BPO Shutdown in India: Are Supervisors and Team Leads Missing Out on Severance Pay?

Winding Up Operations in BPO Company

One of the BPO companies where I work is winding up operations due to a business ramp-up. They gave verbal confirmation on December 6, 2018, and on December 13, 2018, when all BPO employees started protesting, they said that they have already informed the MP state government office in Bhopal about winding up the company's Indore center for domestic business and relevant governmental authorities.

Severance Pay and Employee Classification

They mentioned that they will not pay the 90-day salary payout to agents/supervisors/TL/STL. Only associate-level employees are eligible for severance pay under the Shops and Establishments Act, 1958, as they are considered workmen. Remaining employees are not eligible for severance pay as they are not classified as workmen. Additionally, no one is eligible for a gratuity payout even though we are winding up the business.

Therefore, I kindly request your views on this matter with the correct laws that apply to us, as more than 50 employees are affected by this situation.

**Location**: India

severance pay, establishments act, shops and establishments, Country-India

Understanding Severance and Gratuity Eligibility in India

📜 Legal Framework:
- In India, labor laws play a crucial role in determining the eligibility of employees for severance pay and gratuity. The Shops and Establishments Act, 1958, is one of the key legislations governing these aspects.

🔍 Severance Pay Eligibility:
- As per the information provided, only associate-level employees are considered workmen under the Shops and Establishments Act, making them eligible for severance pay. However, agents, supervisors, TLs, and STLs may not fall under the workmen category, thus potentially excluding them from severance pay entitlement.

🔍 Gratuity Payout Eligibility:
- The absence of gratuity payout eligibility for all employees, including those not classified as workmen, raises concerns. Gratuity is a statutory benefit provided under the Payment of Gratuity Act, 1972, which mandates payment to employees who have completed a minimum of five years of continuous service.

🛠️ Practical Steps:
1. Review Employment Contracts: Examine the terms of employment contracts to understand the specific provisions related to severance and gratuity.
2. Consult Legal Experts: Seek advice from legal professionals specializing in labor laws to clarify the rights and entitlements of employees in the given situation.
3. Engage with Authorities: Consider engaging with relevant labor authorities or unions to address the issue and explore potential remedies.
4. Collective Action: Encourage affected employees to collectively voice their concerns and negotiate for fair treatment during the winding-up process.

🚨 Key Consideration:
- It is essential to ensure compliance with applicable labor laws and regulations to safeguard the rights of employees, especially in scenarios involving business closures or layoffs.

Seeking Clarity and Resolution