Can an Employee Legally Claim Unpaid Notice Period After Accepting F&F Settlement?

Legal Action for Unpaid Notice Period

I would like to know your opinion on the following case:

An employee of middle-senior management was terminated during month-end. As per the contract, the employee should receive 1 month's salary as notice. Therefore, in this case, the present month's salary + 1 month's salary as notice + leave encashment, less deductions if any.

The company did not want to pay the 1-month notice salary, as they believed that during probation no notice is required. However, as per the employment contract, one month's notice is mentioned, and nowhere in the contract is there a mention of "no notice" or "1 day notice" during probation. The employee was on the verge of completing 6 months before being unprofessionally terminated.

During Full and Final (F&F) payment, the final calculation was not shared beforehand, and the employee was asked to come to the office to collect the F&F payment. The F&F was missing the notice period salary.

The employee was given two options: either accept the given F&F or take any action of his choice. At that time, the employee accepted the cheque payment (as it was a significant amount) and signed the F&F settlement.

Subsequently, the employee wrote to HR and senior management, pointing out that there was a miscalculation and 1 month's notice was missing. There has been no response from the company. On the phone, the HR manager said, "We have completed the F&F, and you have accepted this." The employee mentioned that although an acknowledgment of the cheque receipt was given, if there is a calculation mistake or something is omitted for any reason, it should be rectified promptly.

Please advise if the employee can pursue legal action to recover his dues.

How long does it typically take?

The employee has communicated via phone and email to all relevant individuals, but it is evident that the decision not to pay the notice period came from the top level.

Thank you all for your valuable and useful advice.

Regards,
Rajshree

Notice Period During Probation

If the contract of employment does not mention the notice period during probation but states that one month's notice is required, then the same rule applies during the probation period. The employee should receive notice pay.

Filing a Case Against the Company

The decision to file a case against the company will depend on the employee's status. If the employee has been working as a manager with managerial powers, they will need to file a civil suit. However, if the employee was only given a fancy designation without the authority to sanction leaves, appraise performance, or take disciplinary action against subordinates, they will be considered a workman. In this case, it is easier for the employee to collect money due from the employer as the provisions of the Industrial Disputes Act will be in their favor.

Regards,
Madhu.T.K

Thank you so much. In fact, you answered one more query. Yes, the candidate was given the designation of General Manager, but he had no direct reportees. The individuals junior to him were reporting directly to the CMD, and he had no authority over their performance, KRA, or leave, etc.

Request for Further Assistance

If you could please provide some more help:

1. Can he ask for severance pay? According to him, it is a totally unprofessional and vindictive decision by the top boss to terminate him.

2. How much time does it take (on average) to get a legal response?

Thanks again and best wishes,

Rajshree

I can't say anything about the time taken if he goes for a legal battle, but I would suggest that he should start by writing to the company himself and then lodging a complaint before the Labour Officer. If he was just holding a fancy designation without any supervisory/managerial powers, the Labour department will be able to help him. This process will not take much time. Once a complaint is lodged, naturally, the department will call both parties for conciliation, and of course, a settlement can be expected. Since it is an administrative forum, you can have a direct discussion, and a settlement can be reached.

Regards,
Madhu.T.K

After going through your questions and the response of Mr. Madhu, I do have a basic doubt: why are you so concerned about the retaliatory action to be taken by the discharged employee? Is it because you are part of the HR team that gave the suggestion to do away with him in the manner so-narrated, or out of sympathy towards a colleague shown the exit so ignominiously, or is the victim none other than yourself? Human tendency, in general, is to decide first and look for innumerable options to justify the decision taken. The problem arises only when we bank upon empty justifications supporting a wrong decision.

