Compensation from company when employee is terminated

Dear Sir,
If the company is forcing you to resign, do not resign voluntarily.
Instead:

Ask for written termination notice with reason (“project unavailability”).

Reply by email stating you are willing to work but are being compelled to resign — this keeps record for any future labour complaint.

If you resign on your own, you may lose eligibility for retrenchment or notice pay.

Dear Client,
From the contents of the query, it appears that HR of the company is asking you to sign an involuntary termination letter, which is typically a termination when an employer ends an employee's job rather than the employee quitting his/her job voluntarily. It may also be considered to be a firing or wrongful termination. Resignation does not typically entitle an employee to severance pay or compensation, unless the employee was forced to resign which is literally termed as "constructive dismissal" or has specific provisions in their contract of employment. Further, any termination or dismissal other than a disciplinary action for proven misconduct amounts to illegal termination/ retrenchment and is defined as an industrial dispute under Section 2A of the Industrial Dispute Act, 1947 which also violated the mandatory provision of Sec.25F and 25N of the I D Act that prescribed certain conditions to comply with by the employer before termination/retrenchment of a workman/employee from the employment. Any Termination of a workman is covered under the Industrial Disputes Act, and it falls under ‘Retrenchment’. In the case of Punjab Land Development Corporation Vs Labour Court, 1990 (II) LLJ, 70 SC, the Supreme Court held that the expression ‘retrenchment’ is not to be understood in its narrow, natural and contextual meaning, but is to be understood in its wider, literal meaning to mean termination of service of a workman for any reason whatsoever. Further, the Hon'ble Bombay High Court in the case of Godrej and Boyce Manufacturing Company Ltd. v. Shivkranti Kamgar Sanghatana, 2024 SCC OnLine Bom 938, decided on 28-03-2024 ruled out that the nature of duties and functions is the determining factor in ascertaining ‘workman’ under S. 2(s) of Industrial Disputes Act, 1947. The Industrial Disputes Act, 1947 lays down the legal framework for the compensation payable to employees in case of retrenchment. The Section 25C of the Act mandates that an employer must pay retrenchment compensation to an employee who has been in continuous service for at least 1 year before being retrenched. The compensation payable to the employee shall be equal to 15 days average pay for every completed year of continuous service/any part thereof in excess of 6 months. However, it may be noted that the Industrial Disputes Act only applies to companies that employ more than 100 workers. Companies with less than 100 workers are not required to provide retrenchment compensation. If you are an employee of the IT Company then be informed that to restrict IT Companies from exploiting their employees by playing double standards, the Division Bench of the Karnataka High Court in the case of Commissioner of Income Tax v. Texas Instruments India Pvt Ltd (2021) 435 ITR unambiguously held that the IT sector employees considered to be "workmen" under Section 2(s) of the Industrial Dispute Act, 1947. So, in the given scenario, serving a legal notice to the Employer/company, you can raise an industrial dispute before the concerned Labour Commissioner for redressal of the complaint failing which you can approach directly the Industrial Tribunal/Labor Court concerned under Section 2A of the Act for adjudication seeking reinstatement with back wages and other service-linked benefits provided he is not holding the position of Manager/Supervisor but a workman as defined u/s.2(s) of the Industrial Dispute Act. Otherwise, in case he/she is holding the position of Manager/Administrative Officer in the Company, he/she has to file a civil suit before the Civil Court seeking appropriate relief in the matter. Hence, it is recommended to consult with an Advocate specialising in service matters and industrial disputes to navigate the issue in the right way.