Hello Esteemed HR Professionals
I was a CXO in my previous company. My employment was terminated after 4.1 years and no reason was given for the termination. The employment letter says that "either party (employee or employer) can give 2 months notice to terminate employment". The termination letter said that my services are no longer required.
I later learned that the company had hired another CXO and assigned my work to him. It was clear that the company required the services I was providing. The company was and is doing financially very well. There were no layoffs. They pressed me real hard to resign but I refused to do so. I asked them to send me a termination letter so that I can challenge my termination in the court. I wrote to my boss to investigate the matter but he did not respond. My boss had previously asked me not to leave (I had a good job offer from another company) and said that they will give me ESOPs. So ESOPs were given but they became nullified because of termination. There were some serious irregularities I found that I pointed to my boss. He said he cannot do anything about them!!
From your experience and if you have knowledge of court rulings, is such a clause valid in the contract? If yes, then what is the need for a Termination with cause? Every company can just ask people to go saying your services are no longer needed. Can ESOPs be cancelled for Termination without Cause? This seems rather bizarre. The ESOP agreement says that ESOPs can be cancelled if termination is for misconduct etc (meaning for a reason) or for "any other reason". But Termination without Cause is not a reason.
Kindly share your opinion from experience. I would be quite obliged.
cheers
From India, Gurgaon
I was a CXO in my previous company. My employment was terminated after 4.1 years and no reason was given for the termination. The employment letter says that "either party (employee or employer) can give 2 months notice to terminate employment". The termination letter said that my services are no longer required.
I later learned that the company had hired another CXO and assigned my work to him. It was clear that the company required the services I was providing. The company was and is doing financially very well. There were no layoffs. They pressed me real hard to resign but I refused to do so. I asked them to send me a termination letter so that I can challenge my termination in the court. I wrote to my boss to investigate the matter but he did not respond. My boss had previously asked me not to leave (I had a good job offer from another company) and said that they will give me ESOPs. So ESOPs were given but they became nullified because of termination. There were some serious irregularities I found that I pointed to my boss. He said he cannot do anything about them!!
From your experience and if you have knowledge of court rulings, is such a clause valid in the contract? If yes, then what is the need for a Termination with cause? Every company can just ask people to go saying your services are no longer needed. Can ESOPs be cancelled for Termination without Cause? This seems rather bizarre. The ESOP agreement says that ESOPs can be cancelled if termination is for misconduct etc (meaning for a reason) or for "any other reason". But Termination without Cause is not a reason.
Kindly share your opinion from experience. I would be quite obliged.
cheers
From India, Gurgaon
Dear member,
What happened with you is unfortunate. Your termination shows how management does not differentiate between a CXO level and an ordinary employee. We, the members of this forum, understand the pain of an unceremonious exit that you are required to endure. We empathise with you.
Anyway, now your separation is over. Since you have received a letter stating "your services are no longer required," you can send the letter to the MD asking for payment in place of the notice. In your letter, please quote the exact clause of the appointment letter that states "either party can give 2 months' notice to terminate employment". Send the hard copy of the letter by the Speed Post. Preserve the receipt from the post office. Upon delivery of the letter, download its receipt and preserve the hard copy.
If the reply from the previous company is not received, or if the reply is not satisfactory, then send a reminder but follow the same procedure as followed earlier.
Please note that hereafter all the correspondence should be done in hard copy only. This is because generating the material evidence is of utmost importance. However, after despatching the letter, you may scan your file copy along with the receipt from the post office and send it by email. The email communication could be supplementary.
Please keep the tone of the letter polite. Whatever injustice you might have suffered, do not vent your frustration in the letter. Expressing frustration is inconsequential now, and it will divert attention from the objective of sending the letter.
By chance, if the management responds but wishes to reduce the notice period payment, then it is your call to accept the proposal or not. My personal opinion is to accept it and close the matter.
If the management remains impervious to your pleas, then you are free to send the lawyer's notice. From there, a course of litigation will start. The lawyer will guide you further anyway.
The appointment letter is a contract between an employer and an employee. Therefore, more than choosing a lawyer who handles labour law cases, please choose someone who has handled cases under the provisions of the Indian Contract Act, 1872.
Please keep the draft of the letter ready. In the meantime, wait for the other senior members of this forum for their opinions.
Thanks,
Dinesh Divekar
From India, Bangalore
7884What happened with you is unfortunate. Your termination shows how management does not differentiate between a CXO level and an ordinary employee. We, the members of this forum, understand the pain of an unceremonious exit that you are required to endure. We empathise with you.
Anyway, now your separation is over. Since you have received a letter stating "your services are no longer required," you can send the letter to the MD asking for payment in place of the notice. In your letter, please quote the exact clause of the appointment letter that states "either party can give 2 months' notice to terminate employment". Send the hard copy of the letter by the Speed Post. Preserve the receipt from the post office. Upon delivery of the letter, download its receipt and preserve the hard copy.
If the reply from the previous company is not received, or if the reply is not satisfactory, then send a reminder but follow the same procedure as followed earlier.
Please note that hereafter all the correspondence should be done in hard copy only. This is because generating the material evidence is of utmost importance. However, after despatching the letter, you may scan your file copy along with the receipt from the post office and send it by email. The email communication could be supplementary.
Please keep the tone of the letter polite. Whatever injustice you might have suffered, do not vent your frustration in the letter. Expressing frustration is inconsequential now, and it will divert attention from the objective of sending the letter.
By chance, if the management responds but wishes to reduce the notice period payment, then it is your call to accept the proposal or not. My personal opinion is to accept it and close the matter.
If the management remains impervious to your pleas, then you are free to send the lawyer's notice. From there, a course of litigation will start. The lawyer will guide you further anyway.
The appointment letter is a contract between an employer and an employee. Therefore, more than choosing a lawyer who handles labour law cases, please choose someone who has handled cases under the provisions of the Indian Contract Act, 1872.
Please keep the draft of the letter ready. In the meantime, wait for the other senior members of this forum for their opinions.
Thanks,
Dinesh Divekar
From India, Bangalore
Dear Dinesh ji
Thanks for the response. I want to mention that I have received the salary during the notice period and the bonus for the previous year.
My question is around the Bad Faith in which the employment was terminated. The employer followed a Bait and Switch strategy to keep on board till it's DRHP was approved.
The employer did not investigate my complaint against the CFO. They lied to SEBI stating that I had resigned whereas I did not.
I am going for litigation and I want to know if no-cause clause will hold if the employer has acted in a deceitful manner, and had lied to SEBI in DRHP. Also, when it did not investigate a complaint against the CFO and his team.
Will the court consider it unethical and professionally immoral to terminate employment esp when I have been employed for 4 years and where my services are still needed? Is it ok to first give ESOPs and then take them away for no cause?
I am using them for the financial damage that they have caused me.
From India, Gurgaon
Thanks for the response. I want to mention that I have received the salary during the notice period and the bonus for the previous year.
My question is around the Bad Faith in which the employment was terminated. The employer followed a Bait and Switch strategy to keep on board till it's DRHP was approved.
The employer did not investigate my complaint against the CFO. They lied to SEBI stating that I had resigned whereas I did not.
I am going for litigation and I want to know if no-cause clause will hold if the employer has acted in a deceitful manner, and had lied to SEBI in DRHP. Also, when it did not investigate a complaint against the CFO and his team.
Will the court consider it unethical and professionally immoral to terminate employment esp when I have been employed for 4 years and where my services are still needed? Is it ok to first give ESOPs and then take them away for no cause?
I am using them for the financial damage that they have caused me.
From India, Gurgaon
Dear member,
Your issue is the sudden discontinuation of your services. You attribute the cause of your termination to the CFO's financial irregularities you brought to the notice of the management. Rather than investigating the irregularities, they chose to discontinue your services.
However, the question is, do you have incontrovertible material evidence that the CFO did commit irregularities? Now, you are out of a job. Even if the irregularities did take place, then how will you prove it?
