Industrial Relations And Labour Laws
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Hello sir, Ours is an NBFC. Our management wants to terminate employee
1) if he does not perform well.
2) when he/she commits financial fraud
What process should we adopt in this case. Please also provide me with a letter format to be issued to employee in this case

In the first case the employee should be evaluated of his performance very transparently making him also understand where he stands and what the company expects from him. He should also be given a reasonable time to perform and meet the targets by giving a certain time. His performance during that evaluation period should also be evaluated. If that also finds to be negative, give him a show cause notice asking him to show cause why the management should not take disciplinary action/ terminate him for his bad performance. He should be given opportunity to be heard. You can even conduct an enquiry so that you can hear what he has to say. If you find that his bad performance is not related to target, market or any other matter connected with the management, you can terminate him quoting the report/finding of the enquiry officer. Even this order of punishment/ termination shall be issued only after letting him known what the disciplinary authority has decided after considering the report of the enquiry officer by means of a second show cause notice.
In the second case, you can place the employee under suspension and then prepare a detailed charge sheet, do start domestic enquiry and then terminate him. Under both, terminating without offering an opportunity to the employee to defend the charges is illegal and termination without following the above procedures will make the termination invalid.

If the employee does not fall under the definition of "workman" as is given in Industrial Disputes Act 1947, then his/her services can be terminated directly, without citing any reason.
In case of a 'workman', proper disciplinary procedure will have to be followed in accordance with his terms and conditions of employment i.e. issuing a charge-sheet inviting his explanation, then holding a domestic enquiry etc.
For further advise/opinion, you may contact me :-
- Shobhit Kumar Mittal
Industrial & Labour Law Advisor
8077779793, 9319956443

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