Can Acceptance Of Compensation Be Voluntary Termination?? - CiteHR
Psdhingra
Legal Analyst, Hrm
Mkjobhunt
Unit-human Resources
+4 Others

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if the employer gives wages in lieu of notice and the employee accepts it but later files a suit for wrongful termination, what can be done?? can the acceptance of compensation be termed as voluntary termination?? will such a suit be valid?? please help me.
No dear since the employee accepted it and must have taken a reliving and experience letter therefore such suit would not be valid and certainly it would not be considered a wrongful termination neither it can be termed as voluntary termination..
Dear Aporva.agarwal

I presume that the employer has not only given wages in lieu of notice but also had paid the retrenchment compensation due, calculated according to the provisions of the Industrial Disputes Act 1947. Your query is whether a worker who had received the notice or wages in lieu of notice can challenge his termination. This question was answered by the Honourable Supreme Court in the year 1964 itself. In Workmen of Subong Tea Estate vs Subong Tea Estate [1964 I L L J 333(341) the Honourable Supreme Court had held that "Even if the workmen received compensation subsequent to the order of retrenchment they will not be estopped from challenging the legality and validity of the order of retrenchment for there can be no estoppel against the statute". This judgment still has not been set aside. Therefore, in the case referred to by you, the worker can challenge the validity of the termination even after getting the notice pay and retrenchment compensation. If the retrenchment compensation had not been paid to the worker at the time of termination, the termination becomes illegal and could be set aside.

Dear Mr. Harikrishnan Suppose the terminated employee is not a workman and not covered by Industrial dispute act, then how the law would treat this case? regards, Kamal
Dear Mr.Kamal Prasoon Sinha
It depends on the terms of employment/contract of employment, that is the appointment letter. If based on the appointment letter, the employee could establish that the dismissal is wrongful/illegal he can seek a remedy. But he cannot have recourse to the Industrial Disputes Act, and has to approach a Civil Court for breach of contract. In the case of the (wrongful/illegal) retrenchment/dismissal of the worker covered by the provisions of the Industrial Disputes Act, the law itself provides safeguards and also the procedure to be followed before retrenching. Such statutory protection is not available to an individual who is not covered by the provisions of the Industrial Disputes Act. He can sue for breach of contract. The Court may not direct the employer to reinstate the individual, but may order damages.

Dear Apporva,
No case law is needed in this case, as your acceptance of compensation in lieu of notice period itself is your voluntary willingness to accept the decision of termination. Had you refused to accept the notice period salary/wages and filed a suit against the decision of the management or requested for stay order, only then your refusal to accept the decision of the management would have been indicated.

Dear Mr.Dhingra
The case pointed out by Ms.Apoorva is that the individual employee had accepted the wages in lieu of notice period and the issue raised is whether after accepting the wages in lieu of notice a suit could be filed. Of course under the Industrial Disputes Act a dispute should be raised and a suit cannot be filed. The decision of the Honourable Supreme Court is a direct decision on the issue raised by Ms.Apoorva. The Honourable Supreme Court had highlighted the legal principle that there cannot be an estoppel against a law. This principle had been followed by several High Courts and the Honourable Supreme Court itself while deciding cases under several labour laws.

hello all
nowhere apporva had mentioned that all the termination amount has been paid. she has only mentioned that salary in lieu of notice. we cannot presume things in the absence of specific mention of the other compensations and terms of letters.
normally in case of retrenchment, even though one accepts the payment, he is free to pursue his case for wrongful retrenchment.
if it is simple retrenchment (with out any stigma) the case is different, but with stigma attached, certainly one is free to file a case. in that case they hv to conduct domestic enquiry.
in the both the cases the case can b filed, but in the later case, the legal position is little strict
dr nagaraj

Dear Dr.Nagaraj

According to section 2(oo) of the Industrial Disputes Act 1947, the term "retrenchment" is defined as follows:

"retrenchment means the termination by the employer of the services of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include

(a) voluntary retirement of the workman or

(b) retirement of theworkman on reaching the age of superannuation if the contract of employment and of the workman concerned contains a stipulation in that behalf

(bb) termination of the service of the workman as a result of the non-renewal of the contract of employment between the employer and the workman concerned on its expiry or of such contract being terminated under a stipulation in that behalf contained therein or

(c) termination of the service of a workman on the ground of continued ill-health

In industrial law there are no categories of retrenchment. The Industrial Disputes Act 1947 does not classify retrenchment into simple retrenchment and stigma attached retrenchment so as to warrant different kinds of treatment by a judicial forum. The termination of the services of a workman for any reason whatsoever, excepting for those that are indicated as exceptions in section 2(oo), would amount to retrenchment.

I am interested to see this. I am posting from the United States and our laws are a little different. Some of the requirements have to do with Age, and the Older Worker's Act. Amongst other things, This allows an employee (in the US) certain protections if they sign a severance agreement that can but does not have to include compensation. Generally, employees won't sign something if they aren't given something in return so compensation is included. They have 21 days to decide to sign if they are over 40. In the case of a mass reduction in force (WARN) then it's 45 days for all workers. They will then have 7 days after signature to return any compensation and decide to sue. These are not considered a voluntary termination but most of the time they are not a termination with cause. Termination without cause for Lack of Work or a reduction in force is sometimes used for discharges that have performance issue overtones but I discourage that. If it walks like a duck, then it needs to be a duck. For executive terminations, there could be a settlement that occurs to defray potential legal liability.

In USA, while we do have certain laws, the ability for the employee to fight the termination and stay employed is very uneven. By then, the relationship has soured. Unless it is a true Title VII Civil Rights Act violation or Hostile Work Environment situation, it's very difficult for the employee to fight and win an "unfair" termination. Unfair doesn't mean illegal. Therefore, in this country, it's not really the best option for the employee to try to sue instead of taking the settlement so long as it isn't a violation of their civil rights. If it is, I would advise them to go to the EEOC or a Civil Rights Attorney. Does India have such a vehicle to assist employees? Thanks for letting me share.


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