Before terminating the services of an employee, it is important to conduct a domestic enquiry. If not a domestic enquiry, then at least a show-cause notice should be served to the defaulting employee. But for the C-suite employees, this procedure may not be followed. However, if you are aggrieved, then you can very well challenge the termination. Since you were a very senior employee, you cannot approach the labour court. The case will have to be filed in the civil court. The case could drag on for years or even decades. Do you have the patience to make court visits for a long time? Even if the verdict is in your favour, there is no guarantee for the restoration of your employment by the court. If you can prove that you were unemployed because of the sudden discontinuation of employment, the court may agree to the payment of back wages.
One more remedy is to write a letter to SEBI, bringing to their notice financial irregularities. While SEBI may investigate them and take suitable action against the company, there is no guarantee that they will ask the company to restore your employment.
Thanks,
Dinesh Divekar
From India, Bangalore
Your issue is the sudden discontinuation of your services. You attribute the cause of your termination to the CFO's financial irregularities you brought to the notice of the management. Rather than investigating the irregularities, they chose to discontinue your services.
However, the question is, do you have incontrovertible material evidence that the CFO did commit irregularities? Now, you are out of a job. Even if the irregularities did take place, then how will you prove it?
Before terminating the services of an employee, it is important to conduct a domestic enquiry. If not a domestic enquiry, then at least a show-cause notice should be served to the defaulting employee. But for the C-suite employees, this procedure may not be followed. However, if you are aggrieved, then you can very well challenge the termination. Since you were a very senior employee, you cannot approach the labour court. The case will have to be filed in the civil court. The case could drag on for years or even decades. Do you have the patience to make court visits for a long time? Even if the verdict is in your favour, there is no guarantee for the restoration of your employment by the court. If you can prove that you were unemployed because of the sudden discontinuation of employment, the court may agree to the payment of back wages.
One more remedy is to write a letter to SEBI, bringing to their notice financial irregularities. While SEBI may investigate them and take suitable action against the company, there is no guarantee that they will ask the company to restore your employment.
Thanks,
Dinesh Divekar
From India, Bangalore
Hi,
Added to the valid points of our Senior Member Mr.Dinesh Divekar I just want to highlight the following:
In any Contract of Employment there will be a separation clause. In your employment contract your Employer clearly mentioned " either party (employee or employer) can give 2 months notice to terminate employment" which means that either party have the right to cancel the contract at any point of contract without assigning any reasons but only thing is to fulfill the notice period clause which is 2 months in your case. This is not termination on the grounds of misconduct hence the question of domestic enquiry does not arise here. Now your rights in this case is limited to whether employer gave you 2 months notice period or salary in lieu of notice period only. If 2 months notice period or 2 months salary in lieu of the same is not paid then you can challenge the decision of your employer in a civil court. As you know such civil proceedings will be a time consuming process wherein you will be expected to spend money for Advocate. Even if you succeed Court will direct your employer to pay you two months salary (or notice) may be with interest ? Obviously when you challenge your Employer legally they will defend their side through their legal cell. So personally I won't suggest for this option.
With regard to cancellation of ESOPs it depends on the employment terms. As it is mentioned in your employment contract that "ESOPs can be cancelled is termination is for misconduct or for "any other reason" employer reserves their right to cancel the ESOP upon termination of contract for whatsoever reason it may be.
From India, Madras
Added to the valid points of our Senior Member Mr.Dinesh Divekar I just want to highlight the following:
In any Contract of Employment there will be a separation clause. In your employment contract your Employer clearly mentioned " either party (employee or employer) can give 2 months notice to terminate employment" which means that either party have the right to cancel the contract at any point of contract without assigning any reasons but only thing is to fulfill the notice period clause which is 2 months in your case. This is not termination on the grounds of misconduct hence the question of domestic enquiry does not arise here. Now your rights in this case is limited to whether employer gave you 2 months notice period or salary in lieu of notice period only. If 2 months notice period or 2 months salary in lieu of the same is not paid then you can challenge the decision of your employer in a civil court. As you know such civil proceedings will be a time consuming process wherein you will be expected to spend money for Advocate. Even if you succeed Court will direct your employer to pay you two months salary (or notice) may be with interest ? Obviously when you challenge your Employer legally they will defend their side through their legal cell. So personally I won't suggest for this option.
