Illegal termination of Employees by Multi National Companies (MNCs) – Legal Remedies

Illegal termination  of  Employees by Multi National Compamies (MNCs) – Legal Remedies

Employment termination is a complex issue, which requires careful consideration and adherence to legal guidelines. Some companies choose to terminate employees for illegal or unethical reasons. This can lead to severe adverse consequences for the company and emotional and financial losses for the employee. In this blog post, we'll explore some common grounds for the illegal termination of employees by companies as well as the legal protections available against wrongful termination. 

Introduction

Employment termination is a critical issue that has gained significant attention in recent years, particularly in India. According to a recent study by the Centre for Monitoring Indian Economy (CMIE), India's unemployment rate rose to 7.97% in March 2021, with millions of people losing their jobs due to the COVID-19 pandemic. Despite the legal protections for employees against wrongful termination in place, many Indian companies and MNCs continue to engage in illegal termination practices. Unfortunately, some companies have also taken advantage of the situation by terminating employees illegally without following the proper legal procedures. In some cases, employees have been terminated due to their gender, age, or caste, which violates India's anti-discrimination laws. Moreover, some companies have terminated employees without providing adequate compensation or notice, which is illegal under Indian labour laws. These illegal termination practices have serious consequences for both the employee and the company, including legal action, financial penalties, and damage to the company's reputation. Additionally, it is essential to know when the termination is considered illegal.

What is a wrongful termination of an employee?

A wrongful termination of an employee is an act where an employer terminates/dismisses/removes an employee without providing valid grounds for such conduct. Therefore, in cases where the employer or a company can not furnish valid grounds for an untimely termination of an employee, it is considered an illegal termination. Also, despite any reason, when an employee is not given an opportunity to be heard., it infringes the fundamental legal principle of Audi alterem partem, which means, “listen to the other side.”

Circumstances when firing from a job is an illegal termination:

1. Discrimination: If an employee is terminated due to their race, gender, age, religion, or other protected characteristic, it is a clear violation of anti-discrimination laws. Therefore, it is an illegal and unethical termination.
2. Retaliation: If an employee is terminated in retaliation for reporting harassment, discrimination, or other illegal activity, it is unlawful under whistleblower protection laws.
3. Violation of public policy: If an employee is terminated for exercising their legal rights, such as taking time off for jury duty, voting, or reporting a workplace safety violation, it is illegal termination.
4. Breach of contract: If an employee is terminated in violation of their employment contract, it is illegal under contract law. Usually, the appointment or offer letters include this clause that if an employee resigns, they will have to serve a notice period of 1 or 2 or 3 months, as the case may be. If the notice period is not served, they will have to face a penalty of those months’ salary payable to the employer. The same applies to vice versa as well.

Furthermore, the protection provided by laws in cases of illegal termination of employees is of utmost importance in India. These laws help safeguard employees' rights and ensure that they are not unfairly dismissed from their jobs. They also provide a legal framework for resolving disputes between employers and employees, which promotes a healthy, productive work environment.

Analysing laws relating to the termination of employees in India

 Termination of employees in India is governed by various laws and regulations, including the Industrial Disputes Act of 1947, the Shops and Establishments Act of 1961, and the Contract Labour (Regulation and Abolition) Act of 1970. These laws protect employees against wrongful termination, including the requirement for employers to provide adequate notice or compensation to terminated employees. The laws prohibit employers from terminating employees based on gender, age, caste, or religion and provide protections for whistleblowers who report illegal activity in the workplace. Recently, the Indian Government has introduced several amendments to the labour laws to provide greater protection to employees, including the Code on Wages, 2019, which seeks to simplify and standardise wage regulations across all industries. Despite these laws and regulations, there are still instances of illegal termination of employees by Indian companies and MNCsIn the light of these laws, employees in India are provided with the right to seek redressal in the event of wrongful termination, including the right to file a complaint with the labour authorities or take legal action against the employer.

Rights of employees post-termination of employment

1. Right to compensation

A remedy also exists where a right is granted through a law or contractual relationship. The employer should let the employee serve the notice period. Otherwise, such employees should be compensated with a salary of 15 days or equivalent to a notice period.

