Notice Period - Employment


Hello everyone,

I had joined a start-up IT company in Bangalore almost 22 months back.

When I joined following were part of the Employment Agreement.

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9. Termination

9.1 The termination of the Employee's employment with the Company shall be in accordance with the following terms: 9.1.1 The Company reserves the right to terminate the Employee without any cause (defined in Schedule C) by giving [30] (thirty) days prior notice; or

9.1.2 The Company may at any time during the term of this Agreement terminate the Employee for Cause, immediately without notice or salary in lieu of notice or any other compensation; or

9.1.3 The Employee may affect termination of his/ her employment with the Company, subject however, to such Employee providing [30] (Thirty) days' prior notice in writing to the Company. The Company may, at its discretion, relieve the Employee from his/ her duties at any time after receipt of his/ her notice, prior to the expiry of such notice period.

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Now, I received the following email communication from the Human Resources department recently, on Jan 4, 2017.

"Dear All, In line with the business growth and integration process, the Company has revised below mentioned policies / clauses effective January 1, 2017.

Notice Period: Applicable for all full time employees of the Company. Employee may affect termination of his/her employment with the Company, subject however, to such employee providing [90] (Ninety) days prior notice in writing to the Company. The Company may, at its discretion, relieve the Employee from his/her duties at any time after receipt of his/her notice, prior to the expiry of such notice period.

Note: Revised policy is effective January 1, 2017 and it overwrites all other related policies or any written documents issued by the Company."

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I have been asked to step down yesterday citing cost cutting and organizational realignment.

However, I have been told that I would be given pay and notice period by the Employer only for a month and NOT 3 months.

When asked, I was told that in case of resignation by the Employee, the Notice Period has been extended to 3 months whereas for termination by the Employer, the Notice Period is still 1 month.

Is it really possible to have different Notice Period for the Employer and Employee in India?

Is there a way I can get 3 months' notice period and pay from this Company?

Please help.

 

Regards,

Neil

 
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Labour Law Advocate

Since you are in the IT company, I assume that your company is enlisted under Shops & Establishment Act. And I also assume that you fall under the category of 'wrokman'. However, it is essential to know the total number of employees of the company for giving accurate suggestions.

First, regarding your appointment letter, the termination clause is bad in law. It is essential to give reason for termination irrespective of what is written in the appoitment letter. Moreover, the clauses are one-sided and in favour of the employer. 

Secondly, as per your appointment letter the employee is required to give 30 days notice in case of resignation but such condition is changed to 90 days. A company cannot change any condition of service of any employee without giving him a notice in advance of 21 days that the condition of service is going to be changed. A company cannot change the service condition unless and until the employee agrees to such change. In your case this change is illegal. 

Thirdly, there is no legal term as "ask to step down" or "ask to leave" in law though this is common practice. Either an employee resigns volunatarily or the comany terminates his service. However, your situation attracts the clause of retrenchment and the compensation for retrenchment depends on various factors like strength of employees, salary, tenure of service and is applied on "last come first go" basis.

 

 
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FIN

You have posted that:

"I have been asked to step down yesterday citing cost cutting and organizational realignment."

What is this cost cutting and organizational realignment?

Has company issued any written communication on it?

 

Download and print the said email, and all other record pertaining to awards, rewards, appreciations, incentives, appraisals, KRA's, tasks  assigned and achieved etc etc 

Have you been asked to step down in writing or verbally?

What is your exact nature of duties on record/in practice and as in appointment letter?

Are you a member of employee’s/IT-ITeS employee’s/trade unions?

