Can We Fire an Employee for Poor Performance Without Written Warnings? Seeking Advice

Hi, I know that this question has come up time and again, but I was not really sure what the case might be in our scenario. We are a Gujarat-based Software Development Firm with 35 employees. Recently, we found out that one of our senior employees had been tampering with our source code and deliberately delaying the project. Also, we found that more than 50% of the work that he had done was either faulty or incomplete.

Now, we did not have any proper HR policies until recently, and hence he was given only verbal instructions. The management now wants to terminate the employee with immediate effect after he has missed 3 project deadlines. He is currently on suspension from April 10, 2013.

My Questions are:

1. Can we terminate him without initial written warnings?

2. Is the company liable to pay him this month's salary? If yes, till the 10th or for the whole month?

3. Can we terminate him without giving a notice period?

4. What would be the Full and Final settlement if he decides to resign?

If you feel that these are answered in some other discussion, please share the link.

Thanks.

Termination Process and Employee Rights

First of all, you cannot terminate the service of an employee without offering them an opportunity to defend the charges leveled against them and without following the basic principles of natural justice. If the employee has been working in a managerial role (simply having a designation like Sr. Engineer does not automatically make someone a manager unless they have functional managerial responsibilities), then you can consider asking them to leave or terminating their service if their performance is found to be unsatisfactory. However, if they have not been given any supervisory authority over subordinate employees, such as granting leave, initiating disciplinary actions, or appraising performance, then they will likely be classified as a workman under the Industrial Disputes Act. In such a case, before taking action like terminating their service, you need to follow these steps:

1. Issue a show cause notice or charge sheet detailing the misconduct, negligence, or other allegations against them and ask them to explain why action should not be taken.

2. Provide them with a reasonable amount of time to respond to the charge sheet/show cause memo.

3. If their response is unsatisfactory and they claim they were following company policy, give them a chance to prove it to an officer, preferably an independent outsider, through a domestic enquiry where they can present evidence in their defense.

4. Based on the enquiry and the report, decide whether termination is warranted.

If the employee has already been suspended pending enquiry, you should now prepare a charge sheet outlining the charges against them, detailing any wrongdoings, mistakes, negligence, costs incurred by the company, etc., and request a response. If the response is inadequate, proceed with an enquiry and make a decision.

Termination following the above process may not result in dismissal but rather in discharge. In such cases, the employee should receive all terminal benefits, including salary up to the suspension date, applicable gratuity, and leave encashment, without the need for notice pay.

If the employee chooses to resign, provide them with salary up to their last working date or consider settling with one month's pay to facilitate their departure and relieve yourself from the termination procedures.

Note that during the suspension period, the employee is entitled to a subsistence allowance equal to 50% of their salary for the first 90 days of suspension.

Regards,
Madhu.T.K