Introduction
The term ‘Notice Period’ refers to the time between the date of issuing of termination and the last working day of an employee. It refers to the number of days an employer is required to give advance notice to the employee who is proposed to be terminated. A notice of termination is a formal document that an employer uses to notify to the employee that their employment contract comes to an end.
Employers in India are prone to legal risks resulting from not following the prescribed process of law and should thus refrain from wrongful termination. Termination of an employee without a notice being served could prove wrong for an organization.
As per the applicable Indian labour laws, an employer is required to serve notice of a certain number of days before the actual last day of termination, which varies from state to state as discussed in detailed below. The applicable labour codes usually prescribe a notice period of 30 days, but the same depends on various factors (including bur not limited to duration of employment and reason behind termination) and diverse state laws.
Analysis of the applicable laws on the subject
The employment laws in India consist of a range of regulations and laws aimed at protecting the worker’s well-being. The termination of any employee needs to comply with the applicable central or state law, as the case may be, considering the fact that these laws supersede contract provisions. Thus, contract provisions need to be compatible with the law. The laws pertaining to ‘notice period’ are found in the following two sources:
The Industrial Disputes Act, 1947; andRespective state’s shops establishment acts.
State laws (enshrined and linked to the Shops and Establishment Act) are particularly important when no defined procedure for termination exists, or there is a dispute in the interpretation of those procedures.
- The Industrial Disputes Act of 1947 (“ID Act”)
The Industrial Disputes Act uses the term “retrenchment” instead of “termination”. Section 25-F of the ID Act states as follows:
“25F. Conditions precedent to retrenchment of workmen; (a) the workman has been given one month’s notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice:”
It may be noted that the aforementioned ID Act is applicable only in case of ‘workmen’ who is defined as any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward.
There is always a dilemma on whether IT/ITES employees fall under definition of workman under the ID Act. In a recent decision of the Division Bench of the Karnataka High Court in the Commissioner of Income Tax vs Texas Instruments India Pvt Ltd [1], it was held that “The software engineer per se would be a workman; a software engineer rendering supervisory work would not be a workman”.However, the issue remains questionable and subjected to the applicable labour laws at the state level.
2.Respective State’s Shops and Establishment Act
A state’s shops and establishment act (herein after “SE Act”) aims to regulate the condition of work and employment and protect the rights of employees by defining uniform benefits to the employees; irrespective of the industry and type of establishment he / she is employed with.
The requirement of notice period under states of Telangana, Maharashtra, Karnataka, Tamil Nadu and UT of Delhi differs as follows:
Telangana – Under section 47(1) of Telangana S E Act, 1968, no employer shall, without a reasonable cause terminate the service of an employee who has been in his employment continuously for a period of not less than six months without giving such employee at least 1 months’ notice in writing or wages in lieu thereof and in respect of an employee who has been in his employment continuously for a period of not less than one year, a service compensation amounting to fifteen days average wages for each year of continuous employment:
Delhi – Under section 30(2) of Delhi S E Act, 1954, no employee who has put in 3 months’ continuous service shall terminate his employment unless he has given to his employer a notice, of at least 1month, in writing. In case he fails to give one month’s notice he will be released from his employment on payment of an amount equal to one month’s pay. The employer need not give notice if misconduct is the cause for termination. However, the employee, in such circumstances, should have an opportunity to reasonably explain the charge against them prior to termination.
Maharashtra – Under section 66 of Maharashtra S E Act of 1948, no employer shall dispense with the services of an employee who has been in his continuous employment- (a) for not less than a year, without giving such person at least 30 days’ notice in writing, or wages in lieu of such notice; (b) for less than a year but more than three months, without giving such person at least14 days’ notice in writing, or wages in lieu of such notice. The notice is not necessary if the employee is being terminated for misconduct.
Karnataka – Under section 39(1) of Karnataka S E Act, 1961, no employer shall remove or dismiss an employee who has put in service under him continuously for a period of not less than six months, except for a reasonable cause and unless and until 1 month’sprevious notice or pay in lieu thereof has been given to him. If misconduct is the cause for termination, no notice or associated payoff is required.
Tamil Nadu – Under section 41 of Tamil Nadu S E Act, 1947, no employer shall dispense with the services of a person employed continuously for a period of not less than six months, except for a reasonable cause and without giving such person at least 1 month’s notice or wages in lieu of such notice, provided however. If misconduct is the cause for termination, no notice or associated payoff is required.
In lights of the foregoing, it can be reasonable understood that a notice period of 1 month is adhered to or salary in lieu is provided. This holds true when an employee has been working in the organization for a period of 6 months.
However, if the employee has worked for a period of less than 6 months, he can be terminated without a notice, unless the employment contract states otherwise. In case of employee on a probation, he can be terminated without being served a notice before termination.[2]
Conclusion
There does not exist any harmonious definition of the ‘notice period’ in India as the interpretation of the notice period depends on ID Act as guiding principles for all the industries and factories and respective S E Acts for all the shops and establishments.
In India, labor law falls in the Concurrent list and thus both the Centre and State can exercise the power to make legislations on the same. The states make their regulations with minor differences from each other. In this regard, there is no single procedure that mandates anything. An employee may be terminated according to the organization’s contract or through the legislation. But the organization while making any employment contract should keep in check with the applicable labor law as the former will supersede the employment contract.
Author: Dippyaman Bhattacharya, Associate.
Disclaimer: The content of this article is intended to provide a general guide to the subject matter and that the same shall not be treated as legal advice. For any queries, the author can be reached atdippyaman@samistilegal.in
END-NOTES:
[1] I.T.A No 141 of 2020 c/w I.T.A No 151 of 202 [2] Dharampal Singh Dahiya v M/s.Inter-University Centre, (WP NO.1373 OF 2000 – Bombay High Court).
