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Respected All, Recently company asked one of the directors to resign on account lower business volume and economic crises due to covid19, director submitted resignation and asked to release immediately, the company accepted the resignation, sanctioned immediately & relieved him on the same day.

Management is very generous and benevolent but due to COVID crises things are beyond the control of the management.

During the discussion, management agreed to pay three months' notice pay in lieu of notice period with all indirect benefits as per appointment terms and conditions instead of serving the notice period. The company offered him a separation agreement wherein mentioned he should not disclose any confidential information to any outsider since he was leading key profile, however, he refused to sign but submitted an official resignation.

On the same day in the evening afterthought he sent an email stating that the management has forced him to resign and he wished to serve notice period, he may also send a legal notice to the company management for the same matter.

Need expert opinion on this situation.

1. Should we release three months' notice pay at stretch or month on month till the time three months are not getting over?

2. Should we hold his dues for the time being to analyze the situation?

3. Is this the right way to continue the notice period without any assignment/work by seating at home.?

Please advice.

From India, Mumbai
Pointwise reply to your query is given below:-

1. Resignation of your Director is rather forced one which, in other words is termination of

his services. As he is relieved on the same date of resignation, company need to pay him

three months salary in lieu of notice period, as his F&F settlement.

2. Once an action is taken reversal of the same is not possible.

3. In big corporate houses, for a personnel in the managerial cadre or above - whose services are no longer required by management - management will not ask him to put up his paper. Rather he is allowed to come to office, but it will be ensured that no official paper/file goes to his cabin, and no official assignment will be given to him by his boss.

(He shall go mad after 2-3 days and shall continue in the same position for maximum period of one week only. Then he voluntarily come forward and submit the letter of resignation to management)

From India, Aizawl
Dear Santhosh,
Since the individual happens to be a director and the abrupt termination of his tenure is actually at the instance of the management, your queries have to be answered based on the terms of the contract of his employment only. By his subsequent mail, the individual has established his resignation is a forced one but to go out by serving the notice period of three months. Therefore, viewed from the spelt-out magnanimous stand of the management and the necessity of the situation, you can settle all his dues forthwith full and finally.

From India, Salem
Dear Santosh,

You have written that "On the same day in the evening afterthought he sent an email stating that the management has forced him to resign and he wished to serve notice period, he may also send a legal notice to the company management for the same matter."

The following questions emerge from the above excerpts:

Does the Director have any proof of "forced resignation"? Did he record the conversation that took place between the company officials and the Director? How come he has mustered the courage to give a threat of lawyer's notice?

Your company's requirement of signing the Non-disclosure Agreement (NDA) was genuine and legitimate also. Why has he refused to sign even a legitimate document?

Who handled the resignation of the Director? Was that person reporting authority of the Director or some junior-level employee? 

The replies to your questions are as below:

1. Should we release three months notice pay at stretch or month on month till the time three months are not getting over?Reply: - If you have accepted the resignation and if you are going to pay in lieu of the notice period then you have to pay the lump sum amount.

2. Should we hold his dues for the time being to analyze the situation?Reply: - In the light of his threat of lawyer's notice, first send him a reply stating that his belligerent attitude was uncalled for. He must submit an unconditional apology for this kind of email. Otherwise, disciplinary action would be initiated against him and pending the disciplinary action, his dues can be withheld.

3. Is this the right way to continue notice period without any assignment/work by seating at home.?Reply: - It depends on your company. However, do not do anything until the Director gives an apology letter in his own handwriting. Apology through email will not be accepted. You may even ask apology on the bond paper also. He must solemnly affirm that he had written the email in a fit of annoyance and he apologises for the same. Unequivocally he must state that he will not take up the course of litigation.

Does the Director work from home or attends to the office? If you wish to frustrate him then withdraw all his powers. Issue a circular to this effect. Tell him to handover a charge of his office completely. However, he must report to the office every day. Let him just come and sit in the office doing nothing. It is very difficult to cool one's heel in the office without any job. If your company is big enough then identify a place near the security office and assign him a chair and table there. Once you humiliate him this way, he will stop reporting for the work. Send him a show-cause notice for not attending to the office. 

Final Comments: - Receipt of a notice from the Director does not behove well for your company. It shows the matter has been mishandled. Nevertheless, now the top-management of your company must take this as an opportunity to establish the authority. If the company orders are defied then what lies ahead must be communicated to the employees. However, instead of communicating through words, let it be communicated through management's actions. 

In the meanwhile, start scanning all the decisions taken by the Director and find out whether there are any loopholes. If you observe some omissions or commissions, issue him a show-cause notice.

Thanks,

Dinesh Divekar

From India, Bangalore
Dear Santosh ji,

It is the common phenomena in senior management level to fire the employees.

If I am in your place i.e. your company, I will not worry about the email by the employee or his threatening of legal notice. I will enforce what I want to.

Now the issue of his refusal of non disclosure of any confidential information to any outsider since he was leading key profile. In my view signing non disclosure of any confidential information is an added protection with the company.

When he is having an access to confidential information, he should not publicise it irrespective of any agreement or contract. The Employee and that too a person at very senior level has an ethical as well as legal responsibility to keep private information with him and not to disclose it to any one. You just need to remind him in writing when you settle his dues.

From India, Mumbai
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