Umakanthan53
Labour Law & Hr Consultant
Madhu.T.K
Industrial Relations And Labour Laws
Rkn61
Hr Manager
Kritarth Consulting
Posh Programs; Hr Management Consultants

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We are engaging retired officials on contract basis and the office order issued to them has the clause of cessation of service by giving 3 months notice or in lieu payment of 3 months salary to the other by either side. Contract period is fixed one year from April to March. In normal days the period of closure of contract of any such employee shall be informed in writing or in verbal be communicated to them in case of no extension is considered.

However, due to this lockdown caused of this situation, the management has decided to close the services of such official by end of March 2020 and as such no salary credit has been given for April 2020. Now the querry is whether the action of Management taken to close the contract period without complying to the notice period on it's stand that the contract has come to a close on 31st March in line with the order of contract issued to such officials?

No official will hurt by this action of Management and this post is given only to know the legal poisition with regard cessation clause?

From India, Mumbai
Terms of Contract ought to be adhered to by executing Parties in any situation including compeeling ones as at present. It is mandated, Moral, Ethical and Virtuous.This is what Guided me in my Professional Career Path.
Harsh K Sharan, Kritarth Team,
Bluru, 9.5.20

From India, Delhi
Your company management should have considered the terms of contract of employment - " by giving 3 months notice or 3 months salary in lieu of notice period".
When a contract is arrived at for any services to be rendered - both the parties are expected to
honour the terms of contract in letter and spirit.

From India, Aizawl
Dear Sridhar,

I prefer to have a different perception because of the tenure of the initial fixed term employment contract is only one year notwithstanding its extension in the past or in the future which is nothing but a matter subject to every fresh offer and acceptance of the parties concerned. Even if extended mutually the tenure remains to be one more year only. Therefore, the question of notice arises only in the case of foreclosure of the contract within the extended period. With the ending of March,2020, automatically the contract comes to an end with the absence of further extension by the employer.

But your post brings in the fact of non-credit of salaries for April,2020. You have to clarify whether those FTC employees were permitted to work as usual under the premise of deemed extension.

Had they been permitted to work for the organization even for a single day in April,2020 with or without the knowledge of the management, the presumption of the extension of the existing contract for another year cannot be found faulted with and as such the compliance with the notice clause is mandatory now as opined by the learned members above.

Otherwise, you can simply settle their proportionate terminal benefits.

From India, Salem
When the term of contract is fixed or one year which starts from 1st April and ends on 31st March, no formal communication to terminate the contract is required to be given. It is true that in order to renew the contract, a fresh contract or an office order saying that the contract has been renewed or a further period of 12 months is required to be given. But to terminate the contract no office order is required but the contract comes to an end automatically.
Notice period mentioned in the contract is applicable only for premature termination, ie, terminating the contract before March end.

From India, Kannur
Thanks for all the experts giving valuable views on my query. As for the April 2020, no employee was allowed to work in the premises. In fact From 24th March onwards company was completely closed down. But employees on roll were given wages for March n April .2020 in full.
Thanks n regards
V sridharan

From India, Mumbai
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