A leading Indian education company announced a restructuring plan that will impact 2,500 employees, which led to an unfair labor practice claim by a union and a potential investigation by the local labor department for alleged forceful resignment. Mass layoff is in general challenging in India as an employee has the right to refuse to sign a resignation if they feel being forced to do so. Global companies operating in India should have a good strategy in place to handle such a situation.
Even though the company appears to take appropriate steps to help the effected employees, including a progressive exit package, extension of family health insurance benefits, out placement services, fast tracked full and final settlement on demand, and provision of paid leave, Karnataka State IT/ITeS Employees Union (KITU) claimed that “all kinds of HR pressure tactics” are used to “get employees to resign on their own and leave.” Under Industrial Disputes Act 1947, unfair labour practices such as indulging in acts of force or violence is an offense on the part of an employer and it includes forcing employees to resign, therefore employees have the right to refuse to sign.
HRPI Outlook: Worker separation continues to be a very difficult subject in India, which does not have supportive laws regarding workplace exits. Yet, HR & business teams in organizations find a way to meet business outcomes with smart planning. To avoid unnecessary and lengthy litigation, companies should have a contingent plan in place for lay off and the public relations team needs to have strategies to counter potential negative brand impacts.