I have gone through various responses to the query raised by Mr. Rajendra. The issue needs to be understood in proper perspective.
I observe that a distinction has been drawn between the termination of a workman and that of a manager by stating that an employer is required to give one month's notice or three months' notice for terminating the services of a workman, depending on whether the employer is employing 100 workmen or less than that. I would like to state that this kind of obligation with regard to the notice period is imposed on the employer when the termination amounts to retrenchment within the meaning of Sec. 2(oo) read with Sec. 25-F and Sec. 25-N of the Industrial Disputes Act. However, even this does not reflect the true legal position. It is not necessary that in every case of retrenchment, an employer is required to give one month's notice or three months' notice, as the case may be. An employer has to give such notice only where a workman has put in one year of continuous service, but he can terminate the service of a workman even without notice if he has not put in one year of service or 240 days of service in the 12 months preceding his termination.
Besides, an employer cannot pick and choose a workman to retrench him from service. He has to follow the principle of "last come - first go" under Sec. 25-G. It means if a particular workman is not contributing to the organization, he cannot terminate him if he is senior to others. This apart, he has to re-employ him under Sec. 25-H after retrenchment whenever there is a vacancy in the future. Thus, termination by way of retrenchment is a package deal. Does it mean that the employer's hands are tied by Sec. 2(oo), Sec. 25-H, 25-N, 25-G, and 25-H so that he cannot terminate a workman except as provided under the above sections? It is a settled position in law that every termination is not retrenchment if effected for bona fide reasons like lack of performance during probation, etc. In that event, how can the employer terminate his services? Since the rights and obligations of the employer and the employee, in order to be enforceable, cannot operate in a vacuum, there should be some law or some provision that governs this relationship. So far as the law is concerned, it governs terminations that amount to retrenchment. What about terminations that do not fall within the ambit of retrenchment? Therefore, such terminations fall under the realm of a contract of service enforceable under the Contract Act 1872, either in the form of a letter of appointment or standing orders or service rules, where both the employer and the employee, including a workman, can agree on how to terminate their contract of service.
For example, Model Standing Order No. 13 under Schedule I appended to Central Rules 1946 framed under the Industrial Employment (Standing Orders) Act 1946 states that the service of a monthly-rated workman can be terminated by giving one month's notice and that of any other workman can be terminated by giving two weeks' notice. The notice period stipulated under the said standing order is not opposed to the law of retrenchment under the Industrial Disputes Act since it does not envisage any termination by way of retrenchment.
Therefore, terminations in accordance with standing orders or letters of appointment do not amount to retrenchment if effected for bona fide reasons but not as camouflage for punishing an employee for bad conduct. This is the thin line of distinction that an employer is cautious about.
Thus, the employer and the employee, even if he is a workman, can agree upon the duration of the notice period for terminating the contract of service by each of them.
It is in this context, in my view, the query of Mr. Rajendra needs to be answered.
Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai