Is Being Asked to Resign Considered Termination or Voluntary Resignation in HR Terms?

I have been asked to resign from my post in an IT company. During the call, initially, the reason was stated as 'downsizing'. In the last 5 seconds of the call, "performance issues" were introduced. Now, the company policy states that in case of termination, no leave encashment will be provided. During the call to discuss encashment, the HR said your case is of termination as we asked you to drop your papers.

My question:

A) Does being asked to resign fall under termination or voluntary resignation?

Constructive Dismissal

It is constructive dismissal when an employee is forced to resign from their job against their will because of their employer's direction or conduct.

Weighing Your Options

You can ask for a day or two to weigh your options. This will save you from signing any document without carefully vetting it and help you reach a decision that will benefit your career better.

Requesting Severance Packages

While employees who 'resign' usually are not paid severance packages (which usually include a few months' pay and benefits), if you are being compelled to do so, it is reasonable to at least make a request for it.

Making Informed Decisions

The best way to proceed is to understand what is best for you and your future and ensure minimal damage is done. Making hasty or rushed decisions or reactions at this junction might do more harm than you anticipate.

Regards,
Vijay

"Asked to resign" is not a terminology accepted by any law. Companies do this just to avoid the legal complications of termination. Obviously, in order to terminate an employee, a lot of procedures are required to be followed. To avoid such procedures and legal battles, they ask the employees to resign. It is a mutual separation. Under mutual separation, both the employer and employee will be negotiating the terms to arrive at a solution.

If performance has been the reason for termination, the employer should establish that you were not performing. For that, solid evidence such as a performance card, evaluation of your performance, recommendation to undergo a Performance Improvement Plan (PIP), and evidence of the training program offered should be available. An employee cannot be asked to leave on a fine morning citing the reason that they are not performing.

Redundancy and Legal Procedures

Coming to the other reason cited by the employer, i.e., redundancy, I would like to say that the employer has to follow the procedures laid down in the Industrial Disputes Act to terminate an employee on account of redundancy. It should be the last employee employed in a particular department who should be retrenched first. The employer cannot pick and choose to terminate. Certainly, in the case of managers (not by designation but by function), these laws will not apply.

Therefore, before putting in the papers, get these details clarified. They cannot say that performance is the reason. If they say that, your career will be spoiled. If you were not put under PIP, certainly, you should question it. If they say "downsizing" is the reason for termination, then you should say that the last person should be sent out first and they cannot pick and choose employees. Then they will agree to a mutual separation.

Leave Encashment

Coming to leave encashment, I would say that, as per the law, an employee discharged from service for whatever reason, whether by resignation or termination, the unavailed earned leave should be allowed to be encashed. Your HR person has not read the law properly. Ask them to read the Shops and Commercial Establishment Act.

Resignation and Termination

Resignation means an employee leaving the company willingly for future prospects.

Termination Clause

The Termination Clause is for misconduct, non-performance, and other issues when the organization doesn't want to continue with an employee. If it's misconduct, the company will issue a warning letter before termination. In the case of performance issues, a Performance Improvement Plan (PIP) will be issued for improvement.

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Thanks for your insights, guys. I've resigned already. Now, while clarifying the encashment part, this issue came up. Hence, I came here for advice. I know there are people who can share their valuable insights, and hopefully, this post will become a helpful resource for future searchers.

HR's Assertion on Termination

On the call, HR is constantly assertive, saying, "We have asked you to drop your papers, which will be considered under termination." They want to terminate me, so they asked me to drop the papers. As per company policy, in termination, no leave encashment is given.

Now, I am unsure of what I should do in this case.

I think I have clarified my opinion on the issue within a legal as well as practical framework. If HR is saying that on termination, no benefits like leave encashment are available, he is wrong. He should read the law first before saying that on termination leave cannot be surrendered but is available only when the employee resigns.

Termination vs. Resignation

Now, if they are saying that you are asked to resign and it is equal to termination, they themselves are admitting that they have terminated you. Then my question is on what grounds have you been terminated? Were the procedures to be followed to terminate an employee adhered to? Were you given a charge sheet? Was any inquiry conducted? Simply by saying that they do not like you, they cannot terminate you. They should follow the minimum protocol of giving the employee a notice or payment of notice pay as per the contract of employment.

HR Practices and Employee Rights

It is unfortunate that your HR Manager is living in a world of dreams without realities in place. It is unfortunate that he has not taken any advice from seniors or a group like this. He is doing all this on the faith that you (or any other employee) will not move against him or the Company because they can blacklist or put negative comments on your service records, which will cause irreparable loss to you in the future. This attitude should be changed. The background verification is a dangerous weapon. But if you are ready to block it, there are ways to make the employer and the illiterate HR Manager know the reality.

If it was on a performance basis, then I was not informed that my performance is low. In the quarterly assessment, the manager verbally pointed out issues, which felt like "showing the dark even if it's sun." No emails regarding performance were received, and I wasn't put on a PIP.

In IT companies, this is a common practice, as they want to save as much as they can.

I don't think after asking them about warning emails or PIP they would say anything or give me the leave encashment. However, there is always a senior HR who may intervene if the junior HR fails, and directly the senior HR will say no.

I don't know. Let me take the conversation over email and discuss.

Employee Resignation Due to Termination Factors

When asking an employee to resign due to termination factors, the employee must receive emails related to that first. Verbal communications should also be documented in an email and sent. Right?

No. Normally, no employer will send an email asking the employee to resign because if they do so, it will become evidence that the employee has been asked to leave. Instead, the employer will only tell the employee verbally that they should go. Once the employee submits their resignation, it is regarded as an initiative from the employee to leave. Then there are no legal issues involved, and the employer can settle the accounts, which shall include salary and the leave balance, whatever is available.

Employer's Misunderstanding

But your employer or HR is being unreasonable. They are asking you to resign and at the same time saying that in records it would be construed as termination, and on termination, the employee is not paid any leave balance. The latter part is against the law, anyway, and it will not work as per their decisions. The former part, that resignation will be treated as termination, is unreasonable. When an employer is not happy with an employee, they can ask them to leave. They should have the courage to terminate the employee after following the protocols involved. No law states that an employer should keep a non-performing employee in service. They can terminate them, but it should not be done abruptly. The employee should be given at least a reasonable opportunity to improve their performance. For that, the employee will be put under a Performance Improvement Plan (PIP). After a few months, say six months, if the performance is still lacking, the employer can terminate them by paying as per the provisions in the contract of employment or the certified standing orders.

Employee Benefits and Resignation

Normally, when the employee is ready to leave, whatever benefits are payable will be paid in full. There will not be any bargaining. Simply, if the employee who is to be eliminated is ready to go, they will not look into other issues but will just allow them to leave. They cannot have their cake and eat it too. Your employer wants to eliminate you but will not compromise on compensation or other payments. That is why I said your HR is being unreasonable.

You should not expect HR to send an email saying that you should resign. But if you do not resign, they can send a termination letter. Again, you can defend that termination by contesting it, saying there is no reason for termination. As far as possible, avoid termination. It will lead to unpleasant situations for both you and the company. The company will, in turn, take it against you and spoil your career. Therefore, it is up to you to decide whether you should fight for the leave surrender salary and potentially spoil your career or just leave it and find another job.