Professional Conduct and Retaliation Concerns

How can a General Manager professionally impress a CMD when he has no control over his junior colleagues or is not even a formal conduit of the communication process in the organization? The gentleman seems to be thick-skinned. Otherwise, he would have won half the battle by striking the first blow, putting down his papers, and explaining the actual reasons. So, every possibility is there that he will choose any one of the options Madhu suggested. If his only bone of contention is the notice pay as per the contract and not the unceremonious termination, the payment of the same will fully and finally resolve the dispute.

Legal Interpretation of "Workman"

Since there is a perceptible change in the interpretation of the definition of the term "workman" under the Industrial Disputes Act, 1947, by the higher judiciary nowadays by strictly examining the presence of any one of the seven attributes qualifying the term 'workman' in clauses of Sec.2, I don't think the gentleman will waste his time and energy by taking recourse to the provisions of the I.D. Act 1947.

Regards,

Thank you so much for your valuable advice. The discharged employee is a good friend, and he was seeking guidance from me on the proper course of action from an HR point of view. He has been sharing his ordeal ever since he joined that organization. From the second week itself, he encountered some hard facts.

He is feeling sad and anguished as he believes that his career has been ruined due to the company's careless hiring and firing practices. It is a proprietorship company where the whims and fancies of only one person prevail.

He was presented with a completely wrong picture, misleading commitments, etc. He has enough evidence to support his claim. All his colleagues in the company are aware that he has been victimized, but unfortunately, they see it as a part of life and bad luck for the discharged employee.

Now, all he is requesting is a fair settlement of his dues as per the appointment letter, but the company is in denial mode.

In order to recover his fair dues, he will have only one option left, which is to pursue it legally. In that case, when it comes to legal action, can he demand severance pay or some other form of compensation? Would it be advisable to opt for legal recourse or simply try to forget the incident as a bad dream?

It is uncertain how soon he will secure another job, and if he does, whether it will be at the same level in terms of profile and salary. This incident has indeed been a setback in his career path and has resulted in a social stigma that he is currently bearing.

Sir, if you don't mind, may I contact you by phone to seek some help and counseling?

Thank you and regards.

Thank you, Rajshree, for your feedback. In everyone's career graph, when you ascend to the point of a senior-level manager and change your job, it should not be merely in search of greener pastures. You have to choose the right employer who will give you the space to be at your best. Otherwise, ignominy like the one that happened to your good friend is inevitable.

Legal Recourse and Future Employment

Coming to your questions, he can file a civil suit claiming damages for breach of contract as well as notice pay stipulated therein. How long it will take, only God knows. Regarding the impact of the present termination on his future employment, I don't think it will be a black mark since his tenure in your company is for a shorter spell only. If his efficiency level matches the requirements of the new job he seeks, this short stint will certainly pale into insignificance.

Organizational Dynamics and Leadership

Bosses always like followers in their organizations, not leaders. That's why Peter Drucker once said... efficiency leads to insubordination and, in turn, to incompetence.

I approached the Labor Commissioner and explained the case. He felt sad and angry upon knowing such a state of affairs. He also mentioned receiving similar complaints in the past. After some discussion, he accepted the case and referred it to the labor inspector. The office coordinator mentioned that both parties shall be called for the meeting.

Guidance Needed for Handling Meetings

I need some valuable guidance from your side on how to handle such meetings and what approach should be taken. In case the employer refuses to pay, can we approach the civil court? If so, will this act of approaching the labor commissioner go in favor or against us?

Thanks in advance for your time, and I hope to receive your valuable inputs.

Regards

I appreciate your initiative. I am sure that having been employed as a "General Manager," your friend cannot have any relief under the Industrial Disputes Act, 1947. However, there is no harm in the intervention of the Authority under the Act, as it can have some persuasive effect on the part of the management to settle the issue amicably and informally to avoid lengthy and expensive litigation.

During the inquiry, ask for compensation as well as notice pay. If the management agrees to pay only the notice pay as per the contract, it would be better to accept it. Otherwise, file a civil suit. Any remarks received from the management during the inquiry would strengthen your claim before the Court.