Dear professional, I want your guidance on how to terminate some non-performing senior employees who have worked for more than 4.5 years and are almost eligible for gratuity. Management wants to terminate them to save on the gratuity amount. They are pressuring me to terminate these employees for reasons of non-performance. Is it ethical and legal to terminate senior employees before they complete 4 years and 240 days, which is the eligibility criteria according to the Gratuity Act? I seek your advice on the following:
Is it ethical to terminate senior employees just to save on gratuity payments?
1) Is it ethical to terminate senior employees just to save on gratuity payments?
Eligibility for gratuity upon termination
2) Will they still be eligible for gratuity if the company terminates them when they are almost reaching the eligibility criteria?
Termination based on non-performance
3) Can we terminate them based on non-performance reasons?
Procedure for termination and notice period
4) What is the procedure for termination, and how many days of warning notice should I send them?
Please advise.
From India, Nashik
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Is it ethical to terminate senior employees just to save on gratuity payments?
1) Is it ethical to terminate senior employees just to save on gratuity payments?
Eligibility for gratuity upon termination
2) Will they still be eligible for gratuity if the company terminates them when they are almost reaching the eligibility criteria?
Termination based on non-performance
3) Can we terminate them based on non-performance reasons?
Procedure for termination and notice period
4) What is the procedure for termination, and how many days of warning notice should I send them?
Please advise.
From India, Nashik
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Dear Dinesh,
Discussion of Performance Issues
Have performance issues or grey areas been discussed with the employee already? Have any verbal or written warnings been issued?
Opportunities for Improvement
What opportunities have been provided to the employee to improve their performance? While termination due to non-performance is acceptable, termination solely for the purpose of saving gratuity is not right.
Gratuity Eligibility
Gratuity will be applicable only if the employee completes 5 years of continuous service with the organization. Termination on the grounds of non-performance is acceptable, but it must be properly justified. The immediate supervisor should have already discussed the areas for improvement. Proper documentary evidence should be available to support this. If this termination is unplanned, then in all fairness, provide the employee with one month's notice or one month's pay in lieu of notice.
From India, Madras
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1017Discussion of Performance Issues
Have performance issues or grey areas been discussed with the employee already? Have any verbal or written warnings been issued?
Opportunities for Improvement
What opportunities have been provided to the employee to improve their performance? While termination due to non-performance is acceptable, termination solely for the purpose of saving gratuity is not right.
Gratuity Eligibility
Gratuity will be applicable only if the employee completes 5 years of continuous service with the organization. Termination on the grounds of non-performance is acceptable, but it must be properly justified. The immediate supervisor should have already discussed the areas for improvement. Proper documentary evidence should be available to support this. If this termination is unplanned, then in all fairness, provide the employee with one month's notice or one month's pay in lieu of notice.
From India, Madras
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Dear sir, We have not sent them any warning notice to improve their performance. How many days' time frame should we allow them to improve their performance? If they do not improve within the given time frame mentioned in the warning letter, can we terminate them without giving one month's notice? Please advise.
From India, Nashik
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From India, Nashik
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It is felt that your management's decision to terminate an employee who has already put in 4.5 years of service with you, abruptly and without giving an opportunity to improve his performance, is not justifiable. Even for a probationer's termination, an opportunity is given to him by extending his/her probation period by 3/6 months. If the management feels that the employee is a non-performer or not capable of delivering the goods, you should have put him under a PIP for 3 more months, and his performance should have been reviewed/evaluated.
Moreover, management did not communicate with him about the performance issue either verbally or in writing. In such a scenario, do you think the action is fair and justified on the part of management?
From India, Aizawl
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Moreover, management did not communicate with him about the performance issue either verbally or in writing. In such a scenario, do you think the action is fair and justified on the part of management?
From India, Aizawl
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Hi, there is no specific time frame for this. The bottom line is that the employee should be aware that their performance is not up to the expected level, and an opportunity should have been provided to improve. Keep the employee on a Performance Improvement Plan (PIP), set deadlines, and make it clear that if he/she doesn't improve within the stipulated time frame, the result would be an exit without any further notice.
However, PIP should not be used solely to avoid the gratuity burden of the employer.
From India, Madras
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However, PIP should not be used solely to avoid the gratuity burden of the employer.
From India, Madras
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SC - Gratuity can be denied only on termination for mortal turpitude 6.12.2016.pdf
Performance Review Form - KDCL for year 2010.xls