commits a fault.
A corporation has the right to terminate an employee for violating the conditions of the employment contract under the “For Fault Termination” policy. This involves going against the business’s interests. In certain situations, the employment contract might not provide a specific notice time or termination process. The worker can be asked to quit their employment right away.
If the company wants to fire the employee for cost-cutting measures or any other reason when they are not at fault, the employment agreement frequently provides that the employee receives early notice (often 30 to 90 days). PV According to Ramana Murthy, Head of Employment and Labour Law Practice, Economic Laws Practice, the Industrial Disputes Act of 1947’s definition of “non-worker” states that an employee’s services are only subject to the terms of the applicable employment contract (ELP).
If an employer intends to terminate the employment of such an employee, they may do so by following the terms set out in the employment contract and applying the relevant clause. The employer may decide to terminate an employee’s employment, for instance, by giving the appropriate amount of notice or by paying wages in its place. This word, “termination simpliciter,” or “termination without mentioning any cause at all,” is widely used by Indian corporations to terminate employees.
According to Mathur, the termination clause in employment contracts (with managerial, white-collar, or higher-profile positions) typically provides that the employer may avoid the need to provide advance notice to the employee by paying salary and other benefits following the agreement instead of the notice.
Additionally, if the company covered by the Industrial Disputes Act has employed 100 or more workers every working day for the previous 12 months, consent from the government is required before terminating personnel. The statute mandates that a business or facility give the reason for termination. However, the act would not apply to workers who do not meet the act’s definition of a worker or to employers who do not meet the criteria for an industrial establishment.
What options does an ex-employee have?
When an employment contract governs the terms of employment, Mathur continues, “an employee who is unlawfully terminated may sue the business for acting in breach of the provisions of the agreement.” In a similar vein, if an employee is terminated without receiving the benefits to which they are entitled, they may claim those benefits. When a worker’s termination is subject to labor law regulations, the legislation itself provides the worker’s remedy.
Therefore, it is deemed a violation of the contract if a fired employee is given less notice or paid less money than what is specified in the employment contract. In such a situation, an employee may file a lawsuit against the business for violation of the employment contract.
Pioneer Legal’s Jain states: “In cases involving blue-collar workers, the labor courts often handle breaches of employment contracts.” However, a worker who has a signed employment contract may also file a lawsuit in civil court for breach of the agreement. Your place of employment will be used to determine the court’s jurisdiction.
Industrial Disputes Act, 1947
As previously stated, if the employment contract is silent on any matter, the laws governing that matter will apply. Typically, a person will fall under the Shops and Establishments Act or the Industrial Disputes Act of 1947. Since the Industrial Disputes Act is a national statute, the laws are the same across the board. If an employee meets the criteria of a “workman,” the Industrial Disputes Act will apply to them. The statute broadly defines a “workman” as a person who is not employed in an administrative or management position.
Before someone is qualified for protection under the Industrial Disputes Act, other conditions must be satisfied, even if they meet the description of “workman.” The variables include things like the industry, the type of job, and others. Retrenchment benefits are due to a fired employee covered by this legislation. Jain claims that for each year of employment that has been completed, 15 days of the final basic wage be paid as the layoff compensation.
This legislation combines and modifies a number of out-of-date labour laws. These labour laws have not yet been made public, though. These regulations successfully strike a compromise between protecting employees’ rights and the need for some corporation flexibility and transparency.
The Shops and Establishments Act
If an employee is not covered by the Industrial Disputes Act and the terms of the employment contract conflict with those of the Shops and Establishments Act, the employment contract terms will prevail. However, the workplace where the individual works should be covered by this regulation. Since each state has its Shops and Establishments Act, the location of the employee’s place of work would be relevant.
For instance, a worker for a multinational company with several offices in India who works in Hyderabad will be subject to the Shops and Establishments Act of Telangana. People should first review their employment agreements since the current legal framework is primitive and out of date. Jain asserts: “Everyone joining a firm should carefully review and comprehend the employment contract.” “Contractual provisions other than remuneration could be negotiated.”
Employees’ Termination Rights in India
A person’s employment is terminated when they leave their position and cease to work for their employer. Termination may be either voluntary—i.e., at the employee’s request or involuntary i.e., at the employer’s direction. Most voluntary terminations take the form of the employee’s resignation. Employee resignations should not be forced or acquired through deceit. unlawful employment termination; alternatively, we could argue that the employer has the right to fire or retrench an employee for any reason.
There isn’t a set protocol for firing employees in India. According to the provisions of the employment agreement between the employer and employee or following an Act, an employer may fire an employee. Wrongful termination may result in legal action against the employer. As workers are protected from being dismissed for actions that are against the law or public policy, they have the right to specific legal safeguards against wrongful termination.
An employee has rights upon termination that the employer is required to uphold. The employee has the legal right to sue the employer to have these rights protected when they are not. In this post, we will discuss the rights of dismissed employees to safeguard them from being exploited by their company.
EMPLOYEE RIGHTS AFTER EMPLOYMENT TERMINATION
Right to Receive a Notice of Employment Termination
Federal and state laws take precedence over contract clauses, so employers must abide by them when firing employees. The Delhi Shops and Establishments Act of 1954, which governs employment in Delhi, stipulates that if an employee leaves a company after working there for more than three months, they must give him at least 30 days’ notice or pay him instead of notice. If the employee’s termination is due to misbehavior, the employer is not required to provide notice to them. The employee has a chance to rationally defend himself in this situation.
The Maharashtra Shops and Establishments Act mandate that an employee who has been with the firm for more than a year get 30 days’ notice before their employment ends. The employer must provide at least 14 days’ notice before terminating an employee who has been with the organization for more than three months but less than a year.
Right to be heard
The employee has the right to a hearing before his employment is terminated. He must be given the chance to defend his stance and provide justification for why he shouldn’t be fired or sacked. Additionally, an employee must be given the rationale behind his discharge or dismissal when it occurs.
Natural justice’s guiding principles are likewise compatible with the demand for the right to be heard. Under this concept, the harmed party has the right to be heard. Employees can verify that the termination is not excessive in light of the offense by exercising their right to be heard.
Right to a severance payment
The employee has rights to certain payments that he is entitled to receive at the moment of termination of the employment contract with the employer. Severance pay is the name for such a payout. This covers the following payments:
- Paying the remaining money for days worked; payment of salary instead of notice;
- Cancellation of unused paid time off;
- Payment of a gratuity to an employee who has worked for more than five years following the provisions of the 1972 Gratuity Act;
- If an employee who has worked for more than a year is laid off, 50% of their earnings will be paid for a maximum of 45 days.
Payment of any additional compensation that the employer has agreed to make upon termination in accordance with corporate policy; payment of bonuses for employees who satisfied the requirements of the Payment of Bonus Act of 1965 and earned up to Rs. 10,000. The compensation mentioned above applies to blue-collar workers; however it differs for white-collar employees depending on business policy.
Right to request an investigation
An employee has the right to investigate a questionable and unjust termination. It is necessary to carefully review and properly analyze the facts and circumstances to decide if the employee has to be held accountable. Both employers and employees have the right to protection while entering into and being bound by an employment contract. The employee is covered by several post-termination rights in addition to the fundamental safeguards offered by several laws on the employee’s working conditions, working hours, maternity leave, etc.
White-collar employees are allowed to fend for themselves, but blue-collar employees are better off since their firing is controlled by rigid legislation. Therefore, the government must create strict rules that protect both employees and themselves from the employer’s exploitation.
edited and proofread by nikita sharma
