1. TERMINATION
OF SERVICE

2. TERMINATION OF SERVICE
Issues concerning the matter of termination of
employment
1/ Human work is not a commodity to be bought & sold as
fruits or vegetables in the bazaar, nor is a worker a labor tool
to be thrown away when less useful. Work is for the human
person, not the human person for work. Labour has priority
over capital. People come first.
2/ A worker after yrs of service acquires, as it were, “property
rights” to the job; it is his or hers in a way that it is nobody
else’s, in somewhat the same way as a farmer acquires
rights to a field after cultivating it for many years.
3/ Consequently, Labour Courts which are not courts of law,
but courts of social justice, have remedies which surpass
those of ordinary civil courts. Specifically, they can reinstate
workmen whose services have been wrongly terminated.

3. How an Employee’s
service is terminated?
 Broadly divided into three
classes:
1/ Termination by the employer
2/ Termination by the
employee
3/ Automatic termination

4. Types of Termination
Of Service
 Termination By Employeer
Disciplinary
-Dismissal
-Discharge for Misconduct
On grounds of continued ill-
health
Retrenchment
-Surplus
-Expiry of contract where post
remains
-Discharge on transfer of
undertaking
-Discharge on closure of
undertaking
Simple discharge : Rarely
resorted to today

5. Types of Termination
Of Service, contd…
 Termination By
Employee
Resignation
Voluntary Retirement
 Automatic Termination
Compulsory retirement or
superannuation
Where Standing Orders
say automatic (sometimes)

6. Termination by
Employer
 How an employee’s service
be terminated by an
employer?
Ans. All forms of termination at
the initiative of the employer
are retrenchment except for
the following three:
1/ Disciplinary termination
2/ Termination on the ground of
continued ill-health
3/ termination on reaching the
age of superannuation

7. Since Most Termination are Retrenchment, what’s
Retrenchment ?
 Termination of a workman for any reason whatsoever, otherwise
that as a punishment inflicted by way of disciplinary action but
doesn’t include
a/ Voluntary retirement of the workmen, or
b/ Retirement of the workmen on reaching the age of
superannuation if the contract of employment between the
employer & the workman concerned contains a stipulation in that
behalf; or
c/ Termination of the service of a workman on the ground of
continued ill-health

8. According to defn above, only workmen can be
retrenched; Is it correct?
 In the sense that only workmen get retrenchment compensation
according to Industrial Disputes Act 1947, yes. There ‘workman’
excludes both managerial & administrative personnel drawing
more than Rs 2500 pm but it includes supervisory personnel
drawing less than Rs 2500 and all non supervisory personnel,
whatever their pay. Only ‘workmen’ are eligible for retrenchment
compensation and that under certain conditions.

9. What are those
conditions?
 There are two conditions:
1/ The employee must be
a “workmen”
2/ He or she must have
put in a year of continuous
service or a certain number of
days (240) in the previous
twelve months

10. Steps required for valid retrenchment ?
 Broadly 3 steps –
1/ Notice or notice pay (Amount of time differs according to no of
workmen in the organization)
2/ Retrenchment compensation must be paid at the rate of 15
days average pay for every completed year of service or any part
thereof in excess of six months
3/ Government permission is required in some cases, notification
only in others.
Retrenchment workmen must be paid their wages within two
working days from the date of retrenchment. Failure to do this
can invalidate the process.

11. DISCIPLINARY TERMINATION
Q- What is disciplinary termination by an employer called?
Soln- It is called either discharge or dismissal.
Q- What is the diff between discharge & dismissal?
Soln-
• Dismissal is always termination of service by an employer by way of
penalty for a misconduct. It is the most severe of penalties, a
stigma, a very serious mark against the employee, and a definite
handicap in obtaining further employment.
• Discharge however may or may not be by way of penalty.
Two types of discharge i/ Discharge for misconduct
ii/ Discharge not for misconduct

12. Dismissal and discharge for misconduct
Q- When may an employer dismiss an employee or discharge him
by way of penalty?
Soln- When it has been shown through a fair & proper enquiry that the
workmen has committed a serious misconduct.
Q- Must notice or pay given if a workmen is guilty of misconduct?
Soln- If the worker is dismissed, NO ; if he is discharged, YES .
Q- Is a dismissed worker entitled to gratuity?
Soln- Gratuity schemes now awarded do not deprive dismissed
workmen of gratuity. If, however, the misconduct has caused
financial loss to the employer , the employer may deduct the amount
so lost from the gratuity

13. RETRENCHMENT
Q- When may an employer retrench workmen?
Soln- A retrenched worker should be given one month’s notice or pay in lieu
of notice, compensation at the rate of 15 day’s average pay for every
completed year of continuous service. The employer, moreover must have
good and sufficient reasons for reducing the no of his employees and must
follow the rule, ‘Last come, First go.' This act also gives conditions for the
discharge of workmen upon transfer or closure of an undertaking.
Q- When may an employer be discharged on the ground of continued ill-
heath?
Soln- Here a regular enquiry must be held into the heath of the workmen, to
determine whether he or she is physically capable of performing their
duties. Obviously, fairness demands consideration of the length of the
service, length of illness, and the necessity of a permanent replacement.

