Immediate Termination in Manufacturing: What Are the Legal and Financial Repercussions?

Immediate Termination Repercussions

I work in a manufacturing concern and I want to know one thing: what are the repercussions a company has to face if they terminate an employee with immediate effect? Does the company need any justification for this, and if yes, are they bound to pay 2 months' salary to the employee? Kindly clarify.

Regards,
Nandini

It depends on the circumstances of the case. If an employee on probation is asked to go without prior notice, nothing will happen, and the coworkers cannot agitate on the issue. Whereas, if a confirmed employee is asked to go without reasons, without giving him an opportunity to be heard on the charges leveled against him, and without offering him terminal benefits, the matter will become serious. This also will depend upon the employee terminated and the strength of the Trade Union.

In case of termination on a charge of an offense involving moral turpitude for which there is solid evidence against the employee, the chances of the trade union raising a dispute are also very rare. Therefore, the repercussions of termination depend on the issues behind it. The members will be able to advise you only if we get an idea about your organization, the attitude of the Union, and the charges resulting in termination. Please elaborate.

Regards,
Madhu.T.K

The employee is being terminated for non-performance. He was issued a memo once and was also put under observation due to his non-performance. Can we terminate him on the basis of non-performance? Kindly help me with this issue.

You can, but after conducting an inquiry and producing evidence that proves the employee has been a non-performer. Performance should be quantitative and not subjective when it comes to evaluation. It should be such that when a manager is evaluated, they will not place everything on their subordinates/frontline people to escape responsibility. Cascading can be done, but it should be objective and quantifiable.

Therefore, when an employee's performance is evaluated, they should be given ample opportunities to explain what led to their underperformance. Terminating an employee based on subjective performance evaluation without giving them any opportunity to explain would be unlawful.

It depends on the reason for termination. Termination from service with immediate effect is generally advised for occasions that are serious in nature and against the interest of the company, or for performance-related reasons with adequate improvement plans/warnings. Kindly check the termination clause in your offer letter, letter of appointment, or any agreement executed between you and your company.

Hope this helps...

Regards,
Nayagam SP

In reference to your query, I am of the opinion that it all depends on the status of the employee, whether he is a probationer or a confirmed employee. Both categories of employees are governed by different sets of rules.

For instance, a probationer shall not be entitled to any notice or pay in lieu thereof if his services are terminated. However, for terminating the employment of a permanent workman, a notice in writing as per the terms and conditions of one's appointment letter needs to be given by the employer or paid salary in lieu of notice. This is sometimes called "Termination Simpliciter."

But if the services of an employee are terminated on disciplinary grounds, no salary or wages are payable to him, provided the charges against him are proved after holding a proper court of inquiry.

Regards,
BS Kalsi
Member since Aug 2011

The termination of an employee certainly has repercussions for the employer. In the case of termination during the probationary period, there are not many obligations, and the employer can terminate on the grounds of unsatisfactory performance by giving one day's notice, provided it is mentioned in the terms of the appointment order.

Termination of a Confirmed Employee

For a confirmed employee, any termination should go through a Domestic Inquiry to prove the charges leveled against them. The Domestic Inquiry should be conducted in the Principle of Natural Justice, providing the employee with a chance to defend their case either in person or through their colleagues or office bearers, of which they are a union member.

Regards,
Adoni Suguresh
Sr. Executive (Personnel, Administration & Industrial Relations) Retired
Labour Laws Consultant