Dear Member,
The case of 'inefficiency' does not fall into the category of misconduct, and therefore, termination as punishment on account of misconduct is safely ruled out.
Secondly, if you consider the situation of retrenchment, then again, you will have to follow the process as given under the ID Act, i.e., First Come, Last Go.
I have not come across any case law in favor of or against the situation you have mentioned. However, you can simply use the provisions of your standing orders, if applicable to your establishment, or the terms and conditions of the appointment letter.
Regards,
Preetam Deshpande
From India, Mumbai
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133The case of 'inefficiency' does not fall into the category of misconduct, and therefore, termination as punishment on account of misconduct is safely ruled out.
Secondly, if you consider the situation of retrenchment, then again, you will have to follow the process as given under the ID Act, i.e., First Come, Last Go.
I have not come across any case law in favor of or against the situation you have mentioned. However, you can simply use the provisions of your standing orders, if applicable to your establishment, or the terms and conditions of the appointment letter.
Regards,
Preetam Deshpande
From India, Mumbai
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Hi Preetam,
I have another question. The standard terms and conditions of our employment contract state that an employee may be terminated by giving the appropriate notice period or salary in lieu of. Please note that this is not the exact language. I have come across a Supreme Court case that states that such terms and conditions may be arbitrary, and the court may not hold them as valid. Do you have any idea whether such standard contractual terms can be held void? Thanks
From India, Gurgaon
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I have another question. The standard terms and conditions of our employment contract state that an employee may be terminated by giving the appropriate notice period or salary in lieu of. Please note that this is not the exact language. I have come across a Supreme Court case that states that such terms and conditions may be arbitrary, and the court may not hold them as valid. Do you have any idea whether such standard contractual terms can be held void? Thanks
From India, Gurgaon
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Dear All,
The issue that the Learned Questioner faces is his desire to include "inefficiency" as a valid reason for the ultimate punishment of dismissal in his organization's separation policy, and he is seeking a judicial precedent to support this decision. In essence, he believes that hiring should not be done with the intention of firing. Furthermore, in our social interactions, whether significant or trivial, we cannot always rely on judicial precedents; what is crucial is to approach matters with wisdom. The rationale behind this is straightforward - humans are social beings, and just like animals, their behavior can be unpredictable. This unpredictability has led to numerous Case Laws emerging on similar subjects over time. Despite my efforts, I was unable to locate any relevant Case Laws on this matter. Therefore, I suggest that instead of seeking supportive Case Laws, the issue should be approached judiciously and impartially.
As Dinesh correctly pointed out, employment contracts are fundamentally contracts of performance. Both the employer and the employee are expected to deliver certain levels of performance. When there is a noticeable deficiency, appropriate corrective measures should be implemented, ensuring that these actions are morally, legally, empathetically, and equitably sound. Efficiency is a subjective term, making it challenging to define precisely. Inefficiency, on the other hand, is not necessarily the opposite of efficiency; rather, it signifies the lack of certain efficient attributes. Consequently, inefficiency alone is not deemed misconduct. However, an employee who consistently underperforms and becomes a liability cannot be retained in the organization. In such cases, if the departure is voluntary, through actions like self-initiated resignation or voluntary retirement schemes, the transition can be smooth. If the separation is initiated by the employer, dismissal solely due to inefficiency is not an appropriate punitive measure because the employer-employee relationship transcends the terms of the employment contract. Therefore, any separation, even if not celebratory, should be conducted with respect. This underlines the argument against subjective terminations based on fixed notice periods or monetary compensations in place of due process, which are deemed untenable and unjust.
Hence, the question of how an employer should handle such situations remains unanswered. In my view, the best approach would be to first attempt to improve the employee's performance through positive interventions suggested by colleagues. If no progress is observed, consider reassigning responsibilities to align with the employee's capabilities. Similar to the aging process, inefficiency typically develops gradually rather than abruptly.
From India, Salem
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The issue that the Learned Questioner faces is his desire to include "inefficiency" as a valid reason for the ultimate punishment of dismissal in his organization's separation policy, and he is seeking a judicial precedent to support this decision. In essence, he believes that hiring should not be done with the intention of firing. Furthermore, in our social interactions, whether significant or trivial, we cannot always rely on judicial precedents; what is crucial is to approach matters with wisdom. The rationale behind this is straightforward - humans are social beings, and just like animals, their behavior can be unpredictable. This unpredictability has led to numerous Case Laws emerging on similar subjects over time. Despite my efforts, I was unable to locate any relevant Case Laws on this matter. Therefore, I suggest that instead of seeking supportive Case Laws, the issue should be approached judiciously and impartially.
As Dinesh correctly pointed out, employment contracts are fundamentally contracts of performance. Both the employer and the employee are expected to deliver certain levels of performance. When there is a noticeable deficiency, appropriate corrective measures should be implemented, ensuring that these actions are morally, legally, empathetically, and equitably sound. Efficiency is a subjective term, making it challenging to define precisely. Inefficiency, on the other hand, is not necessarily the opposite of efficiency; rather, it signifies the lack of certain efficient attributes. Consequently, inefficiency alone is not deemed misconduct. However, an employee who consistently underperforms and becomes a liability cannot be retained in the organization. In such cases, if the departure is voluntary, through actions like self-initiated resignation or voluntary retirement schemes, the transition can be smooth. If the separation is initiated by the employer, dismissal solely due to inefficiency is not an appropriate punitive measure because the employer-employee relationship transcends the terms of the employment contract. Therefore, any separation, even if not celebratory, should be conducted with respect. This underlines the argument against subjective terminations based on fixed notice periods or monetary compensations in place of due process, which are deemed untenable and unjust.
