Facing Job Loss: What Are My Legal Rights and Entitlements in This Retrenchment Situation?

Hi, I am currently employed in a foreign FMCG company and have been for the past two years. The company entered the Indian market in July 2014, and on July 5, 2016, they informed all employees that they would be winding up operations in India. All employees have been asked to seek alternative employment. The company has committed to paying everyone three months' salary (as per the contract), an additional month's salary as discretionary pay, a bonus, and a cash-out for shares. They have instructed me not to report to work from August 1st onwards but assured me that my monthly salary for August will be paid in August, and the Full and Final settlement for September and November (including discretionary pay, leaves, and shares) will be processed by September 30th. The bonus amount will be disbursed in December 2016.

Questions Regarding Entitlements and Payments

I have the following questions:

1) What am I legally entitled to be paid according to the contract? (The notice period in the contract is three months).

2) Should I wait until September 30th for my Full and Final settlement if I am relieved from duties on July 31st? Should I also wait until December 31st for my bonus payment? I believe I should receive payment on July 31st if that is my last working day.

3) The share cash-out being offered pertains to the previous year, not the current year. Am I entitled to shares for this year? (Please note that the company's financial year runs from October to September, indicating that I have completed this year but am not being provided shares for the current year).

4) Can I pursue legal action, seeking one year's salary as severance? I was initially promised a career development plan by the company, and after dedicating two years to them, they are not offering anything beyond their legal obligations.

Please advise.

Regards

In my opinion, all that is to be paid as per the law has been offered to you. Therefore, even if you pursue legal action, you will not receive anything extra. A one-year salary as a retrenchment benefit is practically impossible when your service with the company is very short. You cannot forget that when the company appointed you, it had a long-term vision. Unfortunately, that vision did not materialize, or the company is under the impression that it cannot be achieved, which is why the company is closing down its operations. When the company sought employees like you, they offered a job, and when you needed a job, you accepted it. Now, things have changed.

Every decision involves an element of risk. Sometimes the risk will be minimal, and sometimes it will cost you a lot, as has happened in your case. Therefore, forget about what has happened, and with the experience you have gained over a period of two years, you can find another job. If you go to court, you cannot join another company, and you cannot fight for loss or damage. Even if you do fight, how long will it take? Will the case be decided in one month, six months, or ten years? It will likely take at least ten years to settle the case. The situation will be more challenging when the directors of the company are from a foreign country because they may not appear for the hearings at all.

The only issue with such a settlement is the date on which the payment is made. It should not be September or December; instead, it should be on the day of your exit, i.e., July 31st. For this, you have to fight, and if necessary, involve someone who can negotiate or mediate with the management. I would suggest that involving the District Labour Officer would be ideal in such cases because an agreement on the date of payment of compensation made before a government officer will always be binding, and the management cannot deviate from that. Therefore, decide on the payment date and make an agreement, either bilateral or tripartite (which is always preferred).

Regards, Madhu.T.K