COVID 19, or otherwise, how a thoughtless Temination can go wrong

A contract of service is not a stand alone contract or employment document, as its commonly thought!

Such a contract, besides the Contract Act, is governed by diverse law, depending on the central, state enactments, the nature of establishment/industry and most importantly the nature of employment, category, title and related factors. Professional employment contracts also cover confidentialy, IP rights IT provisions besides disclosure policies. 

Deliberations under this post focus on empoyment in a commercial establishment covering various Industry, and how a thoughtless termination can go wrong. Emphasis on COVID as it is the most predominating situation at this juncture.

The key laws that apply for an employment contract are the Shops & Commercial Establishments Act (title different for certain States), Industrial Disputes Act, Industrial Employments (Standings Orders) Act (IESO) and certain special enactments, for certain States, like Maharashtra, TN. 

The Central Government introduced a Model Bill with an object to unify law regulating shops and establishments, known as Model Shops and Establishments (Regulation of Employment and Conditions of Service) Act. 

Maharashtra became the first state to adopt this Model Bill by passing the Maharashtra Shops and  Establishments (Regulation of Employment and Conditions of Service) Act, 2017 (the “Act”) which received the governor's assent on 7 September 2017 and entered into force on 19 December 2017. Gujarat and few other states have followed suit. However, there are many States which has their own Shops & Establishments Act. 

Industrial Employment Standing Orders Act (IESO)  applies to certain establishments as well, either by virtue of the nature of industry or by application of this Act by certain States by inserstion of a proviso under their S&E Act, basis number of workmen employed at a given time.

While the Model S&E Regulation .. Act does not have such provision to apply IESO, by virtue of savings under this Act of application of the original S&E Act, IESO may still apply to certain categories of workmen  of any establishment. 

Industrial Disputes Act - While the ID Act has a clear definition of workmen and employees not covered under the definition of workmen (non-workmen), the S&E Act defines employees and the Model S&E Regulation Act and even the new Codes on Labour Law has a new definition of workers. Though on the face of it this creates confusion, Industry needs to have a through review of its employees (a common term yet used for supervisory and manager category as well) and have appropriate classifications for diverse category employed by them to ensure due compliance.

The crux is article is not to legally entagle but sensitize employees to be aware of key laws applicable to the employees and of course the legal perspective apart, to be fair, flexible and minimize determinative action for mutual benefits - Industrial Relations and PR being key to harmony for any industry.

Therefore, a termination, is emergent should take care of all aspects of humanity and legality. Not every one aware that the IESO applies to even offices/establishments and where the industry does not have its own standing order, or at least Service Regulations, the Model Standing Order comes into application.

It is common in the HR parlance to cite "company policy" which is either in a loosely devised form or a chain of emails, or just in air without a codified policy!

Absconding (a wrong term commonly used in the industry instead of abstention/abstaining)to cause an abruput termination.

Also misconduct (this term has clear cut definition under the ID Act/IESO and needs a meticulous process of enquiry, show cause, and establishment 

I came through a just recent example of a termination in haste, by an IT industry, which it has treat with similar haste, As all knows, the NDMA had issued a direction to the Industry not to terminate any worker and to ensure payment of wages during the Lock down and this termination was issued an ignominy. 

A communication was issued to certain employee(s) citing a discussion between the employee and the line manager and relieving the employee from the employment with payment in lieu of notice period - basic, without assigning any reason!, by email 

When the employee refcused to accept the relievement, a notice of termination was issued citing a few instances where the employee did not complete some technical training as per the company dictact!

While it said the trainings were for the 'personal development' of the employee, non completetion of the courses amount to "grave  and serious misconduct"

This notice further stated that as per the employment letter, termination on misconduct does not require notice pay but still the company will pay this, struggling to justify its relieving letter - the course of putting the Cart before the Horse!

Obviously, it was signed by a person of CFO Level, either having no clue of what is he signing and the risks that was inviting or an ignominy !

Needless to highlight a course for personal development and non completiong becoming a grave and serious misconduct! invented for the first time with direct termination! At least post facto the company realised its goof up and settled the matter with the employee on amicable terms

Its imperative that every function and positions whoever handles the empoyee management even a senior with the power of termination/authorized signing must know the basics of employment law to avoid crash courses and collisions.

Lawshastra is available for seminars/webinars or direct consultation. The secret of managing an organization with zero or minimal disputes are available for sharing!!!