14. Q- A company had the following standing order: “The company has at
all times the general right to discharge an employee from services
not only for proved misconduct but also when the employer has
lost confidence in the employee.” An employee was discharged
with removing certain articles from the stores. In the enquiry the
charge was established. Instead of dismissing the worker, the
company served the worker with a simple discharge notice. Was
this legitimate?
Soln- Previously this type of discharge, if it was not done in bad faith and
not a question of victimization, was held to be legitimate but recent
rulings of the supreme court now hold that such a discharge is stigmatic,
i.e., it casts a bad light on the employee .Consequently today, the
employer must go through the regular disciplinary process ie, issuing of
charge sheet, etc. Only after such a procedure in accordance with
principles of natural justice can action be taken against the employees

15. Q- Is it becoming very difficult for an employer to take
disciplinary action against the employee. Is that right?
Soln- It is difficult but it should be difficult since to lose one’s
employment is such a serious event and consequently
protection against arbitrary and unfair terminations so
necessary. On the other hand, it doesn’t mean that action
cant be taken where it should. It merely means very close
attention to the principles of natural justice.

16. TERMINATION BY THE EMPLOYEE
Q- How may a contract of service be terminated by an employee?
Ans- By resignation or by voluntary retirement.
Q- When does a resignation become effective?
Ans- Generally speaking a resignation becomes effective only when it is
accepted by the employer. Consequently, a resignation letter may be
withdrawn if it has not been accepted. When a resignation is given with the
employee specifying that it is with immediate effect, it is effective from the
date it is accepted. Where, an employee, however specifies that it is with
effect from a future date, eg 3 months, an employee remains in service even
though the employer may have expressed acceptance of it, and if the
employee before that date changes his or her mind, the resignation is not
effective.
Q- What if a workmen is forced to resign by threat or by intimidation?
Ans- A resignation must be freely submitted. Where it is forced by threat or
intimidation, it amounts to wrongful dismissal.

17. Automatic Termination
Q- What is automatic termination of services?
Ans- Such termination of service which occurs through compulsory retirement,
expiry of contract, or in some few cases where the standing orders say
termination of services will occur automatically. They are not termination
because of a misconduct, nor are they termination because which depend
upon the initiative of the employer or employee. The termination for the
most part depends merely upon the passage of time, and a positive act on
the part of the employer or employee is not necessary. Furthermore, unlike
other forms of discharge, there is no need for a month’s notice or pay in
lieu of service.

18. Q- When a worker must retire?
Ans- When he reaches retirement age specified in the Standing orders.
Q- What if there is no retirement age specified in the Standing orders?
Ans- The company may not retire a workman in such cases on the grounds
of superannuation since this was not a term of employment when the
workman was hired.
Q-If no retirement age is specified, will not a dispute arise if a workman
is retired?
Ans-Most likely, and if the matter comes before an Industrial Tribunal, the
latter will consider in its award the following factors: the nature of the
work, the wage structure, retirement and other benefits, the climate of the
area, the practice in the area, and in the industry, and the past practice of
the company .

19. Q- When a scheme of compulsory retirement is fixed by an
award, does it bind only future employees or all
workman?
Ans- The award binds all workman but usually the age limit for
the pre-award employees is fixed more liberally.
Q- A company revised its rules, and in so doing, fixed
retirement age at 60. Will the employees who entered
before the company fixed this retirement age be bound
by the retirement age fixed at this later date?
Ans- Only, if it can be shown that they accepted these revised
rules as conditions of their employment. Sixty years,
however seems reasonable.

20. Q- What is the retirement age today?
Ans- There is no universally accepted standard or limit in this
regard. Many establishments are fixing the age of compulsory
retirement at 60.The trend to higher ages for compulsory has
developed with increase in average life expectancy. Of
course when pension schemes are in force, it is natural to
expect lower compulsory retirement ages.
Q- What do you mean by automatic termination because
of the expiry of a contract?
Ans- That where a contract of service exists between a
workman as an employer for a specific period, the contract
expires at the end of that period.

21. PENALTY & TERMINATION SERVICE QUIZ (T/F)
1. Willful slowdown is a misconduct for which a worker can be
dismissed ?
2. Dismissal is a penalty for some misconduct ?
3. The bad name that is attached to the word ‘dismissal’, is not
attached to the word ‘discharge’ ?
4. A strike automatically puts an end to the employer-employee
relationship ?
5. Discharge is always a penalty ?
6. Where the standing orders prescribe absence without leave for
more than ten days as an item incurring automatic termination, a
worker may be terminated without enquiry ?
7. A worker can be dismissed or discharged by way of penalty on
grounds of long and continued illness ?
8. Retrenchment is a possible penalty for a misconduct ?
9. Compulsory retirement is a penalty for a misconduct ?
10. A charge sheet is a penalty ?
11. No worker may be penalized unless the principles of natural
justice have been followed ?