2. Right to a severance payment

A severance payment is a payment made by an employer to an employee who has been terminated.It is intended to provide the employee with financial support during the transition period between jobs. The right to severance payment is a right available to employees in India post-termination. It includes payment of salary in lieu of notice, The unpaid salary for days worked, encashment of unused paid leave, payment of gratuity to an employee who has been employed for more than five years as provided for in the Gratuity Act, 1972 and payment of bonus under Payment of Bonus Act of 1965 (if applicable) including compensation as stated above.

However, It's important to note that the right to severance payment is not absolute and may be subject to limitations based on the employment contract or collective bargaining agreement terms.

3. Right to receive a notice for termination of employment.

The right to receive a notice for termination of employment refers to an employee's entitlement to be informed in advance by their employer about the termination of their employment contract. This notice period allows the employee to prepare for the end of their employment, seek new job opportunities, or make necessary arrangements. In addition, he/she also has the right to receive the termination letter specifying the termination date.

4. Right to be heard

In India, the right to be heard in cases of illegal termination of employees is an essential aspect of labour law. It ensures that an employee facing termination has the opportunity to present their case and defend their rights before any decision is made.

5. Right to Sue By Reason Of Illegal or Unlawful Termination

The right to sue by reason of illegal or unlawful termination refers to an employee's right to take legal action against their employer if they believe their termination from employment was done in violation of laws, regulations, or contractual agreements. This right allows employees to seek recourse and hold employers accountable for wrongful termination, such as termination, based on the grounds explained above in this blog.

6. Right to have an enquiry conducted

An employee has the right to inquire in case of improper and unjust termination. The facts and circumstances should be looked upon carefully and properly weighed to find the actual fault on the part of the employee or if he has to be held responsible.

7. Employment rights protecting pregnant women from unlawful termination

The Maternity Benefit Act 1961 provides for maternity leave of up to 26 weeks for women employees. It prohibits a woman's employment termination during or on account of her absence during such leave. The Act also provides other benefits, such as medical leave and nursing breaks, and requires employers to offer pregnant women a safe and healthy work environment. In India, it is illegal for an employer to terminate a woman's employment on the grounds of pregnancy.

In India, employees have civil and criminal remedies available against unlawful termination. These remedies aim to provide legal recourse and appropriate redress for the wrongful act of termination.

Legal remedies for employees

Civil remedies include:

1. Filing a Lawsuit: An employee can file a civil lawsuit seeking remedies such as reinstatement to their position, back wages, compensation for financial losses, damages for mental anguish, and other relief as deemed appropriate by the court.
2. Approaching Labor Authorities: Employees can file complaints with labour authorities such as the Labor Commissioner or Labor Court or File a complaint with the labour authorities or the Industrial Tribunal under the Industrial Disputes Act, 1947, depending on the jurisdiction.
3. Seeking Arbitration or Conciliation: If the employment contract includes an arbitration or conciliation clause, the employee can initiate proceedings through these alternative dispute resolution methods.

Criminal Remedies:

In some instances, if the termination involves criminal offences such as fraud, forgery, or harassment, the employee can file a police complaint. The police will investigate the matter and, if appropriate, initiate criminal proceedings against the employer.

It further involves:

1. Filing a criminal complaint against the employer for wrongful termination under Section 406 of the Indian Penal Code (IPC) for criminal breach of trust.
2. Filing a complaint against the employer for cheating under Section 420 of the IPC.
3. Filing a complaint against the employer for defamation under Section 499 of the IPC.

Conclusion

Labour laws in India can be complex, and seeking expert guidance can ensure the proper utilisation of the available remedies to address unlawful termination effectively. Employees must consult with legal professionals or labour law experts to understand the specific remedies available in their situation and jurisdiction. Information given in this blog is for knowledge purposes only and must not be considered a substitution for legal advice in any scenario.

Disclaimer

This blog is written and published for informational and awareness purposes only. If your rights have been infringed and if you want to get specific advice about the remedies available to you, connect with a lawyer or legal expert to address your concerns. This blog must not be treated as legal advice in any scenario.