 

 
Reply   
 

Hello Mr. Ritesh, Thank you for your response. Sir, to be precise, my company is engaged in the business of 'Software Consulting'. Also, the Company has been incorporated under the Companies Act, 1956. I am holding the post of 'Director- Marketing'. The Company is based out of New York, USA with its subsidiary in Bangalore (India). The number of employees in Bangalore would be in the range of 50-100 while the total number of employees worldwide considering all the subsidiaries and the parent company would be in the range of 350-400. Both the numbers include full time/ permanent and contractual/ temporary employees. Yes, indeed this is a case of termination as you rightly pointed out sir. But, if a communication is made to increase the notice period to 90 days, how can that be one-sided benefitting only the employer? Can I challenge this by any way? Can I show any reference or legal clause to my employer and ask from 90 days' notice period, as communicated by them in the email or can my employer simply say that the change in policy holds good only for resignation and not for termination and hence i am entitled to only 30 days notice period and pay? Thanks again. Regards, Neil
 
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FIN

You may carefully go thru:

 

Karnataka Shops & Estbs Act; Sec6A, 39……………………………more so: 39(7)

(7) If under any other law or under the terms of an award, agreement or contract of service, any employee is entitled to a longer period of notice or to more favourable benefits that are provided in sub-section (1) or subsection (3) the provisions of the said sub-sections shall have effect as if such period of notice and such benefits had been enacted in this Act.

 

https://www.ilo.org/dyn/natlex/docs/ELECTRONIC/94256/110576/F-1357361103/IND94256.pdf

 

The employer shall scream that you are not covered as per def; of ‘Employee’ as in the Karnataka Shops & Estbs Act, as well as ‘Workman’ as in ID Act.

 

The Karnataka state govt has extended the exemption from standing orders, to IT/ITeS companies.

So number of employees and applicability of standing orders does not matter in your case.

Moreover since you are being asked to resign it amounts to termination/retrenchment.

Therefore you may evaluate the matter from this perspective.

 

Since the Karnataka state govt has extended the exemption from standing orders, to IT/ITeS companies, it has notified a ‘Grievance Redressal Mechanism’.

You need to first of all record (audio/visual/witnessed/minuted)  the demand of resignation.

You need to build irrefutable record to defend your interest.

 

 

 

 

 

 

 

 

 

 

 

 
Reply   
 

Hello Mr. Kumar, Thank you for your response. No, I have not received any written communication till now. I have only been informed about the termination verbally yesterday. I have been told that I would get one months' notice pay from the company and the company would release the letter of relieve after 30 days with my full and final settlement. Everything has been communicated verbally. My manager has only verbally informed me that due to multiple integrations (acquisitions) by this organization, the Company is looking at a person with different skill sets in this role and this role is becoming less useful for the company and hence the company 'wants to let me go' and therefore the termination. My nature of duties as per the appointment letter is to handle all the end to end marketing initiatives of the Company. I am not part of any union, sir. What am I supposed to dow now? Can I challenge this decision? Am I eligible for 90 days' notice period as per the last email communication by my Employer? Thanks again. Regards, Neil
 
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Sir, I may add that the registered office in India is in Hingewadi, Pune, although my office premises is in Bangalore, Karnataka. Does that change the validity Karnataka Actin my case?
 
Reply   
 
Labour Law Advocate

Originally posted by : Neil

Hello Mr. Ritesh,

Thank you for your response.

Sir, to be precise, my company is engaged in the business of 'Software Consulting'. Also, the Company has been incorporated under the Companies Act, 1956.

I am holding the post of 'Director- Marketing'. If you do not have any supervisory power i.e. grant leave, issue cheques or do not have any subordinates under you then you may be considered as 'workman'. The designation is the criteria of being a workman but his nature of duties. The Company is based out of New York, USA with its subsidiary in Bangalore (India). The number of employees in Bangalore would be in the range of 50-100 while the total number of employees worldwide considering all the subsidiaries and the parent company would be in the range of 350-400. Both the numbers include full time/ permanent and contractual/ temporary employees. Mere having a contract won't make an employee a temporary employee. For that the tenure of the employee as well as content of the contract is to be looked into.

