Termination
Of Employment: The Legal And Illegal Grounds Of Dismissal - by Advocate Kanchan
Khatana
An outburst of knowledge and technology in the eon of globalization has
led to the augmentation of commercial and corporate markets. The elevation of investment
by foreign companies in the Indian sector and the advent of laws relating to
Foreign Direct Investment and Foreign Exchange Management have bought about a
radical change in the employment sector. The Indian economy has the
characteristics of being a mixed economy. The Indian metros have been creating
employment opportunities forearms; however, cities like Gurgaon, Pune,
Noida, and Hyderabad have contributed to creating abundant employment
opportunities thereby elevating the Indian corporate market in the global
sector.
The connection between employers and employees has been revamped because
of the instantaneous elevation of the corporate sector. The nature and number
of disputes have sprung up due to the existence of antiquated employers in the
industry. The frequent conflicts include age, harassment, pregnancy, biased
view of superiors, long hours of work, low recognition, and inter alias.
The Constitution of India substantially regulates matters related to the
employment sector in India. ‘Right to work has not been unequivocally embodied
under the Constitution of India. However, in 1985, the Hon'ble Supreme Court
widely interpreted Article 21 through its judgment in Olga Tellis & Ors.v.
Bombay Municipal Corporation & Ors, 1985 SCC (3) 545 included ‘right to
work under the fundamental right of ‘right to life.' The Central and State
governments have framed specific laws to regulate employment matters, namely the Factories Act, 1948, Industrial Disputes Act, 1947, Payment of Wages Act, 1937,
Payment of Bonus Act, 1965, Payment of Gratuity Act, 1972, Employees' State
Insurance Act, 1948, Shops and Establishments Acts, etc. Municipal laws,
collective and individual agreements, as well as judicial precedents, cover a
muster of issues, which may be general or specific.
An employer and employee draw an ‘Employment Contract' when they enter
into a legal relationship. This contract condenses the terms of the relation,
nature of the work, rights and duties of the parties, working hours, etc. The
most ordinary meaning of ‘Dismissal of employment' refers to the cessation of
the employment contract by the employer against the wish of the employee. An
employee may be dismissed on various grounds; the nature of the same may be
fair or unfair or legal or illegal. The factors which are included under the
umbrella term of ‘dismissal of employment' include inefficiency of workers,
information theft, misconduct, fraud, sexual harassment, violation of contract,
personal biases, amongst a few.
Employees possess a right of not to be unfairly dismissed from
employment. Before the dismissal of an employee, employers need to ensure that
they have a potentially fair reason. The first step of an employer, therefore,
is to identify a potentially fair reason for the dismissal. If he is unable to
show the presence of an adequate reason then the dismissal is unfair. The five
potentially fair reasons include misconduct, capability (this includes physical
and mental capacity), redundancy, illegality (i.e., the employee is unable to
continue without breach of law) and some other substantial reasons.
A dismissal can also be constructive, where an employee resigns in
response to his or her employer's breach of contract.
The legal or fair causes of ‘dismissal of employment' include the
inefficiency of an employee, the violation of the contractual agreement, theft
of information or discharge of confidential information, professional
misconduct, intentional damage of employers' property or loss of the same,
sexual harassment, bribery, dishonesty about professional qualifications,
fraud, etc.
The illegal or unfair factors of dismissal of employment are those whose
grounds are speculative or vague. These causes may be proved under the ambit of
misconduct or breach of the employment contract. These grounds or factors have
to be profoundly determined by the employer to the court or disciplinary
committee or any other authority relevant in the matter at hand. If the
employer fails to show or justify the grounds of dismissal, adequate
compensation has to be paid to the employee. The factors include the absence of
employee due to pregnancy or maternity. The female employees are protected
under the Maternity Benefits Act, 1961. The violation of the contract by the
employer is one of the primary factors under illegal causes as this is the most
prevalent in the corporate sector in this age. The violation of the contract by
the employer is a broad term and includes within its scope non-payment of
salary or consistent delay in the payment of wages, long working hours, the
irregular contribution of bonus or gratuity. The violation of gift and gratuity
is regulated by the Payment of Bonus Act, 1965 and Payment of Gratuity Act,
1972 respectively. Discrimination by caste, creed, religion or sex has been in
existence for a very long period. Personal biases, grudges or favoritism or
unfair treatment on the part of the employer is another unfair ground of
dismissal. Firing an employee for lodging a legal complaint against the
employer, or because the employee brought the employer's wrongdoing to light as
a whistleblower, is illegal too. Such adverse actions are considered
"retaliation" and are unlawful. Just cause occurs when an employer is
justified in ending the employment relationship without providing any severance
to the individual. The dismissed employee may also not be to collect employment
insurance benefits and will likely experience difficulty finding other
employment. This severe blow can have a lasting effect on an individual. As a
consequence, it becomes difficult to terminate employment for cause. Typically
only the most serious forms of misconduct such as theft or dishonesty would be
considered 'just' cause. In any situation where an employee is dismissed with
cause, an employer would have to establish:
o That the employee was guilty of serious misconduct
o That the employee was given every chance to improve
o That there were prior warnings and other disciplines
o That there was absolutely no choice but to let the
employee go.
‘Dismissal of employment in India, in the
present scenario, is entirely at the volition of the employer. In a legal
relationship between the employer and employee, the employer stands unmatched
as compared to the employee. The rationale behind this arrangement is that in
an employer-employee relationship, the only thing that regulates or governs the
parties is the Employment contract. The illegal factors for the dismissal of an
employee are triumphantly clothed under the ambit of legal considerations by
the employer, resulting in the termination of the employee for no fault of his.
This is a result of the absence of codified legislation to govern employment in the corporate sector as existing laws relating to labor are
backdated and fail to cover the rights of employees. This codified legislation
and a commission to act as a vigilance committee will serve as a boon for the
white-collar employees who are dismissed on uncorroborated grounds.
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