Grounds For Termination Of Employment In India

Consider this; you are a hardworking employee working with a reputed organisation. One day, to your surprise, you receive a termination letter from your employer. To make it worse, your employer does not provide any reason for firing you. You are now fired without having any idea why.

If you can relate to this, you are not alone. Recently, such instances have taken an upward turn. This gives rise to the question:

“Does an employer need a good reason to fire an employee?”

In India, there is no single law that governs employment terms. There are labour law, industrial law and the bonus act.  To complicate things even more, the contract act as well. So many laws make it difficult for employers to hire, manage, or fire their employees.

An employer can be anyone; a company, a partnership, or even a proprietorship. Every employer needs to follow the laws made for their industry. In India, employees can be government employees, private sectors employees or PSU employees.

What Does The Law Say About Termination?

Indian labour law specifies certain conditions for terminating an employee. If an employer fires an employee under any of those conditions, he can do so and it will be legal.

The type of employment further determines the legal provisions applicable to an employee.

1. Government Sector Employee

The law that governs such employees is the Constitution itself.

A government organization can remove its employees only in two cases. The first case is an instance of proven misconduct. The other case is unnecessary absence from work without any notice.

There is no other way in which an employer can remove such employees. If he does so, a court can give the terminated employee his position back.

This is where government employees enjoy an edge over their private counterparts. If a private employer removes his employee due to any other reason, the court cannot give his job back.

Government employees also sign employment contracts with their organization. Due to this, service conditions may differ from department to department. There is one thing that remains the same; job security and salary assurance.

Such employees enjoy an increase in their salary whenever the government decides. What their service contract says about such increase is immaterial.

2. Private Sector Employee

Terms of service contract govern such employees. But there are certain laws that ensure the fairness of terms of the contract. Private sector employees can  be management staff or workmen.

There is no specific law that regulates management staff. Their respective service contracts provide their terms of employment.

There are certain specific laws that govern workmen. For example, factories act, payment of wages act etc. The employer cannot fire workmen without following these laws.

3. PSU Employees

PSUs are bodies created by the government for conducting business or trade. In theory, PSU employees are not considered government employees. Yet, they receive almost all benefits that government employees receive.

The act that creates such organizations governs their employment procedure. For example, the Life Insurance Corporation (LIC) of India which was set up by the LIC Act, 1956. Now LIC will hire employees according to what the LIC Act says. However, their terms of service must conform to the current laws. They cannot be arbitrary and unreasonable.

A PSU employee cannot  be removed without sending an application to the appropriate government. This application must contain a valid ground for termination.

The government allows termination only on the grounds of incapacity to work and proven misbehavior. Applications made on any other ground are usually rejected.

The Road Ahead

Indian employment laws are complicated. Anyone who knows the loopholes can exploit these laws.

Also, the labour commission is meant to help employers and employees. It was established for welfare purposes. But, it is now one of the most corrupt government bodies.

There are separate acts for separate workplaces. This makes it difficult for an ordinary employee to understand his rights and duties. For instance, there are different acts for factories, trade unions, bonus, wages etc. The employee might not know just where to look.

It is important to bring about a new and simplified law. Such a law should provide all laws related to employment in one place.

An awareness campaign that educates employees about their rights is the way forward. It will ensure that employees do not fall victim to unjust termination.

3 comments On Grounds For Termination Of Employment In India

  • i have been asked to leave from my company stating cost optimization. They are ready to pay me 3 months of pay. i have been a good performer and have done all my duties. Can i take help of law to get my job back.

  • I have been asked to not come office before two hours of my shift. Company terminated 24 employee, without any prior information. They are giving one month pay but only those who have completed more than six months. I have completed 5 months and 25 days. So company not paying one month pay. They are saying that I was in probation period, that’s why I m not eligible for one month pay. Please advise me. My mobile number: 9582078650

  • State clearly in what circumstances PSU employee can be terminated.

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