Can Employers Use a Cessation Clause to Quickly Terminate Underperforming Employees?

Dear Experts, can the employer relieve an employee from employment at any time by imposing the clause of cessation of service as per the order of appointment? This query arises from the employer's need to promptly terminate the service of an employee with an unsatisfactory attitude and performance, without adhering to the formal disciplinary procedures. It's important to note that the employee in question is not covered under the Industrial Disputes Act.

I seek the advice of experts on this matter.

The cessation clause stipulates "giving 3 months' notice or payment of 3 months' salary (Basic + DA only) to the other on either side."

I appreciate your guidance on this issue. Thank you.

Sincerely, [User's Name]

Dear Sridharan Venkataraman, if the performance of the employee is subpar, did you issue him the warning letter(s)? Did you issue him the show-cause notice? In the recent past, I have given two replies on removing the employee due to poor performance. Click the following links to review the replies:

https://www.citehr.com/627975-termin...ml#post2463508

and

https://www.citehr.com/628017-need-s...ml#post2463589

The above replies are applicable to your query as well. Please go through the replies and provide further information.

Thanks,

Dinesh Divekar

The employer can relieve an employee, and an employee can leave the employment at any time under the clause of cessation of service in terms of the Appointment Order.

The employer can end the service by paying the Notice Period amount, but since this is a difficult period owing to the pandemic, the employer should consider making an extra payment over the notice period amount. This would be beneficial. In this connection, call the employee, make him understand the whole situation better, and ask him to tender resignation rather than face termination. Explain how this termination could spoil his future career.

Discharge Simpliciter: Legal Perspective

Such termination of service of an employee as per the appointment terms is termed as Discharge Simpliciter. The Bombay High Court recently considered a matter involving the discharge of a District Judge as legal and valid. In Ajay Ramesh Dinode vs The State Of Maharashtra, decided on 30th January 2020, it was held that "the impugned order was passed taking into consideration the overall performance, conduct, and the suitability of the petitioner for the job. While taking such a decision, neither notice is required to be given to the petitioner nor an opportunity of being heard is required to be given, since the case of the petitioner is not of removal or it cannot be termed as stigmatic/punitive, the same is of simple discharge of the petitioner from service. It cannot be termed as removal for any misconduct or on the ground of indiscipline. While judging the performance of the petitioner, overall suitability, performance record, so also reports from higher authorities were called and were looked into before arriving at the decision of discharging the petitioner from service. In this view of the matter also no fault can be found with the impugned decision."

So there is no issue in issuing an order of discharge, provided there is an overall assessment of the suitability on the one hand, and the termination order is simple and is not indicative of any action based on misconduct. Indeed, discharge simpliciter shall not be used as an easier option to avoid holding an inquiry.

As suggested above, the better option is to seek resignation, but if the employee is recalcitrant, the discharge could be considered.