With regard to cancellation of ESOPs it depends on the employment terms. As it is mentioned in your employment contract that "ESOPs can be cancelled is termination is for misconduct or for "any other reason" employer reserves their right to cancel the ESOP upon termination of contract for whatsoever reason it may be.
From India, Madras
I think the issue here is not of bad faith termination of employment, but of Violation of SEBI regulations, corporate governance and fraud in a company going public.
I think SEBI has a grevience process in which you can go and report your findings. MCA, ROC also have such a mechanism that is now very active. You need to look into those. Also, you may choose to report it officially to the Merchant Banker handling the IPO / FPO, if you think they are reputed enough to take the right steps after that.
But you need to speak to your lawyers and think carefully.
Once this matter of dispute comes out into public, you will find it difficult to get another job because promotors and boards will not trust you not to go against them.
On the other hand, it may be a legal requirement for you to report the fraud in a public company to Finance Ministry. Please speak to anyone you know in the top accounting firms to know more on this matter.
From India, Mumbai
I think SEBI has a grevience process in which you can go and report your findings. MCA, ROC also have such a mechanism that is now very active. You need to look into those. Also, you may choose to report it officially to the Merchant Banker handling the IPO / FPO, if you think they are reputed enough to take the right steps after that.
But you need to speak to your lawyers and think carefully.
Once this matter of dispute comes out into public, you will find it difficult to get another job because promotors and boards will not trust you not to go against them.
On the other hand, it may be a legal requirement for you to report the fraud in a public company to Finance Ministry. Please speak to anyone you know in the top accounting firms to know more on this matter.
From India, Mumbai
Thank you experts for taking the time to look into my situation!
If the matter of dispute comes out in public then the company should also worry about it. Its reputation is also at risk, and its stock may also be impacted by the news of the lawsuit around unfair termination and financial irregularities. For this reason, I am hoping an out of court settlement can be arrived at.
Is the contract the final say in my case, or will the authorities find the company's action suspicious? Does it not matter that the employer made false promises resulting in serious financial losses? Does it not matter that my termination is the result of my whistle blowing activity? I believe the court will view this as an unethical and illegal practice and may not hold the "no-cause clause" valid.
A no-cause clause would be valid if everything else is normal, but in my case lot of things were not normal and more than enough to raise eyebrows.
I am still not clear whether "no-cause termination" means "any other reason". No cause should mean no reason. If yes, then my ESOPs cannot be taken away.
I am not looking to get reinstated. I have another job (and I have informed my boss about the actions I plan to take) but I had to take significant salary cut ( and no ESOPs). I want TBO to pay for the financial losses, and for that I am challenging the termination.
From India, Gurgaon
If the matter of dispute comes out in public then the company should also worry about it. Its reputation is also at risk, and its stock may also be impacted by the news of the lawsuit around unfair termination and financial irregularities. For this reason, I am hoping an out of court settlement can be arrived at.
Is the contract the final say in my case, or will the authorities find the company's action suspicious? Does it not matter that the employer made false promises resulting in serious financial losses? Does it not matter that my termination is the result of my whistle blowing activity? I believe the court will view this as an unethical and illegal practice and may not hold the "no-cause clause" valid.
A no-cause clause would be valid if everything else is normal, but in my case lot of things were not normal and more than enough to raise eyebrows.
I am still not clear whether "no-cause termination" means "any other reason". No cause should mean no reason. If yes, then my ESOPs cannot be taken away.
I am not looking to get reinstated. I have another job (and I have informed my boss about the actions I plan to take) but I had to take significant salary cut ( and no ESOPs). I want TBO to pay for the financial losses, and for that I am challenging the termination.
From India, Gurgaon
In absence of full information, it is difficult to give the correct suggestions. You have been vague in all your posts. I can understand that since it is confidential matters, but it impact judgement of an external person. So I suggest you take the help of the right professional to whom you can disclose all the facts.
Still with reference to your points :
"If the matter of dispute comes out in public then the company should also worry about it. Its reputation is also at risk, and its stock may also be impacted by the news of the lawsuit around unfair termination and financial irregularities. For this reason, I am hoping an out of court settlement can be arrived at."
