My dad is running a small business with 3 permanent employees. We are registered under shops and establishments office. Its a proprietorship. All 3 employees are about 20 plus years old in the organisation.
We are having issues with one of the employees as it is getting more and more difficult to get work done from him. Please advice if we sack him or ask him to leave what are the financial implications that we should foresee in terms of gratuity, retrenchment etc. If they go to a union for help what is the maximum amount we need to account for. Salaries of all the three are between 9 and 9500. We do not intend to shut the operations but feel that in the process of dealing with one, might provoke the others to quit as well.

From India, Mumbai
Retrenchment would be last come first go basis i.e. the person who was employed last has to go first.
Retrenchment compensation would be 15 days salary for every completed year of service.
Gratuity is not payable since total number of employees is below 10.

From India, Kolkata

Section 66: Notice of termination of service

No employer shall dispense with the services of an employee who has been in his [continuous employment] -

a) for not less than a year, without giving such person at least thirty days notice in writing, or wages in lieu of such


b) for less than a year but more than three months, without giving such person at least fourteen days notice in

writing, or wages in lieu of such notice:

c) Provided that such notice shall not be necessary where the services of such employees are dispensed with for


[Explanation - For the purposes of this section, "misconduct" shall include -

a) absence from service without notice in writing or without sufficient reasons for seven days or more;

b) going on or abetting a strike in contravention of any law for the time being in force; and

c) causing damage to the property of his employer.

Having employed them for 20 years,try to tactfully remove them and even extra compensation to be paid do that and get rid of persons who are no longer amenable or whatever.Handle them with care and take advice of local lawyer who handles labour cases.

From India, Pune
You have three permanent employees. But what is the total number of employees working in your organisation? What type of a business is it?

In general, a small business of the size you are operating, does not need to worry about the legal impact of removing any person. You are not covered by industrial disputes act or by standing orders. You are therefore free to act in any manner so long as it is fair. Of course, the employee can always go to the labour commissioner more to the labour court. Many times do so, even if you have followed all the rules.

Since the person has worked with you for a long time, you should try and see how much compensation or severance package you can give him. Depending on the factory or an office, and with state you are being, you need to see the notice period. In general, for 30 days notice period would be enough. You can terminate him on immediate basis and give him 30 days salary. Graduating is not Babel. You have to give him a full and final settlement for his salary, noticed salary, bonus if any due to him.

If you are suspecting that he will go to the union, then you must be careful and understand what is the impact of and union action. Will it resulted in the closure of your business, does it affect the customers access to your business, we do not know any of the underlying facts and therefore will not be able to give you any concrete action. It's better you take help of a lawyer or labour consultant who can understand the matter in detail and guide you.

However, if you are suspecting others believe with him, perhaps your problem is in Management and handling of personal more than any legal issue.

From India, Mumbai
It is not correct to say that Industrial Dispute Act is not applicable to small establishment.It is applicable even if there is only one workmen.
You have to conduct enquiry and terminate the employee if found guilty.Or persuade him to submit a resignation.

From India, Thiruvananthapuram
What I actually meant to say is that the restrictive clauses preventing employers from removing employees without prior approval of the state government does not apply. Other parts regarding inquiry and natural justice, reasoned termination, etc does apply.

From India, Mumbai

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