Facing Job Loss and Unfair Conditions: Can My Company Do This Legally?

Case Details: My company has closed/merged my division with another much bigger division. Reasons cited by them: 1) Costs being reduced. 2) No performance by our division. The company is giving us an option: 1) Either accept a lower-profile job in the new division with a salary cut or 2) Resign. If a person does not agree to either of the above, they are given a termination letter. The company has retrenched a minimum of 30% of its staff in all divisions. Also, the company had sent an email around 2 months ago stating that the notice period to be paid under the separation/termination clause of the appointment letter is reduced from 3 months to 1 month.

My queries:
1) Can a company terminate on these grounds? The performance of the company as a whole has been low due to the recession. The target versus achievement of our division is much better than the bigger division. But since our division is new, expanded only last year, capital inputs for infrastructure and manpower salaries are high.
2) The company is not providing any written communication regarding the reason for the closure of the division and the options (join at a lower level or resign) available to the employee. Only after a person agrees to join at a lower level do they get a self-declaration signed from the employee stating that due to their performance, they are ready to join at a lower level. Under present circumstances, it appears that the employees are underperforming and do not even hint that the employee is suffering because of the closure of the division. Is this justified? Can the company be forced to provide written communication? How can this be done?
3) Can a company change the condition of an important clause like notice pay and reduce notice pay to only 1 month? Does it not require acceptance from the employee as well?
4) Does a company have to seek approval from a government body before initiating retrenchment and changes in service conditions like notice pay? How can an employee know if approval has been obtained?

Thanks and Regards,
Karma

Dear Karma,

If you are working in the capacity of supervisor or above, you are to approach civil court for breach of contract. Otherwise, you are to put up a demand notice before the Area Labour Cum Conciliation Officer under the Industrial Disputes Act, 1947. A change in the notice period is a violation of section 9A of the ID Act.

Regards,
R.N. Khola
(Labour Law & Legal Consultants)

Thank you, Mr. Khola, for your valuable inputs. Just a small query... Someone today was telling me that if the company informs you of a change in the clause of notice pay, and the employee does not reply within 21 days, it is considered implemented! The mail from the company regarding this was sent almost 50 days ago to all employees. Please provide your inputs for this query.

Regards,
Karma

As far as the reduction of the notice period is concerned, which you are saying has been informed almost 50 days ago, the provisions of Sec 9 of the ID Act have been served, which states a 21-day notice for a change in service conditions. But it will apply to you only if you fall under the category of workmen under the ID Act 1947.

Secondly, whether the retrenchment by the management is justified or not is a matter that will be decided by the court and not by forum members like us, as there are a whole lot of things to consider. Of course, there are certain clauses that need to be fulfilled before issuing a notice of retrenchment. Though it may sound like what happened to you is wrong, that might not be the case once the matter goes to court. The management has lots of issues by which they can prove that the retrenchment was justified.

So please consult a good lawyer who can help you in the matter.

Regards