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Organization’s liabilities when forcing employees to resign in India.
What are the organization’s liabilities towards the employee when it is forcing them to resign in Indian context? Does it differ during the current Covid times or similar disasters if faced? What is the legal dimension around and the judiciary’s outlook for such liabilities?
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10 Replies
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It depends upon the context. Organization force employees two resign under two conditions
1. If the company is getting liquidated or the company’s sales has declined beyond recovery level.
2. Any new employee joins in top management and his/her job is to reform the business then he may force the old employees to resign to bring in his or her own acquaintance into the company.
If the settlement is mutually agreed by the outgoing employee and the employer then there won’t be any legal binding.
The above are just my experiences. More inputs on this will be appreciated
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Great Namasivayam, agree with your views. Usually there should not be any legal binding on any party. Organizations make it so complicated for employees to get their rights, they feel better to just walk away and not ask for their rights. Any experiences with that?
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If employees are asked to resign by companies they must pay a compensation to employees.
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Ideally, yes Aminath organizations must follow all processes in place and pay compensation to the employees. I remember one startup company in Noida where they used to sometimes terminate and delay the payment to almost five… six months. And a few times the employees used to stop asking for it also due to the trouble involved. Yes the company got shutdown later.
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In my opinion, a lot of times resignations are forced in ways which are difficult to prove as such in the court of law. The law reads it as resignation only which frees the employers of any obligations towards the employees
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Yes Dishaa, there are ways organizations tend to twist the legal loopholes to their advantage.
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In the current context – The Ministry of Labour and Employment has issued advisories to public and private employers and establishments to not terminate their employees, particularly casual or contractual employees, from their jobs or reduce their wages. The notification mentions that even if a place of employment is non-operational, the employees would be deemed to be on duty. Being so the various directions/circulars/communications of the government can at best be advisory and not mandatory.
There are certain provisions introduced in the Industrial Disputes Act, for payment of compensation in the event of a lay-off. As per Section 2 of ID Act, if an employer is unable to provide employment to an employee due to a natural calamity or for any other connected reason, then the same would fall within the definition of “Lay Off”
The Industrial Disputes Act 1947 is a Special Law that mandates payment of lay-off compensation in the event of a natural calamity or other connected reasons. The liability in this Special Lay Off which is specific has restricted the payment of 50% of wages as compensation.
Irrespective of the foregoing, these are trying times, and employers should deal with these matters sensitively and after seeking legal counsel.
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True Sandhya, organizations need to be sensitive towards their employees during such times. And yes the government has issued notifications to organizations that they must not end anyone’s employment.
Having said that, in multiple locations and organizations, probably due to some sort of loophole, employees have been terminated.
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Hey Suman .. The truth is that during this disaster, the company should not ask for resignation from anyone, and there are such provisions that you cannot even do this. But this is coming in view and we are doing it but it is not normal, it has to be done only in some odd circumstances and as far as my knowledge, we can take this resignation only from those who come in the staff category we not take same action for the laborer.
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Valid points Amod! Thank you for sharing your mind with us.
We should ideally not put low income category people into problem but it has happened, isn’t it?
Any example of a specific incident?
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