This article is written by Shrutika Lakhotia, a student of Diploma in Entrepreneurship, Administration and Business Laws from LawSikho. She has discussed unfair dismissal.

Introduction and Definition of Unfair Dismissal

‘Unfair dismissal’ is a term used in Labour and Employment laws. Before moving to the meaning of the term, it is important to know the importance of such laws in our country. In developing countries like India, labourers/ employees are the most valuable asset which can help in transforming the country into a developed nation. The business and economy, undoubtedly, are growing at a very high pace. Hundreds of industries, manufacturing units, factories, MNCs are opening every day. In order to ace this competition, employers focus on price and goods efficiency which in turn result in neglecting the rights of labourers/ employees. Illiterate, poor and unaware about their rights, labourers often fall prey in the hands of their powerful employers. This is the reason we need labour and employment laws. To protect labourers from exploitation, to improve industrial relations between working class and management, to ensure job security, etc.  

Now, this aspect of job security is disturbed by the act ‘unfair dismissal’. Unfair dismissal is nothing but when the employer terminates the employment of his/her employee on unfair grounds which are harsh, capricious, and indistinct or even without any reason. Unfair dismissal is when the employer does not have any valid or fair ground to dismiss the employee. In most of the cases, the employer terminates the employment of the employee unfairly under the garb of fair grounds of dismissal. The concept of unfair dismissal is easy to understand but difficult to define. One cannot give a definite list of all the acts which will amount to unfair dismissal or not. The term unfair dismissal differs from organization to organization and circumstances to circumstances. It depends on various factors such as the nature of the organization, working pattern of the employer, terms and conditions mentioned in the employment contract, actions of employees, etc.

It is important to keep in mind that a ground of fair dismissal should apply to everyone in such a manner which is uniform to all. For Example, if ‘A’ terminates the employment of ‘B’ on the ground of non-performance and gives another chance to improve to ‘C’ on the same ground of non-performance, then ‘B’ has been terminated unfairly and arbitrarily. The law pertaining to unfair dismissal is based on principles of natural justice and rationality.

To protect employees from unfair dismissal, it is very important to have strict laws with respect to unfair dismissal and not just this, it is essentially important to aware and educate employees about their rights in the case of unfair dismissal. There are various legislations protecting the interests of employees/labourers in India such as the Minimum Wages Act, Payment of Gratuity Act, Industrial Disputes Act, etc. Much legislation provide for fairgrounds of dismissal, however, none of the legislation provides for even the definition of unfair dismissal or what amounts to unfair dismissal, directly. The concept is wide and can be given zillion interpretations. It is scattered amongst various legislations and is not available at a single place. The drawback with such law is that the law becomes vague and unclear. Often the ground of fair dismissal becomes unfair and the employer has the freedom to do whatever he wants under the blanket cover of fair dismissal.

What Are Fair Grounds of Dismissal?

Before talking about what unfair dismissal is like, we must be familiar with the grounds for fair dismissal of an employee. Private sector employees can be organization staff or workmen. The term ‘workman’ has been clearly defined under the Industrial Disputes Act, and would mean all individuals employed in any industry or manufacturing or production unit but does not include an employee who is in a white-collar, organizational or decision-making role. The workmen are governed by labour laws like the Factories Act, the Payment of Wages Act, etc. The non-workmen are governed predominantly by their employment contract and the Shops and Establishment Act of the state in which they work. The employment agreement lays down the conditions for dismissal of an employee from the services. Usually, termination takes place as misconduct, discharge or retrenchment. They are related to misconduct, non-performance, lying about qualifications or experience, statutory restrictions, undisclosed information, information theft, willful insubordination or disobedience, scam or deceitfulness, determined damage or loss of employer’s property, enticement, regular unpunctuality or nonattendance, prominent illegally and sexual harassment, etc. But these fall under the category of fair reasons for the dismissal of an employee.

