Nonperformance Termination During Probation: What Can an Area Sales Manager Do Next?

One of the pharma industry's Area Sales Managers was removed during the probationary period and had 45 working days' salary and 75 days' expenses withheld, citing nonperformance as the reason. What action can the Area Sales Manager take against the company?

No action can be taken for termination, but you can claim the unpaid salary and expenses as per the travel policy. This is because termination during probation cannot be challenged. Moreover, an Area Sales Manager, being a manager, will not receive any protection under the Industrial Disputes Act or Sales Promotion Employees (Conditions of Service) Act. If you are in industries such as pharmaceuticals, paint, electronics, electrical appliances, soft drinks, readymade garments, cosmetics, soaps, household cleaners, disinfectants, automobiles, surgical instruments, biscuits, confectioneries, etc.

One of the pharma industry's area sales managers was forced to accept a pro-rata salary or to quit during the probationary period. The company withheld 45 working days' salary and 75 days' expenses, citing nonperformance. Additionally, his reporting portal was blocked without his consent. Now, the manager is inquiring about his employment status, but no response has been provided to him.

What action can the area sales manager take against the company?

Hi Gaowtham,

Review Employment Contract and Company Policies

Contractual Terms
Carefully review the employment contract to understand the terms regarding probationary periods, salary, expenses, performance expectations, and termination procedures.

Company Policies
Check the company's handbook or policies related to probation, salary adjustments, and dispute resolution.

Document Everything
Records
Keep detailed records of all communications with the company, including emails, messages, and any written notices regarding the salary adjustment, withholding of payments, and blocked access to the reporting portal.

Performance Evidence
Collect evidence of your performance, such as sales reports, client feedback, and any other relevant documentation that demonstrates your work and achievements.

Formal Communication
Written Request
Send a formal written request to the company (preferably through email or registered mail) seeking clarification on your employment status, reasons for salary and expense withholdings, and blocked access to your reporting portal. Request a response within a reasonable timeframe.

Engage HR Department
HR Consultation
Reach out to the Human Resources department to discuss your concerns. HR may provide an explanation or help mediate the situation.

Legal Consultation
Lawyer Knowledge on Labour Laws
Consult with a lawyer dealing with Labour Laws to understand your legal rights and options. An attorney can provide advice based on local labor laws and regulations.

Legal Action
If necessary, your lawyer may suggest sending a legal notice to the company demanding payment of the withheld salary and expenses or filing a complaint with the appropriate labor authorities or a lawsuit for breach of contract and wrongful treatment.

Approach Labour Authorities
Labour Office
File a complaint with the labor office or relevant governmental agency that handles employment disputes. They can investigate your claim and may facilitate a resolution or take action against the company.

Alternative Dispute Resolution
Mediation or Arbitration
If your contract includes a clause for mediation or arbitration, consider initiating these processes to resolve the dispute without going to court.

By taking these steps, the area sales manager can assert their rights and seek a resolution to the issue of withheld salary and expenses, as well as clarify their employment status.

Thanks

Dear Gaowtham,

There is a discrepancy between the two posts you have made. What is the real problem? Are you the concerned manager who has been removed, or are you from HR and wanting to know how to protect the company?

Salary and expenses withholding

Salary and expenses cannot be withheld for lack of performance, but they can be withheld for fraud, fake expense claims, or if the employee did not actually visit the clients as reported. You mentioned that he was given a prorated salary, and then you said he has not been paid for 45 days. I am a little confused.

Possible actions

As for what action he can take, he mostly has the option only to file a civil or criminal case against the company and its directors. However, a legal notice or a call from the Labour Commissioner can also help move things, especially if the employer realizes it could cause a lot of unexpected problems.

If he can show he was not really a manager (no admin rights, no function, or control over subordinates), then he can also file a complaint under the Industrial Disputes Act, I think.

Manager in Probation: Salary and Position Adjustments

Ok, hope this is the same case as in 1. Again, this is the case of a manager in probation. Offering a pro-rata salary or reduced salary is unfair. But if the manager is found to be fit to receive only that reduced salary, what should the management do? They can terminate him. Alternatively, offer a lesser position with a lower salary, right?

Non-Payment of Actual Expenses

Regarding non-payment of actual expenses, the employee has to negotiate or go to court following the Civil Procedure Codes. The Labour Officer will not help him get it just because he was a manager and not a worker or a sales promotion employee.

