Firing an Employee: Is It Necessary to Provide Reasons and Proof Along with Severance?

Hello!

I wanted to know, when the company is firing an employee, do we need to give him/her the reason for firing along with proof? We are paying three months' salary to the employee as mentioned in the appointment letter.

Kindly let me know.

Thank you!

Regards, Nagaveni

Reasons for Employee Termination

There are two reasons for which employees are fired: underperformance or misconduct. Whatever the reason may be, you need to conduct a domestic inquiry. After the domestic inquiry, when the charge sheet is issued to the employee, it serves as communication regarding their termination. Following the issuance of the charge sheet, the employee is expected to respond, thus completing the communication process.

It seems that you have not followed or do not wish to follow the due process of the law. If you had followed it, you would not have raised this query!

Thanks,

Dinesh Divekar

"There are two reasons for which employees are fired: under-performance or misconduct. Whatever the reason may be, you need to conduct a domestic enquiry.

If the person is a contract employee and the terms stipulate that the company can terminate the contract without assigning any reason with one month's notice from either side, otherwise, as learned member Shri Dinesh has mentioned, should be kept in mind.

The procedure should not be short-circuited for the convenience of the organization."

Reasons for Terminating an Employee

You may have a reason for firing an employee, whether due to underperformance, indiscipline, untrustworthiness, accountability failure, money swindling, bribery in contracts, or involvement in criminal cases. It is essential to mention a valid reason when terminating an employee. While organizations often have a clause stating, "Your services may be terminated without providing reasons during the probationary period," such provisions are intended for maintaining discipline and should not be misused.

Terminating an employee should not be seen as a way to eliminate excess staff; reasons for termination should be provided in an orderly manner, with the employee's response duly noted for the organization's improvement.

Best of luck...

Reasons for Termination/Discharge Beyond Disciplinary Grounds

There are also some more reasons for termination/discharge (other than being terminated/discharged on disciplinary grounds):

• Closure of projects/want of orders and being on the bench strength for a long time.
• Closure/merging/absorption of a company with another company.
• Optimization of existing manpower/rationalization.
• Completion of tenure and so on.
• Cost-cutting.
• VRS/VSS.

In these cases, most companies give an option to employees to "resign" (of course with due benefits as agreed upon) so that they will not face problems when searching for employment post-separation. It is only fair on the part of the employer to provide a trouble-free "Reason for leaving" while issuing the relieving letter/service certificates in order to assist those affected.

Agree with Mr. Kumar S. If it is retrenchment, then the company should be fair enough to deal accordingly and relieve the employee. If the employee is being terminated for other reasons, i.e., on disciplinary grounds, then proper domestic inquiry and all related procedures have to be taken into account. Lastly, termination with reasons thereof. Paying 3 months' salary is not a favor done to the employee; please keep that in mind.

Employee Termination: Best Practices

In a nutshell, the answer to the original poster of the query is: Employees are human resources, and well-treated and engaged employees are the real strength of any organization. Termination of the relationship needs to be done with care and following principles of natural justice. Meet all financial dues as laid down in the appointment order. Don't find ways to cut down on what the employee is due to get.

Obviously, a proper reason is necessary for termination. Inquiry into facts which ultimately lead to termination should be done by the employer, giving the employee a full chance to defend himself/herself. I would quote Matthew 7:12, which conveys a thought of great wisdom: "In everything, then, do to others as you would have them do to you. For this is the essence of the Law and the Prophets."

Be fair, transparent, and balanced in your actions as an employer.

Termination Policies in Our Country

In our country, we do not have a hire and fire policy. There are only two ways in which an employee can be terminated.

Termination by Punishment

The first is by way of punishment, which should be preceded by a chargesheet and a domestic enquiry to give the employee an opportunity to prove their innocence. If you are engaging more than 50 employees, then the enquiry is conducted as per the Standing Orders Act.

Termination by Surplusage

The second way is by way of surplusage, i.e., if the employee is rendered surplus for some reason in their category of workmen. This is governed by the Industrial Disputes Act, which is a central act applicable pan India. If the retrenchment is to be carried out, then an individual notice citing reasons for retrenchment has to be given in addition to retrenchment compensation at 15 days' salary per completed year of service and one month's notice pay. The retrenchment has to be valid and justified in the eyes of the law.

All this is provided the employee is engaged in manual, clerical, technical, or supervisory work drawing a salary less than Rs. 1600. Or, even though the salary is higher, by virtue of the nature of duties, they are in the workman category.

Regards

Dear Nagaveni, whatever may be the reason for terminating the service of an employee, you need to follow the rules mentioned in the employment standing order. You need to calculate the dues based on that and pay that amount. However, termination is not a wise solution. I believe the employee has a family dependent on him/her, so we need to provide an opportunity for development in performance or behavior, as applicable. If the proper procedure is not followed, he/she may take legal action against you. Therefore, follow the rules to stay on the safe side.

Regards

The main reason for removing an employee is based on one's performance. If the performance is not satisfactory, you can always guide the person. If it is still unsatisfactory, you need to issue warning letters to observe if the candidate improves. If improvement is not found, you can ask the employee to leave.

However, paying three months' salary to an employee and then removing them according to the whims and fancies of management is not the correct way. The due course of law should be followed.

Notice Period and Termination under the ID Act

If the employee does not fall under the purview of workmen under the ID Act, please refer to the clause mentioned in the appointment letter regarding the notice period. Generally, every employer states in the appointment letter that the notice period is when the management expects you to be with the company for a long time. However, this employment is terminable by giving one month's or two months' notice, as mentioned.

Therefore, as per the aforementioned, if the employee does not fall under the purview of workmen under the ID Act, you may release him by only giving him notice pay with all dues.

Thank you all for your advice, suggestions, and comments! I had a smooth firing session last week with one of our employees. We had many reasons to fire him, and the main reason was that, although he was a Team Leader, he never used to take any responsibilities. He was acting kind of like a Union Leader and recently started misguiding the other staff in the department.

We had given him oral warnings, but it was never documented. In fact, until last month, we had never fired anyone in our company. I feel that this may be the reason most of our employees think it is okay to do whatever they want here, as nothing is going to happen. We wanted to change that impression.

The reason for asking the above question is because we knew that no matter what reason we gave, he would not accept it due to his nature. We did not want to engage in unnecessary arguments that could lead to something else.

We provided him with all the benefits he was eligible for and let him go.

Thank you! Happy weekend!

Yes, before firing an employee, a show cause should be given to him explaining the reason. A company cannot fire someone without any reason. It would be more appropriate if a company issues a warning letter first and then later a show cause notice. Finally, a termination letter with the reason should be provided. Everything has to be handled professionally.

Downsizing and Its Impact on Senior Employees

These days, companies often resort to downsizing, and in the process, senior employees (typically highly paid employees who may have worked with the company for many years) become the first target to be replaced with younger, lower-paid employees. These younger employees do not have the same level of legal protection, and therefore, they are often compelled to accept the settlements offered by the companies. In such cases, payments such as notice pay, termination benefits, leave pay, etc., are provided, and some companies may also offer additional severance pay.

Regards,
A. S. Bhat