Forced Resignations in the I.T. Industry

Forced Resignation – a recent trend

A recent developing trend in India involves professionals working in the I.T. Industry, being forced to resign from their respective companies against their wilful consent. This is seen as a part of a drive by companies to chop down the size of their work-force. I.T. Professionals have claimed that such forceful resignation is nothing but a trick to save on the costs of “severance pay”, which every organisation is bound to pay when an employee is removed from his job in accordance to the provisions of the Industrial Disputes Act.

There are cases of employees who have been asked to resign from their posts without prior intimation leaving them with very little or no time to even look for employment elsewhere. Also such information about termination of service at times is conveyed barely over the phone to the employee. These events quite naturally raise questions about the commitment which such local and multi-national I.T. Companies have towards their faithful employees.

Termination of Employment

According to Sec 2(a) of the Industrial Disputes Act, 1947, if an employer dismisses, discharges, retrenches or otherwise terminates the service of an individual workman, such a termination shall be regarded as an ‘industrial dispute’.

 In cases of ‘retrenchment’ of employee, it refers to the termination of employment in any way whatsoever except by way of punishment inflicted through disciplinary actions. Retrenchment does not include within itself:-

  1. Voluntary retirement of the workman;
  2. Retirement of employee upon superannuation;
  3. Termination as a result of non-renewal of the contract of employment on its expiry; or
  4. Termination on the ground of continued ill-health.

Provision under the Industrial Disputes Act – Severance Pay

Under Sec 25 F (b) of the Industrial Disputes Act, 1947, it has been declared mandatory for an employer, in cases of retrenchment, to pay to his employees’, severance pay i.e. compensation equivalent to 15 days’ pay for each completed year of service, apart from those employees who work as temporary or casual employees. But one finds a blatant disregard of this provision as far as the I.T. industry is concerned. The Union Government representatives, on being approached over this issue, have tried to shift the mantle to the State Governments, to deal with this issue and find a way to handle the concerns regarding retrenchment of I.T. employees arbitrarily.

Employees’ Unions and Welfare Organisations play a role

Professionals who have been forced to quit their jobs without necessary compensation are taking support of the various employees’ unions and organisations established for the welfare of I.T. employees such as Forum of I.T. Employees, Young Tamil Nadu Movement etc. Such retrenched employees seek their due compensation for the loss of employment. The spokesperson of once such welfare centre named I.T./ITes Employee Centre (ITEC) based in Bangalore, in an interview has claimed that, today’s I.T. market is flooded with such cases of ‘forced resignation’. He has confirmed of receiving several calls every day from I.T. professionals who have been retrenched arbitrarily or without severance pay.

Such organisations indulge in ‘collective bargaining’ to force the management of powerful multinational I.T. companies to give in to the demands of the employees. Also these organisations conduct campaigns to muster support against illegal retrenchment process and use social media as a weapon to give to the employees their due rights.

Liability of Companies

Companies generally hide under the legal umbrella, by using the terms of the Agreement to their rescue. For instance, if a clause, specific to severance pay, was not included in the employment agreement, at the time of commencement of service, it becomes very difficult for an employee to make the employer pay severance costs since the employer is not bound by the terms of the contract to pay the same.

Organisation for Dispute Resolution

Under section 2 (A) of the Industrial Disputes Act, 1947, any employee who is dissatisfied with his retrenchment proceedings has the right to approach the Labour Court which has been set up (u/s 7 {1}). Similarly u/s 2 (a) of the Industrial Employment (Standing Orders) Act, 1946, an employee, dissatisfied with his termination of employment, is entitled to raise the matter before the Conciliation Department of the Ministry of Labour (Such provisions are not applicable to administrative and managerial employees).

The Labour Court, Industrial Tribunal (setup u/s 7A of the IDA) and National Tribunal (setup u/s 7B of the IDA) have jurisdiction to deal with matters relating to wrongful termination of employment.

Recent Case

In the current case, Madras High Court passed an order against a leading I.T. company, Tata Consultancy Services, restraining it from the termination of employment of a software analyst working therein.

The terminated employee claimed to be a ‘workman’ u/s 2 (s) of the Industrial Disputes Act, 1947. She was denied severance pay which happens to be compulsory u/s 25 F (b) of the Industrial Disputes Act, 1947. She had moved to the High Court against such an arbitrary decision of retrenchment stating that this move was a gross violation of the provisions of the Industrial Disputes Act, 1947.

The Madras High Court passed such an interim injunction against the orders of termination of employment after the lady was retrenched during her pregnancy. The lady has further submitted that the company had taken an unfair decision to terminate the job of 25,000 workers holding designation of assistant consultant and above. Also such workmen were entitled to severance pay which was denied by the company.

The Company has also failed to comply with various other requirements that have been mentioned under provisions of this Act such failing to publish seniority list, failure to give notice for retrenchment etc.

It is but the common perception that such an intervention by the court may pave the way for many such litigants who have been distressed and exploited by various big players of the I.T. industry.

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