Rules Of Compensation For Termination Of Employment In India

Compensation For Termination Of Employment In India: Nowadays it has become common that there are so many private organizations are terminating their employees due to various reasons like company layoffs, termination based on employee performance and also on disciplinary grounds. Before terminating an employee, the employer has to consider some points so that the termination process will happen smoothly.

Compensation For Termination Of Employment In India In Different Situations:

Termination During Company Layoffs:

When an employer couldn’t able to run his business due to lack of work, money or material then he decides to layoff his company. It may be a temporary layoff or permanent layoff. Whenever a company is going to layoff then they will give a notice period to their employees.

The notice period should be at least 30-90 days and in this period the employer has to pay all the wage dues, allowances and incentives to their employees.

Also Read: Disciplinary Action Against An Absconding Employee

Full & Final Settlement Policy In India

Termination On Disciplinary Grounds:

Employers can terminate the employees based on disciplinary grounds such as misbehaviour with colleagues & customers, thefts etc. But there is no standard policy in India to terminate the employee on disciplinary grounds. But whenever an employer decides to terminate the employee on disciplinary grounds then they have to pay all the due wages and other pending allowances and leave encashments to that employee and there is no need of giving notice period.

Termination Based On Performance Of Employee:

Employers have no right to terminate a permanent employee based on the performance. But in case of probationary and contract employees, the employer can terminate them by giving a proper notice period.

As per Industrial Disputes Act, 1947 employer should give a minimum of 30days notice period to their employees before terminating.

In case of permanent employees, the employer has to give a written notice regarding performance improvement and if needed they should be trained.

So the above are the rules of compensation for termination of employment in India in different cases.