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The Coffee Break Guide to Compliance – Vol. 4

Posted by: on 28 June 2018 in Amendments, Compliance, HR, Human Capital Management

This post is part of the Coffee Break Guide to Compliance by Anandan Subramaniam. Please subscribe to the blog updates if you’d like to be notified of these posts. As always, your questions are welcome: please comment below with your doubts and queries.

The Coffee Break Guide to Compliance – Vol. 4 (Forms of separation of a workman in an establishment – Applicable to manufacturing and commercial establishments)

Employers have the freedom to select anyone for a particular job requirement. But as per the Industrial Disputes Act, they do not have the liberty to just remove them by choice. It becomes an industrial dispute if it is not normal.

Under Section 2 (S) of the Industrial Disputes Act, a workman is a “person (including an apprentice) employed in any industry to do any skilled or unskilled, manual, supervisory, technical or clerical work for hire or reward, whether the terms of employment be express or implied and for the purposes of any proceeding under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of that dispute.”

There are many types of separation of an employee by an employer.

Here is a list of different types of separations:

  1. Resignation (also called Voluntary Retirement): A separation of a workman upon legally documented information to the employer, as per the obligations of an offer or appointment letter (employment contract).
  2. Death: Demise of a workman who was on the rolls of establishment, on the date of death.
  3. Retirement: Separation of a workman with all benefits at the predetermined age, as per the statutory legislation.
    1. Superannuation: A predetermined age when a workman retires from the establishment. When a workman superannuates, he gets pension from the fund contributed by him or his employer.
  4. Discharge: A separation where a workman is terminated from service with full benefits, by notice.
  5. Dismissal: A separation, after appropriate notice and enquiry, where the workman is terminated from service, which is a punishment which deprives a workman of a number of benefits.
  6. Removal from Roll: A workman who has neither reported for duty nor kept the employer informed (absence without leave) is taken off from the muster roll after due and appropriate intimation.
  7. Retrenchment: Section 2(oo) of the Industrial Disputes Act states that “retrenchment means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include:
    • (a) voluntary retirement of the workman or
    • (b) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf; or
    • (bb) termination of the service of the workman as a result of the non-renewal of the contract of employment between the employer and the workman concerned on its expiry or of such contract being terminated under a stipulation in that behalf contained therein;
    • (c) termination of the service of a workman on the ground of continued ill-health.
  8. Layoff: Layoff is a denial of employment, by the employer, to the workman for reasons beyond the control of employer.
    The definition as per the Section 2 (kkk) of the Industrial Disputes Act, 1947, lay off is defined as “the failure, refusal or inability of an employer, on account of shortage of coal, power or raw materials or accumulation of stocks or breakdown of machinery or by any other reason, to give employment to a workman whose name appears on the muster rolls of his industrial establishment and who has not been retrenched.”
  9. Termination of contract: A separation after completion of a fixed period agreed by both the workman and employer, or at the end of a project for which the particular workman was recruited. Separation happens after proper notice by the employer.
  10. Termination of employees who were recruited as Fixed Term Employees as per Industrial Employees Standing Order Act.
    Recently, Paragraph 2 of the Model Standing Order (MSO) has inserted item 3A and has introduced Fixed Term Employment under the classification of workmen. Further, sub- paragraph (h) has been introduced which defines
    • Fixed Term Employment: “A fixed term employment workman is a workman who has been engaged on the basis of a written contract of employment for a fixed period.”
    • Further to Amendment to Model Standing Order (MSO)

    • No Entitlement Notice on Termination
      • In paragraph 13 for sub- paragraph (b) of MSO, the following is introduced “No workman employed on fixed term employment basis as a result of non-renewal of contract or employment or on the expiry of such contract period without it being renewed, shall be entitled to any notice or pay in lieu thereof, if his services are terminated.”
      • Therefore, FTE on expiry of the term of employment is not entitled to any notice.

Thus, any separation by an employer should be done according to the provisions of labour legislation. This will help you avoid unnecessary legal implications.


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