Answer ... The laws relating to dismissal or termination are different for employees who are categorised as ‘workmen’ and other employees.
Employees who are categorised as ‘workmen’ cannot be terminated without cause. Causes for termination include misconduct, continued ill health, non-renewal of contract, redundancy and non-performance.
Other employees can be terminated without cause (except in a few states where the reasons for termination must be provided or grounds must be disclosed) by giving the required notice or issuing payment in lieu, as per the terms of the contract or the state-specific Shops and Commercial Establishments Act. Recently, the courts have held that reasonable cause is also required for termination of other employees.
Answer ... Most state-specific Shops and Commercial Establishments Acts provide that no one may be dismissed without written notice (which is usually a period of 30 days) or payment in lieu. However, in case of misconduct, an employee can be terminated without notice or payment in lieu, although an inquiry (following principles of natural justice) must be conducted before dismissing an employee in such a situation.
Answer ... If a dismissal is found to be unfair or illegal, the aggrieved employee may claim reinstatement with back wages, along with costs and compensation provided under the law.
Answer ... Statutory severance is payable only to employees who are categorised as ‘workmen’. In terms of the Industrial Disputes Act 1947, a ‘workman’ who has been in continuous service for at least one year is entitled to severance compensation (referred to in India as ‘retrenchment compensation’). Retrenchment compensation is payable at the rate of 15 days’ salary for every completed year of service or any part thereof in excess of six months.
Certain state-specific compliances may also need to be observed.
If the terms of the employment contract provide for a more generous severance compensation than that which is statutorily prescribed, they will apply accordingly.