How Should I Handle Employee Terminations Without Notice During a Financial Crisis?

I am working in a construction company as a Site HR Executive. The company is facing a financial crisis; therefore, the top management has instructed me to terminate/release some employees from the site without any notice period. I now have to release some staff from the site. However, as per their appointment letters, the company was supposed to provide them with a notice period, but it did not do so and even held their salary for the month of June.

Steps to Address Employee Termination Without Notice

At this point, what steps should I take? Kindly advise.

Regards.

Under Section 25F of the Industrial Disputes Act, 1947, it is mandatory for the employer to give one month's notice to the employee when retrenching them from service. As you stated, they have also mentioned the notice period in your appointment letter. If you fall within the definition of an employee under the ID Act, you should approach the local labor authority. If not, seek legal advice from a senior to resolve the matter.

I believe this is a case of redundancy or retrenchment. Therefore, you must follow the provisions of the applicable act.

Legal Consequences of Denying Employee Dues

Under the circumstances, if you deny paying the legal dues of employees covered as workmen under the ID Act, the dispute will definitely go to the labour court/Conciliation Officer for non-payment of retrenchment compensation either under 33-C[2] or under Sec-15[2] of the Payment of Wages Act. Then, you will have to face consequences that can include a 10-time penalty, and reinstatement can also be awarded by the labour courts. This is because the termination is illegal without paying the legal dues/notice pay within the expiry of the second working day of the termination.

Thank you for your valuable advice. I have already discussed the matter with the top management and presented to them the real scenario of what might happen if the terminated employees take the case to the labor courts, and we have to face the penalties. The top management indeed released the pending dues to the terminated employees yesterday evening.

Thank you very much once again.

Regards,
Ravi Shankar Boruah

Well, it's good if they have paid the pending amount for the salary that was due. However, as they have not given the notice period to the employee, they need to pay one month's salary in lieu of not giving them notice.