Rights of Terminated Employees in India

Termination of employment is the departure of an employee from the job and the end of an employee’s job with the employer. Termination can be voluntary, i.e. upon the employee’s own will, or it may be involuntary, i.e. on the will of the employer.

Mostly voluntary termination of employment is in the form of resignation by the employee himself. Resignation by the employee should not be obtained through fraud or coercion. Involuntary termination of employment happens when the employer terminates the employment of an employee due to misconduct, discharge, or retrenchment.

In India, there is no standard procedure followed for the termination of employment of employees. An employer may terminate an employee as per the terms of the labour contract between the employer and employee or following the provision of an Act. An employer may be held responsible for wrongful termination. Employees have the right to certain legal protections against wrongful termination, as workers are protected from being fired for reasons that are against the law or public policy.

The employee has certain rights after his termination, which have to be fulfilled by the employer. The non-fulfilment of such rights empowers the employee to claim his right by suing the employer in a court of law.  In this article, we will discuss the rights of terminated employees so that they may be protected against exploitation by their employer.

Read More: Sending Legal Notice: Format and Procedure

RIGHTS OF EMPLOYEES POST TERMINATION OF EMPLOYMENT

Right to Receive a Notice for Termination of Employment

During the termination of employment, the employer needs to comply with federal and state laws because these laws supersede contract provisions. As per the state law in Delhi, The Delhi Shops and Establishments Act 1954 mandates that an employer can terminate an employee by giving him at least 30 days of notice or a salary in lieu of such notice provided that he has been with the corporation for more than three months. There is no need on the part of the employer to give notice to the employee if misconduct is the reason for termination. In this case, the employee has an opportunity to explain himself reasonably.

According to the Maharashtra Shops and Establishments Act, 30 days prior notice for termination of employment must be served by the employer to the employee who has worked with the company for more than a year. If an employee has worked with the company for more than three months but less than a year,  at least 14 days prior notice should be served by the employer.

Right to be Heard

The employee has the right to be heard against the termination of his employment.  He must be given an opportunity to explain his position and show cause as to why he should not be dismissed or discharged. Also, when an employee is discharged or dismissed, he must be provided with reasons for such discharge or dismissal.

The requirement of the right to be heard also goes hand in hand with the principles of natural justice. Under this principle, the aggrieved party has the right to be heard.  The right to be heard gives the employees an opportunity to ensure that the termination is not out of proportion in comparison with the offence.

Right to Sue By Reason Of Illegal or Unlawful Termination

An employee must be given just and reasonable cause for the termination of employment by the employer. It should be in consonance with the grounds mentioned by the statutes or by the employment contract. However, if there is found to be no just cause for the termination and is based on illegal grounds such as discrimination on the basis of religion, caste, gender, age,  disability, pregnancy, etc. then the employee can sue the employer on the grounds of illegal or unlawful termination of employment.

Right to Receive a Severance Pay

Upon termination of the employment contract with the employer, the employee has rights over certain payments, which he is entitled to receive at the time of termination. Such payment is known as severance pay. This includes the payment of the following:

• Payment of salary in lieu of notice;
• The unpaid salary for days worked ;
• Encashment of unused paid leave;
• Payment of gratuity to an employee who is employed for more than five years as provided for in the Gratuity Act, 1972;
• Payment of 50% of the employee’s wages for up to 45 days where an employee employed for more than 1 year is laid off;
• Compensation will be paid that will amount to 15 days average pay for every year of continuous service;
• Payment of bonus for those employees who worked for at least 30 days in a financial year and earned up to Rs.10,000 under the Payment of Bonus Act of 1965;
• Any other payment agreed to be paid on termination by the employer under the company policy.

The above-stated payment is applicable to a blue-collar employee and differs for a white-collar employee depending upon his company’s policy. 

Right To Have an Enquiry Conducted

An employee has the right to conduct an inquiry in case of improper and unjust termination. The facts and circumstances should be looked upon carefully and properly weighed to find the real fault on the part of the employee or if he has to be held responsible or not.

Read Also – The Payment of Bonus Act

Both the employers and the employees have the right to protect themselves while entering into a contract of employment and being bound by it.  Apart from the basic rights governed by various laws with respect to the employee’s working condition, working hours, maternity leave, etc., the employee is given protection in the form of certain rights post-termination also. However, the blue-collar employees are in a better position since their termination is governed by strict statutes, whereas the white-collar employees are left to fend for themselves. Thus, it is of utmost importance for the government to come up with stringent laws to provide protection to the employees as well against the vagary of the employer.