Compensation In Case Of Retrenchment - CiteHR
Madhu.T.K
Industrial Relations And Labour Laws

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Hi,

I am currently employed in foreign FMCG company since the past two years. The company came to India in July 2014 and on 5th July 2016 they informed all the employees that the company is winding up its operations in India. all the employees have been asked to look for alternate jobs.The company is willing to pay everyone 3 months salary (as per the contract) + 1 month's salary as discretionary pay + Bonus + Cash out for shares. They have asked me not to come to work from August 1st onwards but said they will pay me my monthly salary for August in August and the F&F for Sep & Nov(discretionary pay + Leaves+ Shares) on Sep 30th. the bonus amount will be paid in Dec 2016.

Below are the questions i have:

1) What am i legally entitled to be paid as per the contract? (the notice period as per the contract is 3 months)
2) Should i wait till Sep 30th for my F&F if I am relieved from July 31st? And should i wait till 31st Dec for my bonus payment? I feel i need to be paid on 31st July if that is my last day
3) The share cash out which they are offering is for last year and not this year. Am i eligible for this year's share entitlements? (please keep in mind that the company's financial year is from October to September, which means i have already completed this year but they are not giving me the shares for this year)
4) Can i go to court asking for 1 years salary as severance? Ideally i was promised a career plan by the company and after giving 2 years to the company they are not doing anything extra other than the legal obligations.

Please advise

In my opinion what all are to be paid as per law have been offered to you. Therefore, even if you go legal, you will not get anything extra. One year salary as retrenchment benefit is practically impossible when your service with the company is very less. You cannot forget that when the company appointed you the company had a long vision and unfortunately that did not meet or the company is of the impression that that vision cannot be met and that is why the company is closing down the operations. When the company wanted employees like you they offered job and when you were in need of job you accepted the job. Now the things have changed.

Every decision will involve an element of RISK and sometimes the risk will be less and sometimes it will cost you a lot and the second thing has happened to you. Therefore, forget about what has happened and with the experience you have gained over a period of two years you can find another job. If you go to court, you cannot join another company and you cannot fight for loss or damage and even if you fight how long will you fight? Is that case going to be decided in one month or six months or ten years? It will take at least 10 years to settle the case. The matter will be severe when the Directors of the company are from a foreign country because they may not appear for the hearing at all.

The only problem with such kind of settlement is the date on which the payment is made. It should not be September or December, instead it should be on the day of exit, ie, July 31st. For this you have to fight and if required involve somebody who can talk or mediate with the management. I would say that involvement of District labour Officer would be ideal in such cases because the agreement as to date of payment of compensation when made before a government officer will always be binding and the management cannot deviate from that. Therefore, decide on the date of payment and make an agreement either bilateral or tripartied (which is always preferred)

Madhu.T.K

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