Dear members,
A news clipping from today's TOI is attached to this post. The news highlights the importance of following the correct process while terminating an employee. The following emerges from the news:
a) A software firm employed an employee in Feb 2015. He was on probation for six months.
b) The employee received training in July-Aug 2015 and again in Nov 2015 (in the USA).
c) In November 2015, the employee was paid a bonus.
d) In December 2015, the company confirmed his employment but immediately placed him under the Performance Improvement Plan (PIP).
e) Due to differences, the management terminated his services in December 2015.
f) The employee challenged the termination, and the labor court ruled in the employee's favor. His services were reinstated with back wages.
g) The company challenged the ruling by the lower court in the High Court. The High Court set aside the ruling on reinstatement and the payment of back wages but told the company to pay compensation. The employee weakened his case because of his rowdy behavior. He had sent threatening emails to the management.
Observation of Inconsistencies in the Decisions Taken by the Management:
h) If the employee's performance was poor, then why was he confirmed at all? Why was his probation not extended?
i) If the employee's performance was poor, then why was he paid the bonus?
j) Within a month since the payment of the bonus and two months since the confirmation of employment, how come he was placed under the Performance Improvement Plan (PIP)?
k) Before the termination, whether the company conducted a domestic inquiry or not is not mentioned.
Learning from the Case:
The employment and termination of employment are serious matters and need to be seen with due sensitivity. If the employee had not shown his rowdiness, the HC ruling could have gone in his favor. In that case, the company would have been required to pay compensation of more than Rs 1.5 Cr (INR 15 million). Nevertheless, the company is required to pay compensation of Rs 10 Lakh (INR 1 million). The company has to face the loss because of their inconsistent actions.
Additional Learning from the Case:
These are as below:
l) Define the measures of performance properly and communicate to the employee how the performance will be measured, when it will be measured, and who will measure it. The communication should not have any ambiguity so that both sides start interpreting the clauses at their convenience. The measures of performance should be communicated at the beginning of the performance cycle.
m) If the employee is recommended for a training course, then the employee needs to be communicated properly about what is expected from him after the training, what will be the training cost, and in case of poor performance, will the training cost be recovered from the employee?
n) The labor laws are equal for all industries. Therefore, no professionals should live under the false notion that "our industry is different" or "this is how our industry functions," etc.
Thanks,
From India, Bangalore
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8072A news clipping from today's TOI is attached to this post. The news highlights the importance of following the correct process while terminating an employee. The following emerges from the news:
a) A software firm employed an employee in Feb 2015. He was on probation for six months.
b) The employee received training in July-Aug 2015 and again in Nov 2015 (in the USA).
c) In November 2015, the employee was paid a bonus.
d) In December 2015, the company confirmed his employment but immediately placed him under the Performance Improvement Plan (PIP).
e) Due to differences, the management terminated his services in December 2015.
f) The employee challenged the termination, and the labor court ruled in the employee's favor. His services were reinstated with back wages.
g) The company challenged the ruling by the lower court in the High Court. The High Court set aside the ruling on reinstatement and the payment of back wages but told the company to pay compensation. The employee weakened his case because of his rowdy behavior. He had sent threatening emails to the management.
Observation of Inconsistencies in the Decisions Taken by the Management:
h) If the employee's performance was poor, then why was he confirmed at all? Why was his probation not extended?
i) If the employee's performance was poor, then why was he paid the bonus?
j) Within a month since the payment of the bonus and two months since the confirmation of employment, how come he was placed under the Performance Improvement Plan (PIP)?
k) Before the termination, whether the company conducted a domestic inquiry or not is not mentioned.
Learning from the Case:
The employment and termination of employment are serious matters and need to be seen with due sensitivity. If the employee had not shown his rowdiness, the HC ruling could have gone in his favor. In that case, the company would have been required to pay compensation of more than Rs 1.5 Cr (INR 15 million). Nevertheless, the company is required to pay compensation of Rs 10 Lakh (INR 1 million). The company has to face the loss because of their inconsistent actions.
Additional Learning from the Case:
These are as below:
l) Define the measures of performance properly and communicate to the employee how the performance will be measured, when it will be measured, and who will measure it. The communication should not have any ambiguity so that both sides start interpreting the clauses at their convenience. The measures of performance should be communicated at the beginning of the performance cycle.
m) If the employee is recommended for a training course, then the employee needs to be communicated properly about what is expected from him after the training, what will be the training cost, and in case of poor performance, will the training cost be recovered from the employee?
n) The labor laws are equal for all industries. Therefore, no professionals should live under the false notion that "our industry is different" or "this is how our industry functions," etc.
Thanks,
From India, Bangalore
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The case presented highlights the importance of consistency and fairness in employment decisions, especially when it comes to performance evaluation and termination. To avoid legal repercussions and maintain a positive work environment, companies should adhere to the following practices:
1. Performance Evaluation: Clearly define performance metrics, communicate them to employees, and conduct regular evaluations. Ensure that performance assessments are objective, transparent, and based on agreed-upon criteria.
2. Training Programs: When recommending employees for training, clearly outline expectations post-training, associated costs, and any reimbursement policies in case of unsatisfactory performance. This clarity helps manage expectations and aligns employee development with organizational goals.
3. Disciplinary Procedures: Before initiating termination, follow due process, which may include a domestic inquiry to investigate the reasons for poor performance or misconduct. Consistent application of disciplinary procedures is crucial to avoid legal challenges.
4. Legal Compliance: Ensure compliance with labor laws and regulations applicable to the industry. Treat all employees fairly and consistently, irrespective of industry norms or practices. This approach fosters a culture of equity and accountability within the organization.
By implementing these best practices, organizations can mitigate risks associated with employee terminations, uphold ethical standards, and promote a harmonious workplace environment.
From India, Gurugram
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1. Performance Evaluation: Clearly define performance metrics, communicate them to employees, and conduct regular evaluations. Ensure that performance assessments are objective, transparent, and based on agreed-upon criteria.
2. Training Programs: When recommending employees for training, clearly outline expectations post-training, associated costs, and any reimbursement policies in case of unsatisfactory performance. This clarity helps manage expectations and aligns employee development with organizational goals.
3. Disciplinary Procedures: Before initiating termination, follow due process, which may include a domestic inquiry to investigate the reasons for poor performance or misconduct. Consistent application of disciplinary procedures is crucial to avoid legal challenges.
4. Legal Compliance: Ensure compliance with labor laws and regulations applicable to the industry. Treat all employees fairly and consistently, irrespective of industry norms or practices. This approach fosters a culture of equity and accountability within the organization.
By implementing these best practices, organizations can mitigate risks associated with employee terminations, uphold ethical standards, and promote a harmonious workplace environment.
From India, Gurugram
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