Navigating Labor Laws: How to Implement a 1-Month Termination Policy in a KPO/BPO

Hi All, I am working with a KPO or BPO as an HR, and I want help in creating a "New Termination Policy." Currently, we have a probation policy of 6 months. However, now my senior wants me to implement a policy where we can terminate a new employee (poor performer) after 1 month by paying 50% of the CTC decided in the offer letter if he/she is not performing up to the mark.

Understanding Labor Laws for Termination Policies

I would like to understand how we can implement such a policy in accordance with Labor Laws. Any input on this matter would be greatly appreciated.

Thanks & Regards

You can mention a specific clause in the appointment order stating that the employee is under training for a period of one month. If the employee is unable to cope with the job requirements, he or she will be discharged from service with immediate effect and would be paid 50% of CTC.

In all situations where the employer's actions go against the employee, whether it be a performance issue, salary reduction, termination, layoff, or other issues, there must be proper correspondence. This includes sending show cause notices and allowing sufficient opportunity for the employee to present their views to management. Subsequently, the power rests in the hands of management to accept the employee's points or not; nobody can force the management during the probation period at least.

If this process is not maintained, employees may feel insecure, potentially leading to a dent in the establishment's performance.

In the absence of such communication from the employer's side, if the punished employee seeks legal relief, it often goes against the employer. Therefore, our advice would always be to proceed with proper proceedings.

Thank you.

Hello Megha, I have a few points to suggest in the case.

I think the period of 1 month is too short, isn't it? Until the employee settles down and understands his/her work volume, adapts to seniors' nature and working style, reporting mechanism, etc., a considerable period has to be given to analyze their true potential.

Where we give a 6-month probation period, it should at least be 3 months—if at all it has to be there. Moreover, this particular clause needs to be explained at the time of the interview itself or prior to joining a candidate to maintain transparency.

I am thinking about a situation in which the candidate will be able to establish themselves successfully knowing the fact that they have only 1 month to portray their abilities.

Think well before you finalize a particular course of action. Best wishes.

Termination During Probation

Normally, a letter of appointment shall contain a clause that states, "you will be under probation for a period of six/twelve months during which your services shall be terminated without any notice and without assigning any reasons therefor." In this situation, quoting this clause allows you to terminate the employee without providing a reason. However, it is important to be cautious and ensure that you specify a "Reason," such as poor performance. If you fail to do so, the termination may result in stigma and could be challenged. Obviously, if the performance is poor, it should be documented, and the employee should be given an opportunity to address their performance issues. Without offering a chance to improve performance, termination during probation is not justified. The issue of compensating the employee with 50% or even 100% of their salary is a separate matter.