In a case that will resonate with every HR and compliance team, the Karnataka High Court directed that ₹13 lakh plus interest be released to an employee terminated back in 2008—even though the company later became insolvent. The labour court had already ruled the termination unlawful; the High Court emphasised that when the award was passed the employer wasn’t insolvent, and delayed justice shouldn’t erase liability. For thousands navigating claims during or around insolvency, the decision is a lifeline—and a warning to companies that process flaws at dismissal can snowball into expensive, court-enforced liabilities years later.
@EconomicTimes
The human layer is stark: a career stalled, savings burned, and a family caught in the long shadow of litigation. Workers in insolvency situations often feel invisible: “My salary is small—do I even matter in a waterfall?” The answer here is moral as much as legal: fairness delayed must still be fairness delivered. Employees who fought quietly for a decade now see that paper judgments can become real money, and that courts will cross-check timing and intent. For cultures built on “move fast,” this is a reminder that due process at termination is part empathy, part risk management—and ultimately reputational capital.
Leadership and compliance takeaways span HR, Legal, and Finance. First, enforce cause-based termination with documented inquiry, representation, and reasoned orders. Second, maintain a claims register that travels into any IBC process, mapping each employee’s status. Under Section 53 of the Insolvency and Bankruptcy Code, workmen’s dues for 24 months and employees’ wages for 12 months before liquidation have defined priorities in the waterfall—know where your liabilities sit and budget for them. Finally, build a post-award payment SOP so valid labour awards don’t languish while interest compounds.
What’s one safeguard you’ll add to termination reviews so a judge won’t later call your process unfair?
How will you track and fund potential labour awards if your company—or a key vendor—enters insolvency?
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5@EconomicTimes
The human layer is stark: a career stalled, savings burned, and a family caught in the long shadow of litigation. Workers in insolvency situations often feel invisible: “My salary is small—do I even matter in a waterfall?” The answer here is moral as much as legal: fairness delayed must still be fairness delivered. Employees who fought quietly for a decade now see that paper judgments can become real money, and that courts will cross-check timing and intent. For cultures built on “move fast,” this is a reminder that due process at termination is part empathy, part risk management—and ultimately reputational capital.
Leadership and compliance takeaways span HR, Legal, and Finance. First, enforce cause-based termination with documented inquiry, representation, and reasoned orders. Second, maintain a claims register that travels into any IBC process, mapping each employee’s status. Under Section 53 of the Insolvency and Bankruptcy Code, workmen’s dues for 24 months and employees’ wages for 12 months before liquidation have defined priorities in the waterfall—know where your liabilities sit and budget for them. Finally, build a post-award payment SOP so valid labour awards don’t languish while interest compounds.
What’s one safeguard you’ll add to termination reviews so a judge won’t later call your process unfair?
How will you track and fund potential labour awards if your company—or a key vendor—enters insolvency?
Acknowledge(0)Amend(0)
To safeguard against unfair termination reviews, it's crucial to have a clear and well-documented termination process in place. This should include:
1. A thorough investigation into the cause for termination.
2. Adequate representation for the employee in question.
3. A reasoned order that clearly outlines the reasons for termination.
This process not only ensures fairness but also serves as a record that can be referred to in case of any legal disputes.
In terms of tracking and funding potential labour awards in case of insolvency, it's important to maintain a claims register that includes each employee's status. This register should be updated regularly and be a part of any Insolvency and Bankruptcy Code (IBC) process.
Under Section 53 of the IBC, workmen's dues for 24 months and employees' wages for 12 months before liquidation have defined priorities in the waterfall. It's important to understand where your liabilities lie and budget for them accordingly.
Finally, a post-award payment Standard Operating Procedure (SOP) should be established to ensure that valid labour awards don't languish while interest compounds. This SOP should clearly outline the steps to be taken post-award, including the process for releasing funds.
Remember, the key to managing these situations effectively lies in preparation, clear communication, and empathy towards the employees involved.
From India, Gurugram
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1. A thorough investigation into the cause for termination.
2. Adequate representation for the employee in question.
3. A reasoned order that clearly outlines the reasons for termination.
This process not only ensures fairness but also serves as a record that can be referred to in case of any legal disputes.
In terms of tracking and funding potential labour awards in case of insolvency, it's important to maintain a claims register that includes each employee's status. This register should be updated regularly and be a part of any Insolvency and Bankruptcy Code (IBC) process.
Under Section 53 of the IBC, workmen's dues for 24 months and employees' wages for 12 months before liquidation have defined priorities in the waterfall. It's important to understand where your liabilities lie and budget for them accordingly.
Finally, a post-award payment Standard Operating Procedure (SOP) should be established to ensure that valid labour awards don't languish while interest compounds. This SOP should clearly outline the steps to be taken post-award, including the process for releasing funds.
Remember, the key to managing these situations effectively lies in preparation, clear communication, and empathy towards the employees involved.
From India, Gurugram
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