When Fair Becomes Unfair

There are situations where the grounds for termination are subjective or blurred. In some cases, one can easily observe that these grounds were almost drawn to bring them under the purview of an employment agreement under the purview of the employment conformity, under the broad heads like non-performance or misconduct on the part of the employee.

On the whole, an employer has to establish the grounds of termination or dismissal before a disciplinary committee or the court. If he falls short to do so, then he has to effectively compensate the employee for the earnings of that particular period. Now let’s try to identify some of the grounds of unfair dismissal-

• Reasons related to motherhood or pregnancy

Pregnant female employees cannot be dismissed on account of their pregnancy. Such employees are not to be engaged by the employer within six weeks of delivery or even in the case of miscarriage. If dismissed, they can still claim maternity benefits. They are protected under the Maternity Benefit Act and also during their pregnancy, they are eligible to get their wages to a certain extent.

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• Contravention of employment contract

If the employer does not follow the due procedure and formalities of dismissal such as giving notice or provide with a chance for the employee to be heard, then it amounts to unfair dismissal. If the contract’s conditions are violated by the employer, like non-payment of salary, long working hours, asymmetrical contribution towards PF, gratuity, bonus, etc. and refusal leads to unfair dismissal. The entitlements of an employee are not waived off in case of termination.

• Prejudice

If there is discrimination based on gender, race, religion, caste, etc. at work which leads to the termination of an employee, then that would amount to unfair dismissal. For instance, if the employee chooses to wear turban regularly due to his religious beliefs and gets terminated from his employment citing reasons of ‘code of conduct’, then it amounts to unfair dismissal.

• Personal Biases

Maybe employer or head of the organization has an ill will against you, or he/she gives an unlawful instruction which employee refused to comply with or has an ongoing dispute with an employee, all such circumstances would lead to unfair dismissal.

Recourses and Conclusion

Termination of employment is undoubtedly a tedious process altogether, and an employee can be terminated by giving due cause and notice or by non-renewal of an annual contract, etc. With respect to India, there is no standard process to terminate an employee. An employee can be terminated as per the process mentioned in the individual employment contract signed between the parties (employer and employee). Every employee and employer has their own set of terms and conditions depending on the description & nature of the employment, requirements of employee-employer and relationship of employee and employer. In a situation when there is an absence of a labour contract or the particular contract does not define a method of termination, then the employer is bound to follow the state-specific legislation. Nevertheless, none of the terms and conditions of the contract could be arbitrary, one-sided, vague and discretionary. To achieve this there needs to be a framework governing the same. This is why the provisions of labour contracts or any termination policy or clause are superseded by labour laws.

An employer will have to face permissible corrective consequences in cases of unfair termination or if the appropriate route of termination as endowed in respective state laws is not complied with. In addition, the courts may order the employer to pay fines and award additional compensation to an employee who was terminated. It becomes significant at this point to mention that employers reduce the potential labour disputes in relation to the termination of an employee when employers follow labour laws and procedures for terminating employee as explicitly mentioned in the contract.

Ahead of this, however, employers must make certain that administration teams and HR experts are fully briefed on termination measures. Contracts can protect employers; yet, management teams and HR professionals must warrant labour law observance to shield them from any undesirable legal action.

The matter of utmost concern is the amount of difficulty employees find with proving unfair dismissal. The employers usually find a way to discharge an employee under the array of fair dismissal. They may allot cumbersome work with minute deadline and then cite non-performance or missing deadlines, etc. Or they may cite reasons for unsatisfactory work or coming late to work as not complying with the company’s policies. The point is any small or big unrelated issue could be cited as a reason for termination. This becomes difficult for an employee to prove as all such records are the company’s property and the management, as well as the control of affairs in the company, is within the hands of the employee.

However, it is important for an employer to know that they are exposed to a number of legal and reputational risks as a consequence of wrongful termination, or not following the due course of action which paves way for unfair dismissal. Employers should, therefore, plan to construct contracts and human resource (HR) materials to ensure that senior management, HR personnel, and employees are fully apprised of their rights and responsibilities.

Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skill.