EMPLOYEE TERMINATION
5 years ago
Can a Employee not to give notice period for termination of employment in case of non payment of previous 2 months salary?
Ambrose Leo
Responded 5 years ago
A.No. Notice in lieu of payment of salary & benefits to be issued provided the terms & conditions of employment.
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A.Is notice period (3 months) legal in India?
It may help to think of a buyout agreement as a sort of "prenuptial agreement" between co-owners: It determines what will happen if your corporation's owners decide not to stay together 'til death do them part.
The law provides remedies if a promise is breached or recognizes the performance of a promise as a duty.
Every document signed in India is legal in India provided that:
• Adhere and comply within the jurisdiction of the law/s such labor law etc..
• Not Forbidden By Law such as in IPC act 1860.
• If Permitted It Would Not Defeat The Provisions Of Any Law (other subsidiary law such as FEMA, SEBI etc)
• Does not Opposed To Public Policy.
Conclusion:
On the basis of above discussed, it can be easily understood that the ambit and scope of section 23 of the Indian contract act 1872, is vast and therefore the applicability of its provisions is subject to scrutiny by the court of the consideration and object of an agreement and the agreement itself.
Therefore, in order to bring a case within the purview of section 23, it is necessary to show that the object of the agreement or consideration of the agreement or the agreement itself is unlawful.
I'll keep it short and simple:
Either party - employer or employee can terminate the contract by giving sufficient notice or compensating accordingly. In such a case, employer is bound to release the employee without any fuss, assuming that either of the above two conditions are met.
So, if your organization doesn't allow you to buyout the notice period, please feel free to knock on the doors of the Indian judiciary.
The following key issues should be highlighted:
• A 30 to 90-day notice period applies in order to terminate ‘workmen’ (as defined in the Industrial Disputes Act, 1947) – that is, employees whose role is not primarily supervisory, administrative or managerial) for convenience, with 15 days’ pay due for every year worked. In the case of manufacturing units, plantations and mines with 100 or more workmen, termination for convenience requires prior government approval; in other sectors, it requires only government notification.
• Termination for cause does not include non-performance – it includes only behaviour which qualifies as misconduct.
• The ‘last in, first out’ principle requires that the employer first terminate for convenience the last people to join the organisation in the same role. However, this requirement can be contracted out of. When hiring for the same role, workmen who were terminated for convenience should be given the opportunity to re-join the company.
• State laws generally provide for about 15 days of earned/regular leave a year. Employees also benefit from up to 10 days of sick leave and a possible 10 additional days of ‘casual leave’. This is generally more than what most organisations would ideally like to provide.
• Most state laws provide for ‘casual leave’ – the employee can opt not to come to work that day without applying for leave in advance. Many organisations find this disruptive.
• Most state laws restrict women from working at night; if women are to work at night, specific approval must be obtained. This exemption is granted only to limited business sectors (eg, IT sector). Further, the employer must offer door-to-door transport and meet some security-related requirements.
• Most state laws prescribe overtime for any hours worked beyond 48 hours in a week. However, this is seldom observed.
• Indian law regulates and in some cases prohibits the use of contract workers. To engage contract workers, the contractor must hold a licence and the employer must be registered as a ‘principal employer’.
• Non-compete agreements are not enforceable under Indian law, while non-solicitation clauses can be enforced only in limited ways.
• While the ‘work for hire’ principle applies under the Indian copyright regime, it does not apply under the Indian patent regime; employees must thus provide formal assignments.
• Indian laws require employers to maintain a plethora of registers and notices. Compliance with such requirements is difficult and full compliance is rare.
What do you consider unique to those doing business in your country?
Some of the points mentioned above are unique to India. In addition, while Indian employment law is mainly federal in nature, most states have a Shops and Establishments Act. These statutes are similar, but not identical. Further, some states have been permitted to make amendments to central laws, with which are thus applicable in a different manner in such states.
Is there any general advice you would give in the employment area?
India is heavily regulated in the employment arena. Legal assistance should be obtained with regard to employment contracts and employment terms of service. Practical advice should be sought on best practices and common practices, so that policies are HR friendly and legally compliant. Advice should also be obtained on areas where compliance is difficult, so that employers can adopt positions that balance convenience against risk.
Emerging issues/hot topics/proposals for reform Are there any noteworthy proposals for reform in your jurisdiction?
