Transitioning to Task Rate Pay: How to Draft a Contract Termination Notice for Employees

Transition to Task Rate Compensation

I work for a company in the construction industry. We have had problems with underperformance by some of our employees who were hired on a fixed monthly salary. Management has now decided to move all the employees to a task rate. I have been asked to write a letter notifying the employees that their current contracts will be terminated in two weeks, and the new terms will be implemented. Please assist me in drafting such a letter. All the affected employees have been advised and are also waiting for this documentation.

Regards,
Flomaz

The service of contract employees should also be governed by the terms of the appointment order issued to them. If a provision is included in the appointment order to terminate the service of any employee due to poor performance or underperformance, then you can invoke such a clause and terminate the services of those employees. On the other hand, if a general clause for termination of employees exists, which allows for termination by giving one month's notice or payment in lieu of notice, you can terminate the services of an employee if their performance is found unsatisfactory by providing them with one month's notice or by paying one month's salary in lieu of notice so that the issue will be settled.

Regards

I am in full agreement with Mr. Rao. Please proceed as per the termination clause mentioned in their appointment letter. I would like to add one more thing: the Supreme Court has opined that you cannot terminate your staff with a simple note (State Bank Of India Vs Santosh Kumar). Therefore, terminating a group of staff can lead to legal complications.

Avoiding Legal Complications

To avoid these potential issues, please try to obtain a resignation letter from them. This could be a beneficial option. Otherwise, provide them with one or two months' notice, as stipulated in the appointment letter, or offer them one or two months' salary in lieu of notice.

Case Study: Forced Resignation

I have also encountered a similar situation where four employees resigned. However, after they received their full and final payment, we received a court notice. After a five-year court battle, they were able to prove before the court that they were forced to resign. It is important to note that the court typically favors employees in such cases.