Can a Private Company Fire Someone for Misconduct? Seeking Clarity on the Process

Can a private limited company terminate an employee on grounds of misconduct? Kindly reply, as I need to understand the process if yes. Thanks in advance.

Regards,
William Viera

No, you cannot terminate an employee without holding an enquiry. If, in your observations, the misconduct is very severe, you can place him under suspension and then hold an enquiry. Finally, you can discharge or dismiss him depending upon the reports of the Enquiry Officer. But the act of straight away dismissing or discharging an employee will be illegal, even if you have solid proof of his severe misconduct.

Regards,
Madhu.T.K

Information Required for Employee Termination Process

Sorry, but the post contains too little information to enable an effective and proper answer. Whether Private Limited or otherwise is NOT the question. One needs to know:

• What industry? (Manufacturing/Service/Financial/Insurance or any other)
• How many employees (and how many "workmen" under the Industrial Disputes Act 1947?)
• Applicability of the Industrial Employment (Standing Orders) Act 1946
• Are there Service Rules in place?
• What is the level of the employee in question and what is their seniority?
• What misconduct is involved?
• If the employee is a "workman" under the Industrial Disputes Act 1947, is there a Trade Union organized?

The above information is necessary to decide the approach you should adopt.

If the concerned employee is a "workman" (existence of a Trade Union notwithstanding) and Standing Orders (under the Act) are applicable, normally you will NOT be able to terminate his employment without following due process of law, case law, etc. If he is NOT a "workman," you may have a little wider issue to handle and decide the issue.

Therefore, to get properly advised, you need to share all relevant information!

One would like to help but only after getting all necessary information, please.

Regards,
Samvedan

Hi, thanks for your response.

Industry Details

1) What industry? (Mfg./Service/Financial/Insurance or any other)
A) Value Chain Manufacturers.

Employee Information

2) How many employees (and how many "workmen" under the Industrial Disputes Act 1947?)
A) There are about 80 employees.

Legal Applicability

3) Applicability of Industrial Employment (Standing Orders) Act 1946
A)

Service Rules

4) Service Rules in place?
A) Yes.

Employee Level and Seniority

5) What level of the employee in question and what seniority?
A) A Material Planning Executive.

Misconduct Details

6) What misconduct?
A) The person was not committed to the customers when the dispatches were required, and he just left the office and also locked the computer with a password. The issue was a minor salary raise.

Trade Union Status

7) If the employee is a "workman" under the Industrial Disputes Act 1947, is there a Trade Union organized?
A) No, no.

Please provide inputs to handle the problem.

Thank you,

Regards,
William Viera

It looks like this is not a case for termination but rather warrants a severe warning.

rajanassociates
https://www.citehr.com/285737-legal-...-industry.html

Termination of Employment on Grounds of Misconduct

Based on the answers to my questions, I find it is clearly possible to terminate the services of the concerned employee. Whether the company should do so is purely the company's decision. Legally, your action to terminate his services will be sustained if, by the facts of the job responsibilities attached to him and performed by him, we can documentarily prove (when needed at an appropriate forum).

Principles of Natural Justice, however, demand of you to consider:
1. his past employment record and
2. seriousness of misconduct.

This means that the company must ask him (formally in writing) to explain the misconduct by him in the instant case BEFORE taking any decision and decide (objectively and not emotionally) if the seriousness of the misconduct and of the punishment maintain due proportionality.

If after this kind of consideration, the company comes to the conclusion that his services NEED to be terminated, you have to refer to that clause in the Letter of Appointment that stipulates that the contract of employment between the company and this individual can be terminated at some notice period or compensation in lieu of the notice period. Relying on such a clause, you must inform him simply that "as empowered by that clause (kindly quote the same) the company has decided to terminate his employment. You may or may not mention the reason for this decision.

Having issued the letter, be kind and give his F & F settlement as expeditiously as possible. Thereafter, continue to hope that this matter will not progress further.

Having said all this, I must CAUTION you to not accept such advice tendered on a message board blindly BECAUSE it is wrong for anyone to give such advice in extreme matters WITHOUT examining any relevant document. Kindly note this particularly. Such matters should ideally be discussed in person, and the concerned documents are seen in personal interaction. To that extent, you may consider this advice as a guideline and NOT advice in your particular matter.

