Small Manufacturing Unit Dilemma: Can I Let Go of a Technical Staff Member for Poor Performance Without Formal Records?

We have a small manufacturing unit with about 30 employees, including daily wage workers and technical/administrative staff.

Can I terminate a technical staff member for non-performance?

Being a small company, we do not have any method of issuing a notice or official letter for poor performance, so I don't have any records as such.

On account of poor performance, you can terminate anyone, be it technical staff or otherwise. Nevertheless, the measures of performance should be communicated to the employee concerned well in advance, and Key Result Areas (KRAs) derived from these measures also should be communicated. When I say "communicated," I do not mean to say telling them verbally but issuing a proper KRA sheet and obtaining their signature.

Steps of Progressive Discipline

While terminating an employee, it should not be an on-the-spot termination. You have to follow steps of progressive discipline.

Thanks,
Dinesh Divekar

Thank you for the input. Is there any government-approved format for this? We, being a small company, do not have a separate HR department, and hence this has to be done by the company management personally, which is not so easy.

Recruitment and Performance Management

Recruitment of employees as per the job requirements, assigning performance measures, measuring performance, and taking corrective action on under-performance are all internal matters of the company. The government does not interfere with these processes. While there have been numerous rulings by various courts on the legality of termination, the courts primarily consider whether the principles of natural justice were followed.

Addressing Immediate Performance Issues

To address the immediate performance issue, I recommend issuing a warning letter regarding poor performance. Allow the employee time to improve their performance. If there is no improvement, issue a show-cause notice. If the explanation provided is unsatisfactory, termination of employment may be necessary.

Communicating Performance Expectations

Moving forward, communicate to all employees the performance cycle, expected deliverables, measurement timelines, evaluation criteria, evidence maintenance responsibilities, and consequences for not meeting requirements. Initiating this dialogue will facilitate subsequent communications.

Thanks,

Dinesh Divekar

Termination and Retrenchment Under the Industrial Disputes Act

Every termination, except by way of punishment, is treated as "retrenchment" under the Industrial Disputes Act of 1947. If you terminate any worker as a form of punishment, then, according to established legal principles, they must be given the opportunity to defend themselves. Therefore, conducting a formal domestic inquiry is necessary when dismissing a worker.

Regards, S.K. Mittal
[Phone Number Removed For Privacy-Reasons]

Dear Mr. Mittal, is an engineer or technical staff also considered a "workman"? So, other than for punishment, can an employee not be sacked? What is retrenchment? Is it termination due to poor performance or the removal of the last employed staff for lack of business?

Thank you.

Termination for Under-Performance

For the termination on account of under-performance, you do not have to think too much. Such terminations are quite common. Issue the warning letter immediately and give the delinquent employee 1-2 months to improve. If the performance does not improve, then issue the show cause notice.

Whatever may be the reply from the employee, proceed with termination. However, while terminating, ask the employee to submit a letter of resignation. When you call him for the final meeting, ensure he keeps his mobile away to prevent any recording of the conversation. Such meetings should be personal and never conducted over the telephone. In the letter of resignation, he should mention the actual reason for separation and also declare that he has not submitted this letter under duress. A simple handwritten letter is better than a typed one.

Considerations in Termination Process

By the way, we have discussed statutory provisions for the termination of an under-performing employee. Nevertheless, a few questions arise from HR Management too. What is the length of service of the employee, and since when has the employee been underperforming? If the employee has joined in the recent past, then the case highlights deficiencies in your company's recruitment practices.

Accountability in Recruitment Practices

You are punishing an employee for poor performance; however, who will be responsible for the poor recruitment? What will be the cost of poor recruitment, who will be responsible for this cost, and what will be the punishment for imposing this cost on the company? I ask these straightforward questions because, often, the burden of punishment is generally carried by the junior employees while the seniors go scot-free.

Thanks,

Dinesh Divekar