Hence, the question of how an employer should handle such situations remains unanswered. In my view, the best approach would be to first attempt to improve the employee's performance through positive interventions suggested by colleagues. If no progress is observed, consider reassigning responsibilities to align with the employee's capabilities. Similar to the aging process, inefficiency typically develops gradually rather than abruptly.
From India, Salem
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Hi Umakanthan.M,
Thanks for your response. It does bring in a degree of clarity. Like I stated earlier, my organization is not in the process of firing anyone for inefficiency. We need to have a policy in place in case there is a situation where an employee becomes inefficient. In that case, can his/her services be terminated under retrenchment laws, or would it amount to misconduct? I have now managed to gather sufficient case law which states that inefficiency does not amount to misconduct. However, a deliberate go-slow attempt would be considered as misconduct. So far, I have also found articles on the internet which state that termination for inefficiency is not retrenchment. However, the articles do not provide any supporting case law.
In the light of all the answers I have received here and some more research, my query has now changed to "whether a termination clause in the employment contract which states that employment can be terminated for any reason or without giving reason in lieu of either pay or notice can be held to be void." In terms of public entities, I have found case law which says that such clauses can be void if the process of natural justice is not followed. However, I am now stuck at finding a decision regarding private entities. Would appreciate any help with this regard.
From India, Gurgaon
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Thanks for your response. It does bring in a degree of clarity. Like I stated earlier, my organization is not in the process of firing anyone for inefficiency. We need to have a policy in place in case there is a situation where an employee becomes inefficient. In that case, can his/her services be terminated under retrenchment laws, or would it amount to misconduct? I have now managed to gather sufficient case law which states that inefficiency does not amount to misconduct. However, a deliberate go-slow attempt would be considered as misconduct. So far, I have also found articles on the internet which state that termination for inefficiency is not retrenchment. However, the articles do not provide any supporting case law.
In the light of all the answers I have received here and some more research, my query has now changed to "whether a termination clause in the employment contract which states that employment can be terminated for any reason or without giving reason in lieu of either pay or notice can be held to be void." In terms of public entities, I have found case law which says that such clauses can be void if the process of natural justice is not followed. However, I am now stuck at finding a decision regarding private entities. Would appreciate any help with this regard.
From India, Gurgaon
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Dear Mr. Umakanthan,
I profoundly appreciate your comments. You have brought out the facts of the matter beautifully and succinctly.
No doubt, such brilliant and learned comments come out of your vast experience as a former Labour Commissioner and Presiding Officer of labour courts and tribunals.
The members have been expressing the same views, viz. "the contract of employment is a contract of performance"; "Efficiency is a relative term; hence, we cannot define it precisely. But inefficiency cannot be its antonym because it simply brings out the absence of certain attributes of efficiency. That's why inefficiency is not held to be misconduct," etc.
And also, the very fact that RETRENCHMENT by definition does not include any performance issues, and that the term Retrenchment itself means cessation of service in SITUATIONS WHICH ARE "NON-DISCIPLINARY"; thus, do not deal with Performance or Efficiency issues.
No wonder our learned member was unable to find any reference connecting or linking Retrenchment and Inefficiency, despite her enduring long effort.
Your kind and wise words remind me of the famous story about Emperor Akbar's court, wherein an astrologer was put to death for saying, "All family members of the emperor will die before his eyes," and another was rewarded for saying, "You will live a long life, longer than any of your relatives."
Thanks again for putting up the matter so nicely and explaining the issues involved in a manner that is pleasing, yet factual.
Warm regards.
From India, Delhi
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I profoundly appreciate your comments. You have brought out the facts of the matter beautifully and succinctly.
No doubt, such brilliant and learned comments come out of your vast experience as a former Labour Commissioner and Presiding Officer of labour courts and tribunals.
The members have been expressing the same views, viz. "the contract of employment is a contract of performance"; "Efficiency is a relative term; hence, we cannot define it precisely. But inefficiency cannot be its antonym because it simply brings out the absence of certain attributes of efficiency. That's why inefficiency is not held to be misconduct," etc.
And also, the very fact that RETRENCHMENT by definition does not include any performance issues, and that the term Retrenchment itself means cessation of service in SITUATIONS WHICH ARE "NON-DISCIPLINARY"; thus, do not deal with Performance or Efficiency issues.
No wonder our learned member was unable to find any reference connecting or linking Retrenchment and Inefficiency, despite her enduring long effort.
Your kind and wise words remind me of the famous story about Emperor Akbar's court, wherein an astrologer was put to death for saying, "All family members of the emperor will die before his eyes," and another was rewarded for saying, "You will live a long life, longer than any of your relatives."
Thanks again for putting up the matter so nicely and explaining the issues involved in a manner that is pleasing, yet factual.
Warm regards.
From India, Delhi
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Termination-emp loyment_563.pdf
Termination letter.doc