Regards,
Samvedan

Additional Information Required

1) What industry? (Mfg./Service/Financial/Insurance, or any other)
A) Value Chain Manufacturers.
2) How many employees (and how many "workmen" under the Industrial Disputes Act 1947?)
A) There are about 80 employees.
3) Applicability of the Industrial Employment (Standing Orders) Act 1946
A)
4) Service Rules in place?
A) Yes.
5) What level of the employee in question and what seniority?
A) A Material Planning Executive.
6) What misconduct?
A) The person was not committed to the customers when the dispatches were required, and he just left the office and also locked the computer with a password. The issue was a minor salary raise.
7) If the employee is a "workman" under the Industrial Disputes Act 1947, is there a Trade Union organized?
A) No..., No....

Please provide inputs to handle the problem.
Thank you,

Regards,
William Viera

Dear Mr. Williamviera, I am responding to your query by extracting a portion of the Judgment of the Honourable Supreme Court of India in Workmen of Firestone Tyre and Rubber Co of India (Pvt) Limited vs. the Management, reported in 1973 I LLJ page 278. This extract is taken from the book "The Law of Industrial Disputes," Fifth Edition by Shri O.P. Malhotra.

Extract from the Judgment:

1. Before imposing punishment, an employer is expected to conduct a proper inquiry in accordance with the provisions of the standing orders, if applicable, and principles of natural justice. The inquiry should not be an empty formality.

2. Even if no inquiry is held by the employer or if the inquiry held by him is found to be defective, the Tribunal, to satisfy itself about the legality and validity of the order, has to give an opportunity to the employer and the employee to adduce evidence before it. It is open to the employer to adduce evidence for the first time justifying his action, and it is open to the employee to present evidence to the contrary.

3. An employer who wants to avail himself of the opportunity of adducing evidence for the first time before the Tribunal to justify his action should ask for it at the appropriate stage. If such an opportunity is asked for, the Tribunal has no power to refuse. The giving of an opportunity to an employer to adduce evidence for the first time before the Tribunal is in the interest of both the management and the employee and enables the Tribunal itself to be satisfied about the alleged act of misconduct.

The above guidelines have been followed by the Honourable Supreme Court and various Honourable High Courts. I have not reproduced certain portions which are not relevant to the present discussion.

The above extract answers your query regarding passing an order of dismissal without conducting an inquiry. Even after the management adduces evidence before the Tribunal and even if the Tribunal finds that the inquiry had been conducted according to the principles of natural justice and the provisions of the standing orders, the dismissal could still be set aside on the ground that the punishment of dismissal is disproportionate to the misconduct proved.

Apart from the above, it is open to the employer to dismiss an employee without conducting an inquiry on the ground of "loss of confidence." However, the employer has to prove before the Tribunal how he came to the conclusion that he lost confidence in the employee. The employee may allege that the employer was actuated by malafide motives while dismissing him from service. These are all matters of evidence.

Regards

Understanding Termination and Retrenchment

Paying the notice pay and terminating the worker would amount to retrenchment and not dismissal. Please refer to the definition of the term "retrenchment" as defined in the Industrial Disputes Act 1947. It states that the termination of the services of a workman for any reason whatsoever, except for the exceptions mentioned in the section, amounts to retrenchment. This definition was interpreted by Justice V.R. Krishna Iyer to mean that even if a worker's services come to an end by efflux of time, that is, the appointment order will prescribe the date on which the worker's service would come to an end, it would amount to retrenchment. At the time the judgment was pronounced, clause 2(oo)(bb) was not in the Industrial Disputes Act and was introduced later.

Therefore, if the services of the worker are terminated only by giving him the required notice, the employer would be opening himself up for litigation on the ground that the employer had retrenched the worker without following the procedure prescribed by law (here, the Industrial Disputes Act). If the matter goes to the Labour Court, the employer has to provide the reasons for dismissing the worker.

