Employment illegal termination and due claim

It is not uncommon for the companies to abruptly terminate the services of their employees because of many reasons. Many of such reasons are unjustified and in the eyes of the law, illegal. However, employees have the various legal beacons to get their day in court against such companies.


Illegal termination of employment (Meaning and Law)

Illegal termination of employment comes into picture when an employer/organisation terminates the services of their employee for unreasonable, unjustified reasons without showing any evidence of negligence, misconduct or offence on the part of the employee.

In regards to workmen, the employment termination is regulated by the Industrial Disputes Act, 1947. Termination of employment can be through ‘lay-off’ or ‘retrenchment’. Lay-off happens when the employer fails to continue employment due to shortage of raw material, etc. while retrenchment is the termination of employment for reasons other than those of voluntary retirement, superannuation or ill-health.

In regards to white-collar jobs, the employment termination is regulated by their individual employment contracts in compliance with the Indian Contracts Act, 1872.


Important Things to Remember

  1. Employment of a workman who has been in employment at that organisation for atleast 1 year can only be terminated with a 30-90 days advance notice in writing indicating the reasons for the same.
  2. Compensation equivalent to the average pay of 15 days has to be paid for every completed year of continuous service (for a maximum of six months of pay).
  3. Employer is bound to notify the labour authorities about the retrenchment.


Legal Options for Workmen

  1. The workman should raise the dispute before the conciliation officer.
  2. If not resolved by the conciliation officer, the state government may refer the dispute to the labour court or dismiss the claim.
  3. If labour court dismisses the claim, appeal to the respective High Court is the path.


Legal Options for White-collar employment

  1. Send a legal notice to the employer/organisation.
  2. If the employer is not ready for settlement, file a civil suit for breach of contract and recovery of money from him.


Grounds upon which the courts may allow a claim against illegal termination

  • When the employee has been a victim of unfair trade practises;
  • When there is want of good faith;
  • When the employer/organisation is guilty of an error or has violated the principles of natural justice;
  • When the findings on material depict that the termination was baseless and perverse.


Statutory Law References

Industrial Disputes Act, 1947

Indian Contracts Act, 1872

Code of Civil Procedure, 1908


Landmark Judgments

State Of Uttar Pradesh and Anr v. Kaushal Kishore Shukla 1991 SCR (1) 29

Bharat Forge Co Ltd v. Uttam Manohar Nakate (2005) 2 SCC 489

Tapash Kumar Paul v. BSNL & Anr. (2014) 15 SCC 313


Important Do(s) and Dont(s)

  • When the company engages in talks with you about your employment termination, start asking for evidence upon which they base their reasons;
  • Seek Lawyer consultation in the beginning of this occurrence;
  • Start documenting all the discussions and write down the names of all the people involved;
  • Ask for a copy of a warning by the employer to you against any misconduct or negligence.

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