Termination Of Employment: The Legal And Illegal Grounds Of Dismissal

An outburst of knowledge and technology in the eon of globalization has led to the augmentation of commercial and corporate markets. The elevation of investment by foreign companies in the Indian sector and the advent of laws relating to Foreign Direct Investment and Foreign Exchange Management have brought about a radical change in the employment sector. The Indian economy has the characteristics of being a mixed economy. The Indian metros have been creating employment opportunities for years; however, cities like Gurgaon, Pune, Noida, and Hyderabad have contributed to creating abundant employment opportunities thereby elevating the Indian corporate market in the global sector.

The connection between employers and employees has been revamped because of the instantaneous elevation of the corporate sector. The nature and number of disputes have sprung up due to antiquated employers in the industry. The frequent conflicts include age, harassment, pregnancy, biased view of superiors, long hours of work, low recognition, and inter alias.

The Constitution of India substantially regulates matters related to the employment sector in India. ‘Right to work' has not been unequivocally embodied under the Constitution of India. However, in 1985, the Hon'ble Supreme Court widely interpreted Article 21 through its judgment in Olga Tellis & Ors. v. Bombay Municipal Corporation & Ors, 1985 SCC (3) 545 included ‘right to work' under the fundamental right of ‘right to life.' The Central and State governments have framed specific laws to regulate employment matters, namely the Factories Act, of 1948, the Industrial Disputes Act, of 1947, the Payment of Wages Act, of 1937, the Payment of Bonus Act, of 1965, Payment of Gratuity Act, of 1972, Employees' State Insurance Act, 1948, Shops and Establishments Acts, etc. Municipal laws, collective and individual agreements, as well as judicial precedents, cover a muster of issues, which may be general or specific. 

An employer and employee draw an ‘Employment Contract' in a legal relationship. This contract condenses the terms of the relation, nature of the work, rights and duties of the parties, working hours, etc. The most ordinary meaning of ‘Dismissal of employment' refers to the cessation of the employment contract by the employer against the wish of the employee. An employee may be dismissed on various grounds; the nature of the same may be fair or unfair or legal or illegal. The factors that are included under the umbrella term of ‘dismissal of employment' include inefficiency of workers, information theft, misconduct, fraud, sexual harassment, violation of contract, and personal biases, amongst a few.

Employees possess a right not to be unfairly dismissed from employment. Before the dismissal of an employee, employers need to ensure that they have a potentially fair reason. The first step of an employer, therefore, is to identify a potentially fair reason for the dismissal. If he is unable to show the presence of an adequate reason then the dismissal is unfair. The five potentially fair reasons include misconduct, capability (this includes physical and mental capacity), redundancy, illegality (i.e., the employee is unable to continue without a breach of law), and some other substantial reasons.

A dismissal can also be constructive, where an employee resigns in response to his or her employer's breach of contract.

The legal or fair causes of ‘dismissal of employment' include the inefficiency of an employee, the violation of the contractual agreement, theft of information or discharge of confidential information, professional misconduct, intentional damage of employers' property or loss of the same, sexual harassment, bribery, dishonesty about professional qualifications, fraud, etc.

The illegal or unfair factors of dismissal of employment are those whose grounds are speculative or vague. These causes may be proved under the ambit of misconduct or breach of the employment contract. These grounds or factors have to be profoundly determined by the employer to the court or disciplinary committee or any other authority relevant to the matter at hand. If the employer fails to show or justify the grounds for dismissal, adequate compensation has to be paid to the employee. The factors include the absence of employees due to pregnancy or maternity. Female employees are protected under the Maternity Benefits Act, of 1961. The violation of the contract by the employer is one of the primary factors under illegal causes as this is the most prevalent in the corporate sector in this age. The violation of the contract by the employer is a broad term and includes within its scope non-payment of salary or consistent delay in the payment of wages, long working hours, and the irregular contribution of bonus or gratuity. The violation of gift and gratuity is regulated by the Payment of Bonus Act, of 1965 and the Payment of Gratuity Act, of 1972 respectively. Discrimination by caste, creed, religion, or sex has been in existence for a very long period. Personal biases, grudges favoritism, or unfair treatment on the part of the employer are other unfair grounds for dismissal. Firing an employee for lodging a legal complaint against the employer, or because the employee brought the employer's wrongdoing to light as a whistleblower, is illegal too. Such adverse actions are considered "retaliation" and are unlawful. Just cause occurs when an employer is justified in ending the employment relationship without providing any severance to the individual. The dismissed employee may also not be able to collect employment insurance benefits and will likely experience difficulty finding other employment. This severe blow can have a lasting effect on an individual. As a consequence, it becomes difficult to terminate employment for cause. Typically only the most serious forms of misconduct such as theft or dishonesty would be considered 'just' cause. In any situation where an employee is dismissed with cause, an employer would have to establish:

That the employee was guilty of serious misconduct

That the employee was given every chance to improve

That there were prior warnings and other disciplines

That there was absolutely no choice but to let the employee go.

‘Dismissal of employment' in India, in the present scenario, is entirely at the volition of the employer. In a legal relationship between the employer and employee, the employer stands unmatched as compared to the employee. The rationale behind this arrangement is that in an employer-employee relationship, the only thing that regulates or governs the parties is the Employment contract. The illegal factors for the dismissal of an employee are triumphantly clothed under the ambit of legal considerations by the employer, resulting in the termination of the employee for no fault of his. This is a result of the absence of codified legislation to govern employment in the corporate sector as existing laws relating to labor are backdated and fail to cover the rights of employees. This codified legislation and a commission to act as a vigilance committee will serve as a boon for the white-collar employees who are dismissed on uncorroborated grounds.