Is It Legal to Terminate Long-term Employees with One Month's Notice? Seeking Advice on Alternatives and Compensation

Hi, As per our company's appointment letter, one month's notice is required to be given on either side for the termination of services. Now, one of our top officials has instructed us to send advance notice to two of our employees, informing them that their services will no longer be required, effective one month from the notice. These two employees have been with us for over 10 years. Recently, they have been assigned to a new project under the supervision of this top official. According to the official, their performance does not meet the required standards for the project, and their skills are not suitable. Despite verbal advice to improve their performance, they have not shown any improvement. There is no written communication regarding this matter. The official has informed me that he no longer requires their services for his projects. Upon checking with other departments, it appears they have adequate staff, and transferring these employees to other departments is not an option. Is it legally permissible to provide them with one month's notice and release them thereafter? What would be the legal consequences of such an action? Furthermore, please suggest alternative measures for handling this situation. What compensations would be required for this type of termination with advance notice? Regards, erv

Please clarify whether these employees are workmen or Management Cadre employees. This is very critical information.

Dear erv,

While you can take action as per the terms of the appointment letter, more than the legal angle, you need to think about its impact on the organization's culture.

Employee Development and Training

These two employees have been working for the last ten years. In that case, what steps has your organization taken to groom them to handle projects of this kind? Were they trained to develop the required skills? If training was given, what performance feedback was provided to improve those skills? What preparedness did your organization have to handle projects of this type?

Considering legal aspects only, you may remove these two employees, but then it will create fear in the minds of other employees. To avoid removal, if employees start becoming proactive and begin quitting, what would be the cost of the additional attrition? Have you considered this?

Lessons from Jet Airways

Please remember the incident of Jet Airways. The management had terminated 1,950 employees. Yes, their termination was legal, but the move had repercussions on the management, and they had to eat humble pie.

Comparison with GE

Is your company as strong as GE? In GE, Jack Welch used to remove the bottom 10% of employees every year. However, employees knew what would be in store for them if they fell in the bottom 10% of the performance matrix. While removing employees, GE was quite generous and did not strictly adhere to the terms of employment.

Responsibility of HR in Organizational Culture

HR is responsible for the organization's culture. If the employees were underperforming and still worked for 10 long years, then who allowed them to continue in your company? What action will you take against these seniors for permitting underperformers to continue in your company? First, take action against these seniors and then address the junior level. If you only take action against these two employees without acknowledging the seniors, you would be sweeping the issue under the carpet.

I tried to analyze the case objectively. The objective was not to ruffle your feathers!

Thanks,

Dinesh V Divekar

Legal Considerations for Terminating Workmen

Legally, you cannot remove workmen based solely on a clause in the appointment order. Doing so may put you in a difficult position where you might have to reinstate their services with back wages.

Removing workmen from services is not straightforward. You must follow the correct and lengthy procedure stipulated by law, which can still be challenged by workmen in courts.

Please consult a lawyer specializing in labor laws and follow their advice before taking any further steps. Also, consult your seniors in this matter.

It would be beneficial to arrange a meeting between the lawyer and your Project Manager to inform them of possible legal complications in this case.

The advice given by Mr. Dinesh Divekar is very important and relevant in this case, apart from legal issues.

I totally agree with Mr. Dinesh. If you have nurtured an employee for ten long years and now all of a sudden you are planning to terminate him, though it is legally correct, it is absolutely wrong with respect to your organizational culture. This will set a very bad example in front of all other employees as well.

Regards,
Mayuri

Handling Senior Employee Resignations Without Notice

There are cases with seniors (AGM/GM) who are asked to resign without being given the chance to serve the notice period, even though a one-month notice is agreed upon by management. They are asked to hand over their responsibilities with immediate effect. Subsequently, the management neither settles their full and final (F&F) dues nor responds to any further communication.

Since the seniors are not covered by labor laws, what course of action should be taken to settle their dues? The management has treated many seniors in this manner, and they are feeling exploited.

Your response will provide guidance to many individuals facing similar situations.