HIRE AND FIRE GROUP 6

Factual Overview
 Labour and Employment in India is governed by Industrial Law in India.

There are 51 laws in India which are related to employees/workers and they cover all aspects
related to working condition, wages, welfare, social security.

 The earliest Indian statute to regulate the relationship between employer and his workmen was
the Trade Dispute Act, 1929 (Act 7 of 1929)

 The original colonial legislation underwent substantial modifications in the post- colonial era
and the Industrial Disputes Act (the Act) brought into force on 01.04.1947

 The Act and other analogous State statutes provide the machinery for regulating the rights of
the employers and employees for investigation and settlement of industrial disputes in peaceful
and harmonious atmosphere.

There are three main categories of employees A.T Indian Labour and Employment Laws, i.e.
government employees, PSU’s employees and private sector employees.
 Hiring of Employees
These laws are applicable while hiring employees either on full time
bases/directly hiring, or on permanent or fixed term basis or on
temporary period
There are no specific laws in India, which could provide procedure or
manner for hiring employees in private sector
The employee could be hired through newspaper advertisements,
recruitment firms, online job portals, personal networks etc.
The terms of the employment, either on contract basis or permanent
employee basis, would be governed by the contract between the
organization and the employee
The Local Shops and Establishments Act also plays an important role
for such provisions
 Firing of Employees
Non-workman in Private Sector:
I. Primarily, none of the Labour Laws apply to non-workmen and
service conditions of such employees.

II. They are governed by the respective contracts and general

service conditions (if existing).

III. In case of termination, courts cannot reinstate the Employee.

Although, It will be illegal to retrench and lay off if statutory
conditions are not fulfilled and prescribed compensation is not
paid to the workmen.

IV. Employee only has recourse for damages.

V. In certain cases Appropriate Government’s prior permission is

also required.
 Firing of employees
Workman in Private Sector
I. Section 2 defines “lay-off” the failure of the employer to
provide employment due to shortage of raw material, power
etc.

II. Section 2 (oo) defines “retrenchment” as termination of a

workman for any reason whatsoever otherwise than voluntary
retirement, reaching age of superannuation, non renewal of
contract or termination due to continued ill-health

III. Section 2 (oo) (bb)–provides for termination of the service of a

workman as a result of the non-renewal of the contract of
employment between the employer and the workman
concerned on its expiry or of such contract being terminated
under a stipulation in that behalf contained therein
 Corporate Examples
IBM Accenture

Microsoft Cognizant

Big 4 (PwC,
Deloitte, EnY, Tech Mahindra
KPMG
Industrial Employment Standing Orders Act,1946

Definition under the Act (Sec.2)

“Standing Orders” mean rules relating to matters set out in the Schedule to the Act
[Sec.2(g)] to be covered and in respect of which the employer has to draft for submission
to the Certifying Officer, are matters specified in the Schedule.

Objectives of the Act

 To require employers to define the conditions of work
 To bring about uniformity in terms and conditions of employment
 To minimize industrial conflicts
 To foster harmonious relations between employers and employees.
 To provide statutory sanctity and importance to standing orders
 Publication of Work
MODEL STANDING
Classification
of Workers
Time, Holidays, Pay Days
and Wage Rates ORDERS
Attendance
Leave and Payment of
and Late
Holidays Wages
Coming

Termination Disciplinary
Stoppage of
of Action for
Work
Employment Misconduct

Suspension Dismissal Complaints

 Obligations of Employers & Workmen
Employers:
 Submit draft standing orders with the required information to the certifying officer for
certification within the time limit mentioned in the Act.
 Act in conformity with the certified standing orders in the day to day dealings with the
workmen
 Modify certified standing orders only with the approval of the certifying officer

Workmen:
 Work in conformity with the certified standing orders or model standing orders as the
case may be.
 Comply with the provisions of the Act in regard to modification and interpretation of
standing orders.
Employment Misconducts

Wilful insubordination Disobedience Theft

Habitual
Fraud Dishonesty
Negligence

Riotous or disorderly behaviour during

work hours at the establishment
 Acts of Misconduct
The following acts or omissions on the part of a workman shall amount to misconduct:
 Going on an illegal strike
 Wilfully slowing down in performance of work
 Theft, fraud or dishonesty in connection with the employer’s business or property or the theft
of property of another workman within the premises of the establishment
 Taking or giving bribes
 Habitual absence without leave or absence without leave for more than ten consecutive days
 Collection without the permission of the manager of any money within the premises of the
establishment except as sanctioned by any law for the law for the time being in force
 Engaging in trade within the premises of the establishment
 Wilful damage to work in process or to any property of the establishment
 Unauthorised possession of any lethal weapon in the establishment
 Disclosing to any unauthorised person any information
 Terminations for Misconduct
1. It is now well established that such Standing Orders have the force of law and constitute statutory terms of
employment. What constitutes misconduct or indiscipline is set out in these Standing Orders and a company may
define the acts which may amount to indiscipline.
2. The difficulty in this category of cases is the legal requirement for holding a domestic inquiry under the Standing
Orders Act. The Standing Orders are framed by a company under this Act or if such a Standing Order is not framed by
it, the company may follow the Model Standing Order annexed to this Act.
3. In any case, the Model Standing Order contains certain standard acts which are regarded as misconduct. In a given
case, the management has only to invoke the specific acts of misconduct and issue a notice to the employee and hold
the obligatory inquiry to prove the misconduct before awarding punishment which may extend to dismissal and
termination of service.
4. The main challenge in such cases is the leading of evidence, cross examinations and eventually going through the
whole gamut of forums for adjudication which are provided under the IDA and the Standing Orders.
5. These are long drawn out processes and yet have to be gone through to the bitter end if management wishes to send
the signal that employee indiscipline will not be tolerated.
 Offences and Penalties
• An employer fails to submit the draft Standing Orders as required by Section 3 or
who modified his standing orders otherwise with sec.10 shall be punishable with
fine which may extend to Rs.5000 and in case of continuing offence with a further
fine of Rs.200 for every day after the first during which the offence continues.
• An employer who does not act in contravention of
the standing orders finally certified under this act
for industrial establishment shall be punishable
with fine which may extend to Rs.100 and in case of
continuous offence with further fine of Rs.25 every
day after the first during which the offence
continues.
• No persecution for any offence punishable under
this section 13 shall be instituted except with the
previous sanction of the appropriate government.
It can be tried only in the Court of a presidency
magistrate or the second class magistrate.
LATEST EXAMPLES
 REFERENCES
1. https://www.theguardian.com/commentisfree/2012/jan/26/hire-and-fire-
destroyed-uk-jobs

2. https://economictimes.indiatimes.com/news/economy/policy/more-sectors-
may-come-under-hire-fire-policy/articleshow/2902585.cms

3. Economic Times

4. HBR

5. People Matters

6. Quora & Glassdoor

7. https://www.quora.com/Which-IT-companies-in-India-are-currently-firing-
laying-off-employees-secretly