As part of the objective to make it easier to do business in India, the government has proposed that the federal labour laws be revised and possibly amalgamated into two or three labour codes. If this is accomplished, the filing requirements will be streamlined. Amendments have also been proposed to some federal laws relating to factories and the use of apprentices. There has been no progress taking these initiatives forward and it appears unlikely that the government will do so.
Key amendments to law in recent months include a substantial change to the Maternity Benefit Act 1961 through the Maternity Benefit (Amendment) Act 2016. Key features of this amendment include:
• an increase in paid time off for eligible female employees from 12 weeks to 26 weeks in case a female employee has fewer than two children. If she has two or more children, she is entitled to 12 weeks’ leave;
• the introduction of the concepts of a 'commissioning mother' and an 'adopting mother', which widens the scope of the law. Such mothers are entitled to 12 weeks’ leave;
• the option to work from home once the paid maternity leave period has ended, based on an agreement with the employer; and
• requiring an establishment with 50 or more employees to set up a crèche facility.
Overall, the amendments are progressive in nature. From an employer’s perspective, there will be greater financial implications due to the increased maternity leave payment and also the benefits to be paid to the new categories of eligible female employees.
In December 2016 the Employee’s State Insurance Act 1948 was amended, increasing the salary or wages threshold for coverage of an employee to Rs21,000 (approximately $309) per month from the previous wage cap of Rs15,000 (approximately $221) per month. The act applies to commercial establishments and provides for social security insurance for employees in case of sickness. The amendment has led to higher employee coverage under the law.
What are the emerging trends in employment law in your jurisdiction?
After decades of the government and courts adopting a somewhat socialist mind set, there has been a shift to a more pragmatic, business-friendly approach. The old approach, which focused on unskilled and daily wage workers, has given way to a focus on India’s growing service industry. There is heightened interest in rewriting the employment laws to make them more business friendly. India’s newest employment law on the prevention of sexual harassment is also leading to an increased number of sexual harassment complaints and additional processes to be followed.
Another important aspect is the move towards e-governance in the labour law sector. A new web portal launched by the government provides users with a unique labour identification number, facilitating online registration, the filing of self-certified, simplified and single online returns for specific federal laws, and a transparent labour inspection scheme on risk-based criteria. Some concessions have also been provided for start ups in terms of employment law compliances.
It may help to think of a buyout agreement as a sort of "prenuptial agreement" between co-owners: It determines what will happen if your corporation's owners decide not to stay together 'til death do them part.
The law provides remedies if a promise is breached or recognizes the performance of a promise as a duty.
Every document signed in India is legal in India provided that:
• Adhere and comply within the jurisdiction of the law/s such labor law etc..
• Not Forbidden By Law such as in IPC act 1860.
• If Permitted It Would Not Defeat The Provisions Of Any Law (other subsidiary law such as FEMA, SEBI etc)
• Does not Opposed To Public Policy.
Conclusion:
On the basis of above discussed, it can be easily understood that the ambit and scope of section 23 of the Indian contract act 1872, is vast and therefore the applicability of its provisions is subject to scrutiny by the court of the consideration and object of an agreement and the agreement itself.
Therefore, in order to bring a case within the purview of section 23, it is necessary to show that the object of the agreement or consideration of the agreement or the agreement itself is unlawful.
I'll keep it short and simple:
Either party - employer or employee can terminate the contract by giving sufficient notice or compensating accordingly. In such a case, employer is bound to release the employee without any fuss, assuming that either of the above two conditions are met.
So, if your organization doesn't allow you to buyout the notice period, please feel free to knock on the doors of the Indian judiciary.
The following key issues should be highlighted:
• A 30 to 90-day notice period applies in order to terminate ‘workmen’ (as defined in the Industrial Disputes Act, 1947) – that is, employees whose role is not primarily supervisory, administrative or managerial) for convenience, with 15 days’ pay due for every year worked. In the case of manufacturing units, plantations and mines with 100 or more workmen, termination for convenience requires prior government approval; in other sectors, it requires only government notification.
• Termination for cause does not include non-performance – it includes only behaviour which qualifies as misconduct.
• The ‘last in, first out’ principle requires that the employer first terminate for convenience the last people to join the organisation in the same role. However, this requirement can be contracted out of. When hiring for the same role, workmen who were terminated for convenience should be given the opportunity to re-join the company.
