Employee termination
in India.

SALARY PAYMENT IN Indian Rupee (INR)

CONTRACT LANGUAGES Hindi / English

PAYROLL TAX 16.75%

PAYROLL CYCLE Monthly

TIME TO HIRE 12 hours
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India

Valid reasons to terminate employment in India

An employer can terminate an employee’s employment for various reasons that are aligned with business related reasons such as redundancy, restructuring, or closure. Employers can also terminate an employee’s contract for individual related reasons including unsatisfactory work performance. In any of these cases, the employer must give the employee sufficient notice for these sorts of termination reasons.

An employer can terminate an employee employment immediately for the following reasons:

If an employee shows disobedience towards their work responsibilities or employer
Any wilful insubordination
Fraud, dishonesty, or theft from the company
Loss or Damage to the employer’s goods wilfully.
Taking bribes or illegal gratifications
Absence more than 10 days without asking for leave
Consistent late attendance
Disorderly conduct during work hours
Negligence at work

If an employee has been terminated for any of the above reasons, then no notice is required to be given and they will not be eligible for any compensation or severance payments. If a role has been found to be redundant in an organisation, this form of termination is known under the reason of convenience and all employees that hold the same role must also be made redundant for the reason to be legally valid.

Unfair reasons to terminate employment in India

In instances that an employee has worked with a company for longer than 6 months and is not on a probation period, an employer must give the employee at least 30 days written notice which includes a valid reason for the dismissal. This can change depending on each states legislation around termination rules. Another unfair reason is if an employer does not undertake appropriate due process leading up to the termination of the employee. Employees also cannot be terminated based on discriminatory facets including age, race, nationality, or gender. Women employees that are pregnant or on maternity leave cannot be terminated or this would constitute to an unfair dismissal.

Dismissal procedure in India

There are a few standard ways to dismiss an employee in India depending on whether they are on probation, not on probation or work in company that is seeking to dismiss a large number of employees in one go.

If an employee is on probation period, which can range from 3 month to 2 years in India, then the employer does not need to give the employee any notice, reason or further compensation.

If an employee is not on a probationary period, then the employer must give an employee sufficient notice which will depend on the relevant states provisions, the industry and the seniority of the employee. This could range from anywhere between 30 to 90 days notice and must include a valid written reason for the dismissal. An employee can arrange with the employee to have any future payments made in lieu if they do not wish to continue out their duties after been given notice.

If a company that is within the manufacturing, mining or plantation sectors needs to dismiss over 100 workers based on convenience, the company needs to apply for approval with the government being doing so.

Resignation procedure in India

There are no standard rules that regulate how an employee should resign in India. There may be provisions outlines in the specific employment contract signed between the employer and employee that stipulates an expectation if choosing to resign. If an employee is on a active probationary period, they are not required in any circumstance to give notice or reason to the employer if they want to resign.

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FAQs

Is it difficult to terminate employment in India?

Like resignation, there is no standard rules around termination at a national level in India. Termination rules are determined by each state government. However, within the range of labor laws, employers are guided how best to terminate an employee without facing legal risks from unfair dismissal.

What are the risks of terminating employment in India, and how do I mitigate them?

There are legal risks associated with wrongfully terminating an employee in India. To mitigate these risks, it’s important to understand the respective labor codes, have clear and concise provisions included as part of an employment contract and seek guidance from an expert on Indian labor laws and issues.

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