Compensation To Be Paid On Termination??? - CiteHR
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Can u plss suggest on the following:
The mangement of our Company has decided to terminate a few employees by paying them 1months salary in lieu of 1months notice for termination.
however the mangement has decided to pay only the 1 month Basic salary as compensation instead of their last drawn salary inclusive of all allowances. beneifts etc....
Wanted to know whether this is a right course adopted by the mangement...
Is there any act which states that the compensation to be payable in lieu of 1 months notice on termination should be equivalent to the last drawn salary and not only the basic salary???
Thanking you,

Well Amita,
Are these employees on Probation/Contract/Confirmed etc, whats their tenure of service and whether they have been fordible asked to leave?
And where do you stand in this? your designation and whether you are asked to leave also?

It depends upon the company policy with regards to termination.Generally every comapny adopts a different approach with regards to each type of case like :
1. Termination/Layoff : ( Which is rare) company pays off the full last drawn salary for the notice period.
2. Termination with regards to performance : Company pays the last drawn basic salary as a compensation.
3. Termination on disciplinary grounds : Company doesnt pay at all for the notice period.
I find the above policies justified as well and I hope would answer your query.
I think there is an act which states what needs to be done in case of a "LAYOFF" and it specifies that the employee needs to be paid his total last drawn salary for the notice period.

No body / Company can't terminate any employee without any reason.
If you want terminate the permanent (except Contractual employees) enployee 1st do the Domestic Inquery against the employee then you can terminate.
You can not do the directly, otherwise employee goes to court.

If the employee isnt performing well then ethically the organization must give them a written notice and a time frame to improve the performance. Please note that a clause must be added to the notice that in case the employee's performance doesnt improve then the management may go ahead and termincate the employement of the that particalar employee. Do not forget to take an acceptance from the employeen on the same on the company letter head.
In case the management is still not happy with the employee's performance, then the organization ca ask the employee to put down his papers and give him full salary as per the notice period mentioned in his/her appointment letter / offer letter.
Call me if you need so help.
98102 02461

Hello evryone,
That is right: It is in extremely rare cases that a Company would actually issue a termination letter; for, no matter whatever the reason is (excepting extremely gross or violent misconduct), mostly they would ask the employee to hand in his papers and resign himself.
In such cases, no salary in lieu of the notice period is given: for, technically, the employee is resigning voluntarily.
But if for any reason, if the Company does in fact issue a termination letter, than (to the best of my knowledge), only the basic salary for the next month (which should ideally have been the notice period), is paid to the employee, and not the salary which he was taking home each month.
It is always better to reach an amiciable solution to such unfortunate matters so as not to hurt one's interest.

Hi Amita,
Salary considered in this case would be Salary considered for retirement befit, which will consist of Basic Pay + DA (Only the Part considered for retirement benefit) + Commission (If provided at fix % over turnover).

Unless otherwise specified in the Standing Orders of the company, salary means basic salary only. If the company has the practice of paying Dearness Allowance, then DA should also be paid.
Retaining or terminating an employee is an internal matter of the company. However, before terminating for misperformance, the employee shall be given an opportunity to be heard. If the termination is on the ground of misconduct, there should be conducted a domestic enquiry. At the same time, one who has not completed one year of service shall be terminated without paying even the compensation stipulated in the Industrial Disputes Act. As such, it is better to have an understanding by which employee will accept notice pay offered on condition that he gets a service certificate from the employer.

Hi All,
If any company terminate the employee on performance basis then employee goes to the Court.
2nudely the company give a notice to employee for well performing the performance on written paper and one take receipt on one copy, and employee also give to company as apology letter and commandment letter to company for the change of performance.
3rd the company give a chance for performaning to employee from present department (jurisdiction) to other department.
After that the company give a notice for his/her performance and take a time on written. OTHERWISE EMPLOYEE ABSOLUTELY goes to the court.
The culture in indian company (LALA) the management told to hr person please take the resignation XYZ after that HR person YES SIR, but this is not practice or true.

In some organisation appointment offer/ contract of employment is issued with the condition that your services can be terminated without assigning any reason. For permanent employees his services can be terminated after complying all requirements. For contract employee no such formalities is required. So far as notice pay is concerned the amount to be paid by employer or employee in lieu of notice pay would be equal to basic pay plus DA. But when nothing has been specified and his PF is deducted on the whole consolidated amount of his salary, his total salary will be paid to him or recovered from him as the case may be. Under the Industrial Employment Standing Order Act while appointing a person he should be given full details of his salary, nature of work, working hour, tenure of his appointment, method of termination,etc.

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