• State laws generally provide for about 15 days of earned/regular leave a year. Employees also benefit from up to 10 days of sick leave and a possible 10 additional days of ‘casual leave’. This is generally more than what most organisations would ideally like to provide.
• Most state laws provide for ‘casual leave’ – the employee can opt not to come to work that day without applying for leave in advance. Many organisations find this disruptive.
• Most state laws restrict women from working at night; if women are to work at night, specific approval must be obtained. This exemption is granted only to limited business sectors (eg, IT sector). Further, the employer must offer door-to-door transport and meet some security-related requirements.
• Most state laws prescribe overtime for any hours worked beyond 48 hours in a week. However, this is seldom observed.
• Indian law regulates and in some cases prohibits the use of contract workers. To engage contract workers, the contractor must hold a licence and the employer must be registered as a ‘principal employer’.
• Non-compete agreements are not enforceable under Indian law, while non-solicitation clauses can be enforced only in limited ways.
• While the ‘work for hire’ principle applies under the Indian copyright regime, it does not apply under the Indian patent regime; employees must thus provide formal assignments.
• Indian laws require employers to maintain a plethora of registers and notices. Compliance with such requirements is difficult and full compliance is rare.
What do you consider unique to those doing business in your country?
Some of the points mentioned above are unique to India. In addition, while Indian employment law is mainly federal in nature, most states have a Shops and Establishments Act. These statutes are similar, but not identical. Further, some states have been permitted to make amendments to central laws, with which are thus applicable in a different manner in such states.
Is there any general advice you would give in the employment area?
India is heavily regulated in the employment arena. Legal assistance should be obtained with regard to employment contracts and employment terms of service. Practical advice should be sought on best practices and common practices, so that policies are HR friendly and legally compliant. Advice should also be obtained on areas where compliance is difficult, so that employers can adopt positions that balance convenience against risk.
Emerging issues/hot topics/proposals for reform Are there any noteworthy proposals for reform in your jurisdiction?
As part of the objective to make it easier to do business in India, the government has proposed that the federal labour laws be revised and possibly amalgamated into two or three labour codes. If this is accomplished, the filing requirements will be streamlined. Amendments have also been proposed to some federal laws relating to factories and the use of apprentices. There has been no progress taking these initiatives forward and it appears unlikely that the government will do so.
Key amendments to law in recent months include a substantial change to the Maternity Benefit Act 1961 through the Maternity Benefit (Amendment) Act 2016. Key features of this amendment include:
• an increase in paid time off for eligible female employees from 12 weeks to 26 weeks in case a female employee has fewer than two children. If she has two or more children, she is entitled to 12 weeks’ leave;
• the introduction of the concepts of a 'commissioning mother' and an 'adopting mother', which widens the scope of the law. Such mothers are entitled to 12 weeks’ leave;
• the option to work from home once the paid maternity leave period has ended, based on an agreement with the employer; and
• requiring an establishment with 50 or more employees to set up a crèche facility.
Overall, the amendments are progressive in nature. From an employer’s perspective, there will be greater financial implications due to the increased maternity leave payment and also the benefits to be paid to the new categories of eligible female employees.
In December 2016 the Employee’s State Insurance Act 1948 was amended, increasing the salary or wages threshold for coverage of an employee to Rs21,000 (approximately $309) per month from the previous wage cap of Rs15,000 (approximately $221) per month. The act applies to commercial establishments and provides for social security insurance for employees in case of sickness. The amendment has led to higher employee coverage under the law.
What are the emerging trends in employment law in your jurisdiction?
After decades of the government and courts adopting a somewhat socialist mind set, there has been a shift to a more pragmatic, business-friendly approach. The old approach, which focused on unskilled and daily wage workers, has given way to a focus on India’s growing service industry. There is heightened interest in rewriting the employment laws to make them more business friendly. India’s newest employment law on the prevention of sexual harassment is also leading to an increased number of sexual harassment complaints and additional processes to be followed.
Another important aspect is the move towards e-governance in the labour law sector. A new web portal launched by the government provides users with a unique labour identification number, facilitating online registration, the filing of self-certified, simplified and single online returns for specific federal laws, and a transparent labour inspection scheme on risk-based criteria. Some concessions have also been provided for start ups in terms of employment law compliances.
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