Facing Layoff Confusion: How Should I Handle My Company's Silence on Legal Notice?

Dear Sir, kindly advise on the below situation. I work in an IT company.

Case due to COVID-19:

On 26th March 2020, the Manager called me and said I would be laid off. When I asked about the terms and conditions, he mentioned two options:

1) Immediate termination of service on 31st March 2020 along with 3 months basic pay and leave salary.

2) Time off Service Scheme (TOSS) where there would be 3 months of service on paper with NO SALARY, only PF will be paid. The company can revoke TOSS or terminate the services on 30th June 2020.

I agreed to the first option. However, I later received a letter from HR stating only the second option, i.e., TOSS. I requested the management to pay as per the call by the Manager and offer letter, but to no avail.

A legal notice has been served to the company to pay as mentioned in the offer letter for the separation process. The offer letter states:

"Notwithstanding the clause on retirement from the company's service, your employment with the Company is subject to termination on 90 days prior notice by either side. The Company reserves the right to substitute the notice period by paying you basic salary in lieu of the notice period."

It has been a month, and the company has not responded to the legal notice despite reminders. The three-month period will end on 30th June 2020. The company is pressuring to withdraw the legal notice to provide further documentation related to employment.

What should I do now, considering there are other employees in a similar scenario? Kindly provide your valuable and experienced advice to handle this situation.

For employees who have not received such notices, the company is paying salaries with about a 20% deduction. I have not received any salary for the last two months nor received any job offers.

I am eagerly awaiting your reply.

Thank you.

Thank you for replying. The company took over from another company on 1 April 2019, so the length of service is 1 year as of 31 March 2020. I am working as a software consultant.

Since the company has not responded to our legal notice, the lawyer suggests that we file a civil case. Furthermore, the lawyer mentions that the insolvency limit is now 1 crore due to COVID-19; earlier, it was 1 lakh. This change may weaken the case.

I am having difficulty understanding this point clearly. I am a salaried employee and not a partner in the company.

Filing a civil case will be time-consuming, and they will not provide me with any documents for new job opportunities until the outcome of this case.

The company has not had projects since December 2019, and some projects under discussion got delayed due to COVID-19.

Similarly, out of 30 employees, only 4 have come forward to serve a legal notice. I have humbly requested them four times to settle the account as per the terms and conditions of the offer letter before serving a legal notice.

What could be my course of action? Kindly suggest.

Legal Advice on Employment Termination

I could foresee this situation, and that was why I said since you have already initiated a case against the company, you may go ahead with it. You should have used this forum before sending a notice. You are well aware of the situation of the company, which has an empty order book. You have not even completed a year of service when you were asked to leave. Twelve months of service with 240 days working naturally give an employee a lien on employment but not for an employee hired as a consultant. That is why your advocate has suggested filing a civil suit. What happens? You will end up paying fees; nothing else can happen.

In my opinion, your company has been very fair when compared to other companies. At least they have given you 3 months' time. If you do not withdraw the case, you will not get a service certificate. Again, if you are given a service certificate, you cannot expect that the company will give a fair reference to your future employers. They can certainly put this in the background verification.

Therefore, my advice is to withdraw the notice (a notice once served is served and it cannot be withdrawn, but you can give an undertaking to the company that the case will not be initiated) and ask for a settlement.

Thank you for replying swiftly. Kindly consider the fact that for the remaining employees, they have funds to pay with only a 20% salary deduction. Why are they not paying my lay-off salary, which is 40% of my gross salary, as they have committed on the call? Their intention seems to be to abandon an employee without paying any amount.

Since they have acquired me from another company, my total service is 2.5 years, including both companies. My total service up till now is 18 years (across 7 companies). I have enough appreciation emails from this management for future employment.

Three months of time is on paper only without salary. Considering my vast experience, I do not need this. It is not only about paying the lawyer's fees; somewhere, fair play on the part of the company and justice matters.

Also, consider the fact that a couple of months back, I wanted to leave and asked them if the notice period is negotiable. They said it is 3 months non-negotiable. Please elaborate on insolvency as the lawyer has pointed out.

The concern is not only about the ending of regular employment/termination; it is about compensation that an employee should receive as per the terms and conditions of employment or, in the present scenario, a decent amount for a Golden Handshake.

I request you to consider the above facts and let me know your advice.

IBC Act 2016 Suspension

The IBC Act 2016 is currently not applicable in your case. The government has suspended the operation of the IBC temporarily, which is a fair move by the GOI during COVID times. However, you need to negotiate with the company to get the best deal possible. A civil suit for the recovery of unpaid dues is an option, though it comes with the cons of time and expense.

I understand your frustration, but it's important to be practical; we live in an unequal world where justice is often delayed to the point it becomes injustice. Day in and day out, we witness injustice and blindfolded justice. That is an undeniable fact. If the company pays even a part of your dues, consider withdrawing the notice. Obtain good references and move on.