Facing Legal Hurdles in Demoting an Employee: What Are Our Options?

Hi Friends,

Can somebody help with the legal complications involved in demoting an employee? One of our employees has turned out to be a wrong hire. His contribution has been nil in the past few months he has been with us and he has a major attitude problem. The management has realized the mistake and has asked the person to leave (by paying the notice pay), but the person has refused to resign.

Under such circumstances, we have decided to demote him as he is ineffective in his current capacity. Can someone provide insight into the legalities of demotion? What other courses of action can we take against the employee?

Regards,
Rekha

Dear Rekha,

Both termination and demotion are forms of punishment that can be awarded only after a proper disciplinary proceeding starting from:

Show Cause: This must be issued on the basis of correspondences, opportunities given to the employee by the organization, and his/her replies. The correspondences will be admissible as evidence in the Court of Enquiry constituted for this case by the Company.

Chargesheet: Upon receipt of the reply, if found unsatisfactory, a chargesheet should be issued.

Court of Enquiry: A Court of Enquiry (either single or a board) must be constituted to look into the charges. The accused employee must be given the full opportunity to present his case.

Disciplinary Authority: The Enquiry Findings are to be submitted to the Disciplinary Authority who will go through the proceedings, look into the evidence, and either hand out a punishment or dismiss the case. Either party has the right to appeal its decision within the allotted time.

Appellate Authority: Upon receiving the appeal, the Appellate Authority goes through the entire papers, evidence, and also calls the aggrieved party or both if required and gives them a hearing. After that, the Appellate Authority gives its verdict which is final and binding.

If the aggrieved party is still not satisfied, then he/she can approach the Labour Courts, Industrial Tribunals, or even the High Courts.

One thing must be noted here. If the whole Disciplinary Proceedings are free and fair, transparent, bona fide, and the principles of Natural Justice have been followed, a Court of Law usually doesn't have the power to overturn or dismiss the findings of the Disciplinary Proceedings.

So, please follow the above process, and I tell you there will be no problems. From now on, start written correspondence with the employee to gather evidence if you haven't done that already.

Regards,

SC

Rekha,

Two cents from me.

What is the position/level of the concerned employee in the organization? Had you checked his background without offering him the position? Were there clear KRAs before you started sourcing people? If he is a senior and the answers to the other two questions are negative, then it is not just a fault but a blunder from management. On top of that, you asked him to resign!

There are two things you can do apart from taking the disciplinary action as explained by other contributors.

1) Don't confirm him after the probation period; he will leave on his own. 2) Give him some assignments. As you said that he doesn't work, surely he will not work again, and you can discuss his "performance" and ask him to leave. Demoting is not advisable as it involves many legal complications.

I hope this will help.

Regards, Sanjeev Sharma

Email: ss_himachali@yahoo.com; sanjeev.himachali@gmail.com

Blog: http://sanjeevhimachali.blogspot.com/

Dear Swastik Sir,

I am a new member to this site. I received the domestic enquiry format from my friend.

Can you please clarify whether the employee has not been served any notice/charge sheet? Can we conduct an ex-parte enquiry in his absence and retrench him? Please give your opinion.

Thanks and regards,
Rashmi

Dear Rashmi,

No, you cannot do it. How can you proceed ex parte just like that? Unless you serve him a notice, how are you giving him an opportunity to explain his case? You are violating Principles of Natural Justice.

One more thing, you must mention the same in the Chargesheet, that if he fails to appear, it would proceed ex parte. If the line is not inserted, you cannot proceed ex parte.

A chargesheet looks somewhat like this: (Copied from one of my previous posts)

As for the chargesheet, it goes like this:

We are in receipt of your written explanation dated --- in reply to the show cause letter issued to you under letter ref no.-- dated--- which has been found unsatisfactory.

You are, therefore, charged under clause no---, (state the relevant portion of the clause).

In that it has been reported ----(give the full incident)

In accordance with the provisions of clause of -- of Standing Orders, an Enquiry Committee will meet to investigate the above charges leveled against you in the office of the -- at --- hours on---, and you are directed to be present thereat to enable you to conduct your defense properly and adequately. We send herewith a copy of the Standing Orders and a copy of the complaints in this connection on which the Company may rely at the time of the Enquiry.

At the Enquiry, you will be given a full opportunity to conduct your defense by examining your witnesses and cross-examining the Company's witnesses. Should you fail to present yourself at the enquiry, it will proceed ex parte.

You can replace the words Standing Orders with Rules of the Company if your organization is not covered by the Industrial Employment Standing Orders Act, 1946.

Regards,

SC

Respected Swastik Sir,

Thank you for your reply. In our company, we have done one small thing which may be a mistake. As the concerned employee had gone out of station and had just written a letter with his present address, we sent formal notices to his old address and got it back as "Party left."

Then we published in the local newspaper and finished the inquiry in absentia, dismissing him in the last week of February 2007. Now he has come back and is again sending registered posts requesting permission to return to duty. The union fellows have started thinking of legal action.

My boss is worried about this. Can you please clarify? We have already deposited his amount at the Labor Commissioner's office in June 2007.

Thanks and regards,
Rashmi

Dear Rashmi,

As per the rules, you are supposed to send the notice by Registered Post to all addresses given by the employee at the time of employment. This is the reason why you will always find two addresses asked for: Present and Permanent in all government and other important places where you are required to give your personal details. If you have failed to do so, then you must allow the employee to be heard.

However, if the employee has given you only one address during the time of employment, then it is the duty of the concerned employee to notify the employer about the change of his address. So, if your case falls into the second category, then what you have done is okay.

Regards,
SC

Respected Swastik Sir,

The employee has submitted his change of address by registered post along with his new college address. However, my boss has not considered it. We have sent it to his old address only. Please clarify.

With thanks and due regards,
Rashmi

Dear Rashmi,

If the date of receipt of the change of address is before the date of issue of the Notice of Enquiry, then the Company has committed a mistake by not sending the letter to the new address.

If the date of receipt of the change of address is after the date of issue of the termination notice, then the Company has not done anything illegal by not sending the notice to the changed address.

Now, if the date of receipt is in between, then it can only be decided on a case-to-case basis by the Labour Court/Industrial Tribunals. The same is applicable in the second case also. It is to be decided on the grounds of whether the termination was bona fide and done without any malicious intent.

We should remember two things:

1) What is the problem the Company is facing in not going for a re-enquiry?

2) Is there any confession by the employee in front of the Disciplinary Authority that has resulted in the decision?

If you can satisfy the two, then the Company is on a strong ground regarding the legality of the change.

Regards,

SC

Respected sir,

My boss is under a bit of fear. The notice has not been issued, and the proceeding copies are not yet given to the employee, nor has the termination letter been issued even though it is over five months. The employee is now going for a defamation case and labor conciliation, as per information from the vigilance department.

Please clarify.

Thanks and due regards, Rashmi