The company will probably not care. Even ones like Wipro and Infosys have had cases filed against them. if your entire intent is to make money from out of court settlement, I cannot comment on how successful you will be.
"Is the contract the final say in my case, or will the authorities find the company's action suspicious?"
If you file a compliant with the relevant authorities they will be interested, provided you have evidence. Else, they dont care on why you were fired as long as it was not affecting any activities they were supervising / responsible for.
"Does it not matter that the employer made false promises resulting in serious financial losses?"
It matters to no one, even if it was in writing. They asked you to stay, you were stupid enough to do so. Now they no longer want you. They can claim your work quality is not up to the mark now and there are better suited persons. The court will not force them to keep employed a CXO who the company does not trust or believe is right for them.
"Does it not matter that my termination is the result of my whistle blowing activity? I believe the court will view this as an unethical and illegal practice and may not hold the "no-cause clause" valid."
Whistle blower protection is an American / European concept. If your company is American or European, their laws will protect you. Here in india, you can always go to the authorities, but they will not protect your job for it.
"A no-cause clause would be valid if everything else is normal, but in my case lot of things were not normal and more than enough to raise eyebrows. I am still not clear whether "no-cause termination" means "any other reason". No cause should mean no reason. If yes, then my ESOPs cannot be taken away."
The company does not need a cause to remove someone they do not trust is right for them. That is enough. You are not at worker level where you will be protected by the labour laws. ESOP is driven by the ESOP Terms. if that provides it being taken away on termination, the clause will apply. For you, when they asked you to resign you should have done that, and negotiated to keep your ESOP and dignity. Your allegations against the company will be taken up by a different forum which will rarely involve protecting your employment.
You would be looking for a 10-15 year court battle. I hope you provided funds for it. And I am surprised your new employer is ok with your case against previous employer. If so, you have found a very good employer in deed (or you have exceptional skills that is in demand)
From India, Mumbai
Still with reference to your points :
"If the matter of dispute comes out in public then the company should also worry about it. Its reputation is also at risk, and its stock may also be impacted by the news of the lawsuit around unfair termination and financial irregularities. For this reason, I am hoping an out of court settlement can be arrived at."
The company will probably not care. Even ones like Wipro and Infosys have had cases filed against them. if your entire intent is to make money from out of court settlement, I cannot comment on how successful you will be.
"Is the contract the final say in my case, or will the authorities find the company's action suspicious?"
If you file a compliant with the relevant authorities they will be interested, provided you have evidence. Else, they dont care on why you were fired as long as it was not affecting any activities they were supervising / responsible for.
"Does it not matter that the employer made false promises resulting in serious financial losses?"
It matters to no one, even if it was in writing. They asked you to stay, you were stupid enough to do so. Now they no longer want you. They can claim your work quality is not up to the mark now and there are better suited persons. The court will not force them to keep employed a CXO who the company does not trust or believe is right for them.
"Does it not matter that my termination is the result of my whistle blowing activity? I believe the court will view this as an unethical and illegal practice and may not hold the "no-cause clause" valid."
Whistle blower protection is an American / European concept. If your company is American or European, their laws will protect you. Here in india, you can always go to the authorities, but they will not protect your job for it.
"A no-cause clause would be valid if everything else is normal, but in my case lot of things were not normal and more than enough to raise eyebrows. I am still not clear whether "no-cause termination" means "any other reason". No cause should mean no reason. If yes, then my ESOPs cannot be taken away."
The company does not need a cause to remove someone they do not trust is right for them. That is enough. You are not at worker level where you will be protected by the labour laws. ESOP is driven by the ESOP Terms. if that provides it being taken away on termination, the clause will apply. For you, when they asked you to resign you should have done that, and negotiated to keep your ESOP and dignity. Your allegations against the company will be taken up by a different forum which will rarely involve protecting your employment.
You would be looking for a 10-15 year court battle. I hope you provided funds for it. And I am surprised your new employer is ok with your case against previous employer. If so, you have found a very good employer in deed (or you have exceptional skills that is in demand)
From India, Mumbai
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