Job Position Abolished After 2 Years: Can an Employee Refuse a New Department and Seek Legal Help?

I just came across a scenario wherein an employee was recruited for a particular job position. After two years, management decided that the job position was no longer required, so they abolished it and asked the employee to move to another department. However, the concerned employee refused to accept the new department.

Legal Issues in Job Position Abolition

Are there any legal issues involved in this case? Can the concerned person approach the labor court in this situation?

Dear Rajesh S,

Transfer Clause in Appointment Letters

What clause about transfer has been mentioned in the appointment letter issued to the employee? Many companies include the following clause:

Your services are liable to be transferred from one department to another, from one place to another place, and also liable to be transferred to any place, associate company's subsidiary organizations, or any company wherever the interest of the principal in India. Also, your services are liable for deputation or loan to another organization in which the management may have an interest.

In the above paragraph, the verbiage about the transfer clause is clear. If this type of clause is included in the letter of appointment, then the company's administration can issue the transfer order (TO). The conditions of TO are binding on the employee, and if he/she does not oblige to the conditions, then the administration can initiate disciplinary action against the employee.

Counseling for Positive Discipline

However, the above-mentioned approach is of negative discipline. Counsel the employee and explain to the employee that the administration does not wish to have any conflict with the employee. The transfer is in the interest of both the employee and the company. Therefore, he/she should not create conditions wherein his/her exit from the company happens on a bitter note.

Thanks,

Dinesh Divekar

Whatever Dinesh has stated is perfect. To add to what he has said, I would say that as far as an employer is concerned, whenever a position is abolished, there are two options: one is to retrench the employee, or to offer them another position that requires the same skill set and provides a salary and perks not less than what they were receiving in the previous position.

Therefore, even if the employee prefers a legal battle, they will not be able to win it. They cannot directly go to the Labour Court but can approach the Labour Officer, who acts as a conciliation officer. During the conciliation process, it can be stated that the employee has not been denied employment but has been offered a position in another department, which would satisfy the relevant provisions of the Industrial Disputes Act.

Management's Indirect Approach to Employee Removal

Now the situation is that the company doesn't require a person for that position. Instead of terminating him, management offers him new job opportunities, even though they are well aware that he does not possess the skills required for the new position. This is an indirect approach by management to remove an employee from the organization.

Now, his situation is that he doesn't have any other option but to leave the organization and look for other job opportunities.

In this case, the employee has not made any mistakes.

This will stand only if the position is abolished and the new position offered does not require any additional skills. If your intention is to eliminate the employee, you can do so after following the procedures, i.e., paying whatever compensation is applicable, etc. You cannot just transfer an employee to another department or to a position in which he cannot contribute anything and then, after a few months, ask him to leave on the grounds of non-performance. That is injustice and not acceptable.

Dear Rajesh,

It would be helpful if you could provide details of the type of organization you work with. In a government company, it is common for issues like refusal to accept a transfer to arise, whereas in private companies, this situation rarely occurs. If the job, designation, or department/function is abolished, the employee cannot expect to continue being paid for doing nothing. If he does not accept the transfer, he could potentially be retrenched on the grounds that the function no longer exists. (Madhu will have details of the procedure, I am sure.)

However, it is essential to understand what the original function was and what the new function entails. I know many individuals who have left or resigned from their jobs because it turned out to be sales-related, and they did not wish to pursue that kind of role. This factor may also play a significant role in decision-making.

Thank you.

He was assigned the job to take care of operations (supply chain management, stores, and production). After two years, a consultant came and suggested to the management that based on the production capacity, the role of the operations head was not necessary. Following the consultant's suggestion, management asked the individual to work in sales and marketing, an area in which he was not familiar.

Production Head Performance Issue

That is the issue. If you feel that a particular person as a Production Head is not performing, you can ask him to go. But then somebody below him would become the Production Head. It is not that a position like Production Head is redundant.

Anyway, a production person cannot do a sales job because these are two extremes. Anyway, if he has been working as a HoD, then naturally he will not come under the scope of a workman, and hence he may not be able to fight legally. Then pay him whatever notice pay is required as per the contract of employment and relieve him.

Any employee is bound by the terms and conditions stipulated in the Appointment Letter. Generally, one of the conditions stipulated in the appointment letter will be "you are subjected to work in any department or section of the department or any location within India either existing or that may come in the future at the discretion of the Management." Hence, transfer from one department to another department cannot be disputed unless it is deliberately done with a malafide intention.

If it is a workman, he can approach the union and request a change. If it is an executive/supervisor/manager, it is not worth challenging the action of the Management. In large organizations, Management deliberately keeps changing the roles of the staff to make them multi-skilled and competitive.

Sales jobs and operational roles

Sales jobs are suited for a specific type of person. Someone from operations will mostly refuse to take up a sales job. If management insists, they are likely to leave soon.

I am not aware of any company that doesn't need a head of operations, especially if they are handling the supply chain. Therefore, I am uncertain about the organization’s structure or size. I am generally suspicious of consultants who make such suggestions, but we know nothing about the company or business. I feel there is something else we are not being told. The owners suddenly telling a production head that their position is abolished and they have to do sales (not supervise, but actually do sales) is strange to me.

Dear Mr. Rajesh,

Job Redundancy and Employment Offer

On the redundancy of a job position, the company has offered him employment in another department, which seems to be of a similar nature of work. If he refuses to take the job, he can quit the company.

Training for Different Job Nature

If the job is different from the existing nature of work, the company can send him for some orientation courses or training for a reasonable time period and engage him in the new position.

Legal Recourse

If the company is not offering the employment opportunity, then only he can approach the court of law. Now, the company is offering the alternate position. If he is not accepting the position, then he can quit the company.

Dear Mr. Bhaskar,

Question on Job Reassignment

How can being assigned a sales job instead of the HOD Operations & Supply Chain role be considered a "work of similar nature"?

I agree with the rest of the points.

Most of the opinions of learned colleagues posted here are based on the assumption of swapping the job from production to sales specialty, which may not be the case as the initiator didn't describe any particular specializations. It happens at many managerial/senior management positions. Sometimes the incumbent may not have the required skills in a new capacity, and he may be right in declining the new offer, lest he might fail to perform.

Example of Role Misalignment

For example, if a non-technical person is assigned to a highly technology-oriented role where direct involvement in operations is required, how is it possible for him to succeed? On the other hand, if the role involves only supervision and coordination, then it may be possible. However, in this case, the concerned employee has the option to seek an alternate arrangement if possible or to resign/accept termination. There are remote chances of succeeding in a labor court, which may not be applicable considering the levels of positions involved.