Definition of a Sales Promotion Employee

The definition of a sales promotion employee as per section 2(d) of the Sales Promotion Employees (Conditions of Service) Act is almost similar to what is given in the ID Act, and it excludes such persons: (i) who, being employed or engaged in a supervisory capacity, draws wages exceeding sixteen hundred rupees per month; or (ii) who is employed or engaged mainly in a managerial or administrative capacity.

Dear Saswata Banerjee,

It can be withheld for fraud, fake expense claims, or if the employee did not actually visit the clients as reported. No such discussion happened between the concerned manager and his immediate reporting officer or with any other hierarchies through any mode of communication. They only cited reasons of non-performance and forced acceptance of a pro-rata salary basis, but that manager denied acceptance as it was not signed in the employment offer letter. After that, they instructed the payroll department to withhold his salary and expenses. Now, the manager is struggling to meet his daily expenses.

Dear Sir/Madam,

You mentioned that you terminated/removed him (two different words with different meanings). Have you conducted a domestic inquiry against him? If you took action without an inquiry, you are required to compensate him regardless. If you conducted an inquiry and found him guilty, then withholding payment and allowances could be a suitable punishment. Your decision to terminate/remove him is considered as punishment.

Thank you.

Dear All,

I have a few questions:

1. Can an organization terminate service without giving a reason for non-performance? Is it legal?

2. Can an employee go to the Labor Court when no show cause or notice is given to him for non-performance?

3. What precautions should be taken to avoid legal issues?

4. Is the ID Act applicable to managerial staff?

Can an organization terminate service without giving a reason for non-performance? Is it legal?

Non-performance is a valid reason for termination of employment. However, the employer should give the employee a reasonable time to improve performance. During probation, if the reason for termination is cited in the termination letter, it is illegal, not justifiable, and against ethics because such an order should be considered a stigmatic order. Before initiating such an action, the employee should be given an opportunity to be heard, and in the case of non-performance, sufficient time to improve performance. If a probationer is terminated without assigning any reason, then that would be proper provided the appointment order contains a clause that "during probation your service shall be terminated without notice and without assigning any reason therefor."

Can an employee go to the Labor Court when no show cause or notice is given for non-performance?

If termination is during probation and without any reason to show, like non-performance, he cannot approach any dispute redressal authority. At the same time, if the order contains a reason for termination, i.e., non-performance, and he was not given any opportunity nor a show-cause notice, he can approach the Conciliation Officer first and then if the conciliation fails, the Conciliation Officer himself may refer it to adjudication. It should be the Conciliation Officer, i.e., Labour Officer who should be approached directly and not the Labour Court.

What precautions should be taken to avoid legal issues?

In order to avoid issues, the contract of agreement/appointment letter should be drafted carefully, and the termination should be based on that contract/appointment order.

Is the ID Act applicable to managerial staff?

Normally, no. A person having managerial powers cannot get any protection of the ID Act. But he should be a manager by functions and not by designation.

Probationer Termination and Legal Protections

A probationer cannot be terminated without assigning a notice and giving a reason, as stated by the Madurai bench of the Madras High Court.

"Probation doesn't mean at-will employment. No society is free when the employees' liberty is made to bend upon the arbitrary will of another. It is possible only in a dictatorship and not in a democracy. No man can be deprived of the right to life, which includes the right to employment. The probationary period should be regarded as an opportunity to learn and become fit as an employee. Probation can't be used as a tool/strategy to terminate the services of the employees without inquiry."

"The courts and the protections of the law are open to everybody. They protect the rights of people who can't protect themselves and protect people against abuses. They also embody notions of equal treatment and fair play. The interest of the man on earth is justice, and the last resort for the man is court.

Therefore, the clauses and policies of a company should be made based on the various judgments of our courts from time to time. When a company drafts a clause in an appointment letter that 'During probation, your service can be terminated without notice and citing a reason' is itself wrong and bad in law.

Nowadays, it's been a common practice that many companies do not adhere to laws and business ethics and terminate employees arbitrarily. In cases, they take advantage of the word 'managerial' to victimize an employee under the pretext that the ID Act, 1947 will not protect him.

The ID Act, 1947 was enacted some 70-80 years ago. At that time, the managerial concept was different. The manager was endowed with proper authority. To me, any employee from bottom to top level, who doesn't have authorities such as cheque signing, leave approving, etc., should be viewed as a common employee or worker and should be covered under the ID Act, 1947 (Code on Industrial Relations Act).

Thanks & Regards,
Krushna