Authbridge

Hindustan Times : It's not without reason that employees of an embattled IT firm are a worried lot today While some are scrambling to get jobs in other firms, others fear that the same salary may be difficult to come by Many are wary that the image of the company may harm their career prospects.

They are not sure whether they will get value and respect if they approach other companies for jobs. Take another case of an international airline that decided to retrench almost 2000 employees and cabin crew 10 years ago when it decided to downsize.

Last year, the Supreme Court of that country found the air- lines guilty of illegal dismissal and ordered the carrier to reinstate and pay compensation to the 1,400 cabin crew who were dismissed as a cost-saving measure during the height of the Asian financial crisis in 1998. For those who could no longer be reinstated, the Court ordered it to pay back wages plus severance equivalent to a month's salary for every year of service. So, what are the rights of an employee? What statutes regulate termination of employment in India? Can an employee whose company's image has been tarnished due to the top management's fraudulent activities be refused a job? The mam statutes that regulate termination of employment in India are the Industrial Employment (Standing Orders) Act, 1946 (IESA) and the Industrial Disputes Act, 1947. Both the acts exclude persons employed in managerial and supervisory positions earning more than a specified statutory amount as well as members of the armed forces who are covered under specific legislations.

If there has been wrongdoing by top officials of a company which in turn has resulted in retrenchment, then such retrenchment can be held valid only if it was done for the purposes of restructuring the organisation and if the appropriate procedure as prescribed under IDA was followed. Under the IDA, dismissal or retrenchment of an employee is deemed to be an industrial dispute and those covered under this act can challenge improper retrenchment or dismissal before the labour courts, says Abhixit Singh, founder of Titus and Co. An employ ee whose employment is regulated by an employment contract and who is not covered by provisions of the IESA and IDA can only be terminated in accordance with the provisions of the employment contract.

If an employee has been terminated in breach of terms of the contract, he may initiate civil proceedings against the employer by filing a civil suit with the court for breach of contract. He will also be entitled to claim damages which will be measured by the amount of remuneration which he has been prevented from earning by reason of wrongful dismissal including the value of any other benefit he is entitled to under the employment contract. According to Sunil Seth, Senior Partnet: Seth Dua and Associates, there can be two instances of an employee being retrenched. One, when an employer is closing down the firm and has applied to the government for closure. Cutting down staff gets into the ambit of retrenchment wherein the employer has to give 15 days' salary for every completed year; 30-60 days notice period and all other dues. In case of retrenchment, one has to look at the state laws, amendments and the IDA. One also needs to understand the rule popularly known as Last In, First Out (LIFO), according to which the junior-most employee will have to be retrenched first.

In certain industries, employees have trade union agreements and may negotiate with the management for a better deal. If there is no trade union, as in several lT companies, there is very litt1e scope of a further deal. In such a scenario, employees can resort to class action wherein they can, as a group, file a case before a labour tribunal. "In the situation of a wind-up, if there are assets of the organisation that can be liquidated to generate monies, his dues will be treated at par with that of secured creditors and monies can be distributed in ratio of the dues," says Dinesh Agnani, senior labour law practitioner and advisor, Authbridge, a leading risk advisory company In case the company's top management has been a cocontributor in the scandal, there is no protection that an employee has per se. No documentation can help an employee and in such a case, organisations can create a separate fund regulated by a government authority which can be used to pay employees. There are also professional liability insurance or keyman insurance covers that can provide the company money if it is involved in a scandal, but these do not cover all such eventualities, points out Ajay Trehan, MD and CEO, Authbridge.