Yes, indeed this is a case of termination as you rightly pointed out sir. But, if a communication is made to increase the notice period to 90 days, how can that be one-sided benefitting only the employer? As per the content of the change, it is clear that if any employee wants to leave the job then he has to give 90 days notice period i.e. stay with the company for another 90 days. But on the other hand, if the company wants to terminate an employee, then they can do it immediately. Isn't is one-sided giving benefit to the company. Apart from that whoever is benefiting, notice is to be given and permission has to be received from employee in case any service condition is changed by the employer.

Can I challenge this by any way? Can I show any reference or legal clause to my employer and ask from 90 days' notice period, as communicated by them in the email or can my employer simply say that the change in policy holds good only for resignation and not for termination and hence i am entitled to only 30 days notice period and pay?

you can always challenge such change of service conditon by way of writing a letter through speed/ registered post. In case of termination, it is essential to give grounds of termination for any misconduct and such misconduct must be proved beyond any doubt through domestic enquiry giving the employee an opportunity to defend himself in observance of principle of natural justice. 


Thanks again.

Regards,
Neil

 

 

 

Find the reply in bold

 
Reply   
 
Labour Law Advocate

Originally posted by : Neil
Sir, I may add that the registered office in India is in Hingewadi, Pune, although my office premises is in Bangalore, Karnataka.

Does that change the validity Karnataka Actin my case?

This is a tricky situation as in your case the "appropriate government" i.e. (under the authority before whom you may lodge a complaint) may be Central Government and not state Government.

In such technical scenerio, it is better to consult a lawyer with all your documents.  

 
Reply   
 
FIN

 

Shops & Estbs Act was enacted to govern the service conditions of employee's working in establishment’s coverd by the Act.

 

From the perspective of Shops & Estbs Act: If the establishment is covered by the Act, and you are covered by the def. of 'Employee ' as in the Act then you can approach the authority; Inspector appointed under the Act.

You may go thru; Sec; 2(g,e),3 also.

The designation, even salary alone does not decide employee is under the ambit of Labor Laws or not?

I am sending you a link that you may carefully go thru and download your exact nature of duties on record and in practice while in employment.

 

From the perspective of: Standing Orders; You may go thru; Bombay Shops & Estbs Act; Sec;38-B that lays down if establishment has 50 or more employees, standing orders shall apply. You may also check if any exemption to IT/ITeS/Software companies is granted from standing orders by staste govt of Maharashtra. Once again it is reiterated that the state Act Bombay Shops & Estbs Act; Sec;38-B lays down for applicability of standing orders. Local counsels can guide you better. If you are facing difficulties then get back and we will try to guide you to local counsel that post at LCI.

Thereafter you may go thru  Industrial Employment Standing Orders Act at Maharashtra Dept of labor website.

 

 

The imp. Point is to know if establishment/employer has certified standing orders and if these cover your designation!!!!

The employer is under obligation to display the standing orders and supply to employee and employer shall be personally/individually held responsible for violation of standing orders.

 

Employee can ask for copy from employer and employer can supply against a nominal cost say Rs.10/-

Employee can apply and obtain certified copy from certifying officer say-DLC against a nominal cost say Rs.3/page.

Model Standing orders make a mention of person that is 'Workman'. Thus either you should be coverd by the def. of ‘Workman’ as in ID Act or also Model Standing orders

OR covered by employer in certified standing orders.

 

Model Standing orders;Sec13; provide for NO Notice period while under probation period and 30days after confirmation of service.

Certified standing Orders; We are not aware what has been firmed up between employer, representatives of employees, and certifying officer.

 

However it is sure that standing orders (Model/Certified) being statue/instrument of law shall prevail upon any private agreement/rules/policies that employer has drafted and signed with employee e.g; appointment letter, said email amending notice period, contract of employment, service agreement, service rules etc etc

 

Thus if certified standing orders ( as on date) provide for 30days notice period as in your case/designation then it shall prevail upon appointment letter, said email amending notice period. In that case you may not fetch the benefit of 90dasy notice pay.

 

 

 
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