Dismissal Without Inquiry

Though the Supreme Court has said that a worker can be dismissed without conducting an inquiry, it also stated that if the worker raises the issue before the Labour Court, the employer must put forth a legally valid defense that the worker was guilty of misconduct as stated in the certified/model standing orders applicable to him. The employer must also lead evidence before the Labour Court to establish the misconduct alleged against the worker and contend and prove that the punishment of dismissal is proportionate to the misconduct alleged.

Moreover, the query raised is whether a person against whom misconduct is alleged can be dismissed/terminated without an inquiry. Even in the case of dismissal without an inquiry, the dismissal order has to specify the misconducts alleged against the worker and the reasons for dispensing with the conduct of the inquiry.

Regards

Termination for Misconduct in a Private Limited Company

If the misconduct committed by an employee is serious or severe, they can be terminated from service without holding a domestic inquiry.

Please let me know, can a private limited company terminate an employee on grounds of misconduct? Kindly reply, as I need to understand the process if yes. Thanks in advance.

Regards,
William Viera

Dear Mr. Kumaresan, please see my post on the previous page. It addresses your query. Whether the misconduct is serious, severe, or not is different from termination without conducting a domestic enquiry. Even if a worker is dismissed for misconduct deemed serious/severe by the management/employer, after following the proper procedure, it could be overturned by the Labour Court on the grounds that the punishment of dismissal is disproportionate to the charges proven.

I had answered whether termination is possible without holding a domestic enquiry. Intervention of labor authorities/court is subsequent to dismissal, only if the delinquent approaches the said forum. Furthermore, the labor court, as a routine matter, cannot set aside the order of termination like an appellate authority.

Regards,

Dear Mr. Kumaresan, whether termination is possible without holding a domestic enquiry or not, I have answered in my first post itself. Please go through it, and you will find the answer. I thought that I am obliged to incorporate in the posting the consequence that could follow if the matter goes to the labour court. These postings are not intended for any one person or individual. This is for all those who view these postings. In my postings, I have not said that the Labour Court can set aside termination in a routine manner. So, please do not ascribe to me what I have not posted. I request you to go through the commentaries on Section 11A of the Industrial Disputes Act 1947. This section has been interpreted to confer on the Labour Court the power to order reinstatement, and ordering reinstatement means that the dismissal order is set aside. You should thank your stars if the dismissed employee does not approach the Labour authorities. In your post, you are referring to "Appellate Authority." Are you referring to any "Appellate Authority" under the Industrial Disputes Act or any other law? Please enlighten me on this aspect. I would be much obliged.

With regards

You should not take anything personally. I have no intention to comment on you personally. I just replied to your posting; nothing more. I'm also here to share my ideas with members of this elite forum. I posted my views to match the query raised. I never ascribe anything. My second paragraph is a general statement for members of this elite forum.

Understanding the Role of the Labor Court

I mean to say that the labor court is not an "Appellate Authority" like the Appeal court above the trial court or the one constituted by management in any organization. The labor court's power is only to ensure that orders of dismissal, discharge, etc., are not shockingly disproportionate to the charges leveled against the delinquent.

I have not taken anything personally. My intention is not only to respond academically and professionally to the posts but also to be cautious to ensure that my posts should not be misconstrued and create problematic issues. Almost all dismissals, and especially dismissals without holding an inquiry, have been legally challenged, and some cases have gone to the level of the Supreme Court. Therefore, I felt that it is my duty to caution the readers of my posting about the powers vested in the Labour Court to hold that the punishment of dismissal is disproportionate to the charges held proved. In my service in this field spanning 33 years, I have come across instances where the employer had to face the situation of reinstating a worker who was dismissed for proven misconduct on the grounds that the punishment is disproportionate to the charges held proved.

With regards,

Dear Mr. Hariharan, it is quite common among the parties in the forum to fight vigorously for their stands; however, that doesn't mean one hates the opposite party. In this way, I posted my comments and am happy to see that you accepted them without taking it personally.

I would like to add further that unlike civil laws, labor laws do not have specific procedures or codes. In most cases, it is judge-made law. Verdicts from apex courts serve as the basis for new issues. For the same issue, courts may give two different views as the verdict purely depends on the facts and circumstances of the case. Hence, the nature of misconduct plays a crucial role in awarding punishment.