Can We Terminate a Permanent Employee for Non-Performance Without Notice Compensation?

In case the employer needs to terminate a permanent employee (who has served 6 months) for non-performance, is it necessary to give him a notice period compensation? Although he was informed about his performance and was given a verbal notice for 1 month to improve. Even though a clause is mentioned in the offer letter stating that the employer can terminate in case of misconduct, inefficiency, or disobedience of the rules and regulations. Please guide, does the employer have the right to take an action of terminating him? If yes, do we need to give him the experience and relieving letter in such a case? Please suggest if any other steps can be taken.

Thank you.

Steps for Addressing Employee Termination for Non-Performance

Related to the mentioned subject matter, we should take the following steps (only based on my knowledge and experience):

1. Firstly, we should have a proper assessment policy and record.
2. We should officially inform the employee about the policy in advance.
3. We should include the respective employee's acknowledgment on his or her performance appraisal result.

Regards

Sheetu121, if you are an HR professional, did you read the Industrial Disputes Act? Is the person under probation? How many years of experience does the person have in the same area, both within and prior to your company? What are the assessment methods deployed? Some companies have an outplacement; do you have a similar arrangement?

At one of my former employers (a leading global company), only HR reserved the right to terminate services once a person had been declared redundant or had a behavioral issue with their manager or was deemed unfit to perform the job, etc. The employee was initially transferred to HR's "cost center." We used to arrange different trainings and provide opportunities within the company to work in other areas and even other departments. We typically took around 6 months to bid farewell to a person.

Legal Perspective on Termination

From a legal perspective, it all depends on the terms of the contract of service with the employee. If it stipulates that their services can be terminated for unsatisfactory performance with some notice period, you can terminate their service by giving such notice period. However, such terminations are also fraught with risks of being termed malafide or effected with bad motive unless the employer is careful with their conduct throughout the process leading to the termination.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai

I agree with Mr. Sai Kumar in this regard. It is always better to record his non-performance rather than telling orally, as the record can always be shown as evidence in any court of law. You have to build up records in this case to protect the company and yourself. Otherwise, as Sri Sai Kumar says, the termination will be interpreted as malafide. One has to tread cautiously in this regard to avoid further complications.

Regards,
M.J. Subramanyam, Bangalore

Hello, as the employee has already completed his 6 months and if, as per your policy, he has finished his probation period, then you have to give him one month's notice and provide an experience and relieving letter.

Regards

Terms and Conditions for Permanent Employee Transition

In your message stating that the employee is transitioning to a permanent employee role, what are the terms and conditions of the appointment order if directly selected for the permanent role? In such a case, you should verify the terms and conditions clause related to termination.

When directly appointed to a permanent role, there are no possibilities to cite "non-performance" as the reason for termination. We must provide opportunities to improve performance, and these opportunities should be documented, including training sessions or discussions with the respective department head.

Regards,
PXR