Labour Law & Hr Consultant
Tax & Labor Law Advocate
Harsh Shukla
Ceo And Md Of 3 Uk Based Mnc's
Man Management Functions
Usha Dcruz
Hr Manager
+2 Others

Sirs, Kindly clarify on what grounds a termination can be done. Can it be done if there is any loss in business. How should a termination letter to be preapared. Regards Usha
From India, New Delhi
Hi Usha,

There is a whole raft or reasons when considering the termination of someones employment.

However, your question is specifically on grounds of loss in business.

In this case, i suggest that you have a meeting with the individual(s) and explain to them that there has been a loss in business and that it is no longer viable for the company to continue with their employment.

Losing ones employment is very painful and stressful, therefore, you must ease that pain and stress.

At this meeting you should emphasis that the termination is NOT due to their performance and that should market conditions change you would be happy to hire them again. You should also discuss that by terminating; any future employer will regard that with some element of suspicion. Instead put to them that a resignation would better suit future employment prospects.

I assume that there will be a notice period. In which case you should allow them to fix and attend interviews, this is a minimal cost to the company but you will be seen as a caring employer by those who are still with you.

I hope the above helps.



PS. please do share with the community how you eventually handled this situation.

From United Kingdom, Barrow
Fair and a consistent procedure where an employee can be terminated in terms of any business loss caused solely by him. Instigating to the fact that Human Resourcer should follow the necessary procedure that makes much easier --

Termination caused due to misrepresentation occurs -- when an employer discovers the employee made any such fraudulent statements or deceitful contentions regarding a company that he is representing (Client/Customer) or to his qualifications for a job. Distortions pertain majorily to falsification of an employment either in job or applying to any job.

If you see in most of the applications; an employer requests to sign the statement which indicates - All the above information provided by the candidate is true the best of his/her knowledge. While in some companies the employer gives a formal application (mostly seen in BPO's & MNC's) that need employees signature which implies information provided by the candidate is true & can be verified at any given point of time.

Therefore, evident to the grounds that employee is at guilt due to his slipshod behaviour which caused employer's business loss should be ammended with proves to support your cause in terminating employee. Also the process before terminating any employee requires a thorough investigation on the position/situation; with discrete knowledge of managements understanding HR has to conduct termination procedure.

Note: Remember a counselling is compulsory to an employee before terminating in case he proves to be unexcused.

From India, Visakhapatnam
Termination can take place for variety of reasons inluding loss of business because you may need to downsize to make the unit vibale or close one section of the unit etc.However all such terminations may attract the provisions of retrenchment under Sec.2(oo) or closure under section 25 (FFF) of the Industrial Dsiputes Act 1947. You need to comply with the procedure laid down under the provisions of Sec.25-F or sec.25FFF of teh said Act by paying retrenchment compensation or closer compensation.

From India, Mumbai
Your request for clarification from the members is not clear, even though, the following may be of use/help to you.

Termination is implemented on the following reasons:-

Continuous Insubordination

Continuous Malpractice


Strained Inter-personal relations

Attitude Problems

Misappropriation of Company's funds

Using unparliamentary words

Fraudulent Behaviour

Continuous unauthorised absence

Submitting forged bills for reimbursement

Continuous personal usage of company's property/equipment for personal use, unauthorisedly

Sexual Offences

Stealing/Pilferage in the company's premises

But terminating an employee for the business laws would never be resulted in termination. If proved through performance analysis on a continuous evaluation, he/she could be transferred to any other departments/functions, which should be with the consent of the employee concerned. At the first instance if the termination for business loss leading you to unfair trade/business practice. One person cannot be responsible for business loss in an organization, which one should understand. If actions are not initiated prudently, it would invite hardship to you in the company.

Best wishes,


From India, Pune
Dear Dr. Sundaresan,
You make an interesting observation.
However, are you saying that termination of employment on grounds of loss in business "CANNOT" or "SHOULD" not occur?
I agree that whilst such a loss cannot be the responsibility of just one individual; the fact remains that a loss has occurred.
Surely, if a business in difficulty is to survive, and the company trims it's highest cost i.e. the wages bill, it stands a chance of continuing to trade until market conditions improve. (Of course, i accept that there may be other costs the company is able to trim, but that is not the issue raised). By simply moving the personnel to a different department, does not help.
Would this not create further hardship to the business, perhaps leading to its closure?
I look forward to your thoughts.

From United Kingdom, Barrow
Termination of services of an employee governs with the T&C of the appointment order.However in private sector the employee concerned is orally informed to quite the job within a reasonable time say 3 to 1 month.If he is not quitting than a prescribed procedure is required to be followed to avoid the occasion of litigation.The procedure is framing a distinct charge sheet, serving the same to him giving 15 days period to submit his written statement of defense, if employer is not satisfied then an inquiry officer to inquire the facts and a presenting officer to put up evidence and witnesses, is appointed.After completion of inquiry, the inquiry officer submit his findings to the employer for taking decision to terminate or to continue the concerned employee.
From India, Bhopal
Dear Usha,

Broadly speaking termination of the services of an employee can be resorted to by any one of the following three kinds viz., (1) Discharge (2) Dismissal and (3) Retrenchment.

1)DISCHARGE: This can be further classified as (a) Discharge Simpliciter and (b) Discharge on the ground of continued ill health.Discharge simpliciter is commomnly known as the termination of the services of an employee by the employer by giving notice or paying wages in lieu there of as required under the contract of employment.Since it is not punitive in character and no stigma attached to it, the discharged employee is entitled to all service benefits.However,it is not an absolute right enjoined upon an employer by the contract of employment and the court can set aside the order of discharge simpliciter if found mala fide.Therefore, exercise of this power should be just, fair and reasonable and should not be arbitrary. For example the services of a probationer can be terminated on the ground of not satisfactory performance within the probation period, if so mentioned in the contract of employment or in the Standing Orders.In any other case it has been held ultravires of the constitution by various courts.Discharge on the ground of continued ill health is purely on medical grounds n the so discharged employee is entitled to all service benefits.

2)DISMISSAL normally takes place on disciplinary grounds based on the omissions or commissions enumerated in the standing orders as misconduct.All the terminal benefits including gratuity at times stand forfeited depending upon the gravity of charges leveled n proved.

3)RETRENCHMENT HAS BEEN DEFINED U/S 2(OO) of the I.D Act,1947 as the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action except voluntary retirement, retirement on reaching the age of superannuation termination on a/c of non-renewal of the contract of employment on its expiry n termination on the ground of continued ill health. IN case of retrenchment , the employee is entitled to retrenchment compensation as detailed by Mr.Saikumar in addition to all other terminal benefits.

Regarding the second part of ur question , the answer is no.Depending upon the average no of workmen u employed in the preceding 12 months, u have to obtain prior permission from the appropriate Govt before resorting to retrenchment; if the no of workmen is 100 or above prior permission is mandatory. However, all the retrenched workmen are entitled retrenchment compensation @ 15 days last-drawn wages for every completed year of service. The process of retrenchment has to be according to seniority only n the retrenched employees have preference over re-employment if they so desire. .

From India, Salem
Dear Usha,

Your question of Termination is of negative nature. Ups and downs are part of business and HR people must be Human by nature. Termination can't be done on flimsy grounds. You can terminate an employee for disobedience, Gross negligence and Gross misconduct, you too can terminate services of an employee for Financial irregularities or manipulation in market or for harming the interests of Company by his unauthorized acts and omissions. But understand you cannot terminate services of an employee due to the reason that company's sale are going down due to other reasons. Please understand Hire & Fire facilities are not available under Indian Labor or workmen acts and the bill is still lying pending in parliament. Therefore if the Company is fair & honest it should follow standing orders and also terms of appointment and employees should be terminated by giving them proper reason or dues as per Appointment Letter. I feel if it's difficult for Company to bear salary bill they should bargain with employees and reach a settlement by paying them some notice period salary along with appreciation / Experience letters or ask they to submit the resignation letter as per the terms of settlement. No Company or HR head is above law and justice. All of their actions can be judged/challenged in Courts and even it's possible to file a class action against that Company. A HR expert is supposed to provide proper guidance and information to the management.

So before terminating any one just reconsideand think of the person who is being terminated.

I hope you will take my advise

From India, Delhi
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