Navigating Tough Times: Can We Ask a Long-Time, High-Earning Employee to Leave?

Dear All,

In this challenging time for the industry, can we request a long-standing employee who has been with the organization for the past 3.5 years and is receiving a significantly higher salary than others to leave? Please provide guidance or a template for this process.

I await your prompt response.

Thank you,
Tanvi

Tanvi,

If you are planning to terminate an employee, then you should have a reason for yourself like non-performance, irregular attendance, or attitude problems. If you are terminating an employee just because his salary is high irrespective of his performance, then I think you are losing a good employee. Always remember an older employee is always an asset to the organization.

On the other hand, if he has any reasons like non-performance, etc., then tell him the reasons directly and give him a time like 1 or 2 months to correct himself. Otherwise, you can issue a warning letter and terminate him. HR can't kill a snake without harming the stick, and you need to be aware of it.

Regards,
DJ

Dear,

In this case, you have to follow the retrenchment clause of the ID Act of 1947. The last to come will be the first to go, and you have to pay retrenchment compensation as per the act.

Thanks,
J. S. Malik

Hi Malik,

Can you please elaborate on the clause for my information, and also what is the compensation amount?

Regards,
DJ.

Dear Friend,

If the organization is unable to pay the salary to that extent, in that case, the management can call the employee and brief him on the criticalities. They can also request him to accept a x% salary reduction (if this is implemented across the organization; otherwise, it may be seen as victimization). Alternatively, as Mr. Malikji suggested, it could lead to retrenchment based on last come, first go. Otherwise, there might be legal issues if the employee proceeds legally or approaches concerned authorities like labor, etc.

Thanks and regards,
Kameswarao

Dear Tanvi, Exactly like what Mr. Kameswa Rao mentioned, you could ask the employee to take a certain percentage cut from his salary. But if there are other reasons related to his termination, I am sure you may not be able to suggest the above. If the Management has confirmed the termination - and if you have no other choice but just execute it - you may follow the following: 1) Yes - you can ask a confirmed employee to leave the Organization. Please check the Appointment letter rules. Relating to "Termination of Confirmed Employees" our rules states that - If the company terminates a confirmed employee for a specific reason, then one months notice pay (or 3 months notice pay - for senior positions), will be paid by the company. 2) So kindly check the amount that the company has to compensate for. 3) Prepare a document stating Name: Employee no: Designation: Day of joining: day of leaving: Reason: Notice period to be paid off: yes/no (in this case YES - because you cant ask a person who is being terminated to continue for 10-15 days and serve a notice perios - can create a whole lot of problems as he is already frustrated) Amount to be compensated: 4) Submit this to the MD / HR Manager - who so ever is responsible to approve the payment (dont forget to mention refernce of appointment letter rules) Since the Management has no doubts on his performance and are only forced to do this because of this recession – I am sure that the Senior Management can help him find an other better offer. They must / should have links with other company senior management. Please discuss this with the HR Manager / MD first. Try all references for finding a suitable offer, maybe by relaxing on salary part. If not – at least a recommendation letter from the Managing Director himself. Trust me – the employee would never forget this help and will not hold any hatred towards management. 5) Arrange a meeting with the Person being terminated. Make sure the atmosphere is calm and relaxing 6) Make it a highly confidential meeting 7) The employee has to be properly explained that the termination is only because of the recession and has no connection to his performance. Infact it was a very tough decision for the Management too. Start of by slowly asking how the current work is going on and then mention this. 8) Be aware of any emotional vent out. After mentioning that he is going to be terminated – give time for the person to talk – question – and reduce the tensed feeling. 9) Mention about the other offer and state that The Management clearly knows the situation and would surely be of any help to him. He may ask – why only me? - Please also mention that he was not the person in their mind and they had to consider everyone’s benefits in company. Then the process - · You will have to issue him a relieving letter with the exact date of the notice period. Example – if he is leaving on 20th February and notice period is 3 months, then the relieving letter must be issued as relieved on 20th May. Else, if he gets an offer even before that from another company – mention the date he wants to be put on the relieving letter. · Make all payment settlements – clearly document it with his signature at each stage. · Make sure that no one knows that he was terminated and ask him to keep it as confidential. There is no format as far as I know for Termination – But I know it’s very painful for the employee as well as the HR. Customize it according to the situation. At the end just make sure that he leaves with no hurt feelings – give him a great farewell. Let everyone know that he has chosen to move on with another company. ---------- Ooops - too elaborate!! ;-) Regs, Ash

If there is a clause mentioned in the appointment letter which speaks about the separation policy (one-month notice or salary in lieu of one month notice period), you can do so.

Dear All,

I have gone through the different avenues proposed in the above discussions, but according to me, none are feasible and tenable under the law of the land.

In the 80s, we could terminate a confirmed employee as per terms mentioned in the appointment letter, which states that if somebody was on unauthorized leave exceeding 10 days, their name would be struck off the rolls or by just paying the notice pay, anybody could have been terminated. But now, the ground reality is that if somebody is to be terminated (a permanent employee), you will have to retrench him by paying retrenchment compensation. According to the ID act, before retrenching, you will have to approach the appropriate authority (either the State or Central machinery prescribed) for approval for retrenchment. By the time a decision is available, the very essence of terminating him will have vanished.

The only option to terminate a permanent employee on the roll is by way of disciplinary action. That is the issuance of a charge letter, conduct an inquiry, prove the charges, and finally termination. Other than this, no straight jacket removal is not possible.

D.K. Moitra

But what if a company does so? I mean, without providing any retrenchment compensation, if they terminate someone due to the recession?

I know a few "reputed" companies doing this. They have only compensated for the notice period, as mentioned in the appointment letter.

Thanks,
Ash

Thank you for all your guidance. It is quite informative.

My next question is, if an employee falls in the executive or managerial category, do we still need to provide them with retrenchment benefits or only according to the termination clause mentioned in the appointment letter?

Regards,
Tanvi

I was observing the thread. One of my friends is facing a similar problem in her company. In case the salary needs to be reduced, how should it be mentioned on the letterhead? Is there a specific format for this, or should it be discussed? Please advise.

Hrushikesh

Hi,

It is always advisable to pay the retrenchment compensation along with the notice period and complete the process. This will safeguard, in case of any legal consequences in the future.

Thanks,
Sunil

Hi,

Could anyone provide me with a format to ask an employee to leave?

Regards,
Neha