Dear Experts,
We are a construction-based company in Bangalore. Due to Covid-19, we are experiencing a decline in business, and there are no further projects to assign to our employees.
I would like to inquire if, in the case of an underperforming or excess employee, we can utilize the termination clause against them.
What would be the legal implications, and could you please suggest the best practices in this situation?
Thank you.
From India, undefined
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We are a construction-based company in Bangalore. Due to Covid-19, we are experiencing a decline in business, and there are no further projects to assign to our employees.
I would like to inquire if, in the case of an underperforming or excess employee, we can utilize the termination clause against them.
What would be the legal implications, and could you please suggest the best practices in this situation?
Thank you.
From India, undefined
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Dear Chaithanya,
Performance issues are one among the various modes of termination of employment. In such cases, mostly the method of discharge simpliciter is adopted by the employers, which has the two-fold advantage of a non-stigmatic exit for the employee, thus not affecting his future employment prospects elsewhere, and the ease of eliminating an underperformer for the employer by simply adopting the exit clause of the contract of employment. However, the inherent danger of this simple method of termination is that it is as judicially questionable as the dismissal of an employee related to any behavioral issue. Therefore, it requires granting reasonable opportunities to the underperformer, such as placing him on a PIP and thoroughly documenting the employee's performance, the opportunities given for improvement, objective appraisals, and the absence of possible alternatives.
Redundancy is one of the reasons for retrenchment, which has to be strictly based on seniority in service, i.e., last come, first go, apart from strict compliance with the provisions of section 25-F of the IDA, 1947. In this method of termination, there is no room for pick and choose; otherwise, the retrenchment would be illegal and treated as void ab initio.
In the context of the COVID-19 Lockdown promulgated under the blanket powers vested with the Government of India as per the Disaster Management Act, 2005, companies/employers are obligated not to terminate employees, including contract employees, during the lockdown period. It is a punishable offense with imprisonment up to 6 months or two years with a fine under Section 188 of IPC or 51(b) of the DMA, 2005, respectively, as the case may be.
In my opinion, the best practice fitting the situation is to postpone the decision of terminating any underperformer or redundant employees for now.
From India, Salem
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6185Performance issues are one among the various modes of termination of employment. In such cases, mostly the method of discharge simpliciter is adopted by the employers, which has the two-fold advantage of a non-stigmatic exit for the employee, thus not affecting his future employment prospects elsewhere, and the ease of eliminating an underperformer for the employer by simply adopting the exit clause of the contract of employment. However, the inherent danger of this simple method of termination is that it is as judicially questionable as the dismissal of an employee related to any behavioral issue. Therefore, it requires granting reasonable opportunities to the underperformer, such as placing him on a PIP and thoroughly documenting the employee's performance, the opportunities given for improvement, objective appraisals, and the absence of possible alternatives.
Redundancy is one of the reasons for retrenchment, which has to be strictly based on seniority in service, i.e., last come, first go, apart from strict compliance with the provisions of section 25-F of the IDA, 1947. In this method of termination, there is no room for pick and choose; otherwise, the retrenchment would be illegal and treated as void ab initio.
In the context of the COVID-19 Lockdown promulgated under the blanket powers vested with the Government of India as per the Disaster Management Act, 2005, companies/employers are obligated not to terminate employees, including contract employees, during the lockdown period. It is a punishable offense with imprisonment up to 6 months or two years with a fine under Section 188 of IPC or 51(b) of the DMA, 2005, respectively, as the case may be.
In my opinion, the best practice fitting the situation is to postpone the decision of terminating any underperformer or redundant employees for now.
From India, Salem
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Dear Sir, thanks for the valuable suggestion. Krishna Chaitanya
From India, undefined
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From India, undefined
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Dear Friend,
You can terminate an employee on the grounds of work exhaustion in the company by paying the notice pay, but not on the grounds of non-performance. The Supreme Court stated that administrations across India should not prosecute employers who are unable to pay wages during the lockdown.
Thank you.
From India, Mumbai
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You can terminate an employee on the grounds of work exhaustion in the company by paying the notice pay, but not on the grounds of non-performance. The Supreme Court stated that administrations across India should not prosecute employers who are unable to pay wages during the lockdown.
Thank you.
From India, Mumbai
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Dear friend,
While I fully agree with Umakanthan's post on the subject, I would suggest that you please go through the following link: https://www.citehr.com/618965-act-em...ml#post2443377
From India, Aizawl
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While I fully agree with Umakanthan's post on the subject, I would suggest that you please go through the following link: https://www.citehr.com/618965-act-em...ml#post2443377
From India, Aizawl
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To further clarify the captioned matter, in a significant move, the Supreme Court yesterday (on Friday) passed an interim order stating that no coercive action should be taken against employers for not complying with the directions of the Ministry of Home Affairs (MHA) for full payment of wages to employees during the lockdown period.
The interim order will be in operation until the Central Government files a reply to the petitions challenging the direction passed by the MHA on March 29.
From India, Aizawl
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The interim order will be in operation until the Central Government files a reply to the petitions challenging the direction passed by the MHA on March 29.
From India, Aizawl
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