Has company rights to terminate employee during probationary period due to lack of work?

Dear Sir, one of our employees has been terminated with a one-month notice period during the probationary period (12 months) due to a lack of work in the industry. His total service is 4 months and 6 days. His probationary period is 12 months, and here his probationary period (12 months) is not completed.

The following clause was included at the time of issuing the offer letter: “You will be on probation for a period of 12 months. Upon completion of probation, your services will be reviewed, and accordingly, your employment will be confirmed, or the probation may be extended at the discretion of the company.”

Our query is as follows

(i) Is his termination legally correct?

(ii) Is his termination violating any labor law (The Industrial Disputes Act, 1947, etc.)?

(iii) Does the company have the right to terminate an employee during the probationary period due to a lack of work in the industry by giving one month's notice on either side or one month's salary in lieu thereof?

(iv) Please provide procedures under labor law for dismissal, discharge, removal, retrenchment, termination of workman, suspension of an employee, etc.

(v) Is there any possibility for the employee to take any legal action under labor law against the company if he has been terminated with a one-month notice period during the probationary period (12 months) due to a lack of work in the industry?

Please clarify.

Thanks and regards,
T. Thirumurugan.

The queries are answered as follows:

(i) Is his termination legally correct: To put it better, it is not illegal to terminate a probationer with just a little more than 4 months' service. The important point to note is that being on probation, an employee is being assessed for his suitability for long-term employment. He has not been found fit as yet, the basic premise being there is sufficient workload on a long-term basis to sustain that employment. But if the basic premise itself is eroded, then nothing remains.

(ii) Is his termination violating any labor law (The Industrial Disputes Act, 1947, etc.): No, it is not violative of any law including the ID Act.

(iii) Has the company the right to terminate an employee during the probationary period due to a lack of work in the industry by giving one-month notice on either side or one-month salary in lieu: Yes, for the reasons explained above.

Procedures under labor law for dismissal, discharge, removal, retrenchment, termination of workman, suspension of an employee, etc.:

Dismissal and removal are the termination of service of an employee as a result of disciplinary action, whereas discharge also amounts to termination of service. It could be on loss of confidence or any other reason but must be enforced as per terms of appointment regarding the notice period. Retrenchment is a technical term employed in the ID Act to denote the special terms and conditions of terminating the employees under the 'last come first to go' principle. Suspension of an employee does not terminate the master-servant relationship; in other words, the suspended employee continues to be an employee, but the employer has chosen not to take the work from him or her pending the disciplinary action against him or her. The procedure for disciplinary action inclusive of suspension has been detailed in this forum too many times and is hence not repeated. The retrenchment procedure is given in Chapter V of the ID Act and, depending on the size of the organization concerned, the statutory conditions therein have to be strictly ensured. Discharge or the discharge simplicitor, as it is properly called, simply tells the employee that his services are no longer required at the end of the notice period or on payment of its cash equivalent. The detailed procedure to be adopted depends on the facts of the matter and needs more elaboration of the factual context.

(v) Is there any possibility for an employee to take any legal action under labor law against the company if he has been terminated with a one-month notice period during the probationary period (12 months) due to a lack of work in the industry: It is NOT advised so.

While it is unfair to terminate a probationer just because there is no work, legally, not much can be done. When hiring or employing, the company is expected to study all factors, including cost impact and role. It is a failure on the company's part. The poor employee might have sought another job and not joined if not for the flawed planning of the company.

This is a bad on the part of any establishment to terminate an employee on vague grounds that there exist no work in the industry after taking on the job. However, the termination stands legally correct as the employee was on probation and given notice. No one can prevent someone if they want to seek the help of the judiciary. If the employee challenges his termination, the management has to provide the grounds that compelled the termination before the authority.

With the insights above, I think it's unfair for the concerned employee. The company could have given him advance notice that he should start searching for a job or at the most ask him to give a resignation letter. Has the company handed him a 'Termination letter' stating the reason of low work volume within the company?

Sir, it seems that it is a layman's query. The above employer has framed company recruiting norms as his whims and fancies. The Standing Orders Act will guide you; search on Google and refer to other relevant labor acts as well.

Let the actual sufferer present his grievance before this forum instead of relying on layman's hearsay questionnaires, please.