Involuntary Separations of employees from work are - Dismissal - Termination - Suspension - Layoff - Retrenchment - Retirement - Transfers - Liquidation of Company

Involuntary Separations of employees from work

Involuntary separations occur when management decides to terminate its relationship with an employee because of either economic necessity or a poor fit between the employee and the organization. Examples of involuntary separations include discharges, layoffs, and downsizing or "right"-sizing (a term used by firms to make downsizing appear more palatable, generally positioning it as an attempt to make the firm the "right" size for its needs by implementing layoffs).

Dismissal of employee

Usually, this process is perceived negatively by employees. An employer uses his right to terminate the contract of an employment. There can be many reasons for an employer to terminate the contract of employment but some of the common reasons are:

    • Non-Performance

India's largest software services provider TCS axed 1,000 jobs in the country due to non-performance by its employees. Jan 15, 2015, PTI

    • Indiscipline

    • Misconduct

    • Insubordination

    • Theft and etc.

In the United States More than 25% of employers have terminated employees for misusing the Internet, according to a recent American Management Association survey. Recent surveys of Internet use in the workplace indicate a majority of workers use these tools for personal use. Management experts suggest organizations should have a written computer usage policy with specific consequences for violation.

Wrongful dismissal will tend to arise first as a claim by the employee so dismissed. Many jurisdictions provide tribunals or courts which will hear actions for wrongful dismissal. A proven wrongful dismissal will tend to lead to two main rremedies: reinstatement of the dismissed employee, and/or monetary compensation for the wrongfully dismissed.

Employer cannot merely fire (dismiss or discharge) employees For Being Homosexual Or Transgender: Supreme Court of the United States

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No. 17–1623, Altitude Express, Inc., et al. v. Zarda et al., as Co-Independent Executors of the Estate of Zarda.

No. 18–107, R. G. & G. R. Harris Funeral Homes, Inc. v. Equal Employment Opportunity Commission et al.

A male employee was fired by his employer for being gay and another male employee who planned to “live and work full-time as a woman Was fired by his employer. Each employee sued, alleging sex discrimination under Title VII of the Civil Rights Act of 1964.

Court held that

Title VII makes it “unlawful . . . for an employer to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual . . . because of such individual’s race, color, religion, sex, or national origin.” 42 U. S. C. §2000e–2(a)(1). An employer violatesTitle VII when it intentionally fires an individual employee based in part on sex. Because discrimination on the basis of homosexuality or transgender status requires an employer to intentionally treat individual employees differently because of their sex, an employer who intentionally penalizes an employee for being homosexual or transgender also violatesTitle VII.

If the employer retains an otherwise identical employee who was identified as female at birth, the employer intentionally penalizes a person identified as male at birth for traits or actions that it tolerates in an employee identified as female at birth. Again, the individual employee’s sex plays an unmistakable and impermissible role in the discharge decision.

Put differently, the employer intentionally singles out an employee to fire based in part on the employee's sex, and the affected employee's sex is a but-for cause of his discharge. Or take an employer who fires a transgender person who was identified as a male at birth but who now identifies as a female. If the employer retains an otherwise identical employee who was identified as female at birth, the employer intentionally penalizes a person identified as male at birth for traits or actions that it tolerates in an employee identified as female at birth. Again, the individual employee's sex plays an unmistakable and impermissible role in the discharge decision

Process of discharge or dismissal of an employee by his/her employer

Should consider as to whether or not a prima facie case for discharge or dismissal is made out on the basis of the domestic enquiry if such enquiry does not suffer from any defect, namely, it has not been held in violation of principles of natural justice and the conclusion arrived at by the employer is bona fide or that there was no unfair labour practice or victimisation of the workman. - THE SUPREME COURT OF INDIA - CIVIL APPEAL NO. 8042 OF 2019.

Issuing notice, conducting enquiry is mandatory before passing removal order on employee: High Court of Telangana

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WP 28523/2017

K.S. Narayana, S/o Late Rama Rao Vs The Andhra Pradesh State Road Transport Corporation

Facts of the case

This writ petition is filed challenging the proceedings by respondent for removing the petitioner from service.

Learned counsel for the petitioner submits that the impugned (removal) proceedings are issued without considering the explanation submitted by the petitioner in pursuance to the show cause notice. Learned counsel for the petitioner also tried to argue the matter on merits. He states that some of the documents sought by the petitioner under RTI Act were supplied to the petitioner after passing of the removal order which is in violation of principles of natural justice, as such the writ petition is maintainable.

Court held that

In this case, it is to be seen that after issuing notice, conducting enquiry and basing on the enquiry report, impugned order is passed. In view of the same, this Court is not inclined to entertain the writ petition only on the ground that the petitioner has alternative remedy.

Give opportunity to absentee employee for explanations before passing the orders of removal: High Court of Telangana

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WP(TR) 4627/2017

R. RAMESH vs The Additional Director General of Police

The petitioners in all these writ petitions are challenging the action of the respondents in passing orders of removal without following the due process of law.

Facts of the Case

The petitioners were appointed as Home Guards in the year 2003, 1999, 2009, 2007 and 2008.

Home Guards owing to some domestic problems and ill-health, they could not attend the duties for some period and the respondents without conducting any enquiry and following due process of law, passed removal orders.

approached A.P.Administrative Tribunal, the Tribunal vide orders dated 25.04.2013 in OA.Nos.1555/2013, set aside the orders of removal. The said orders were challaneged in the Honourable High Court.

Court held that

This Court having considered the rival submissions made by both the parties, is of the considered view that the respondents without giving any opportunity to the petitioners passed orders of removal and referred to the judgement State of Andhra Pradesh and others v. P.Prasad Rao and another 2012 (1) ALD 76 (DB)

Accordingly, the impugned orders of removal passed by the respondents are set aside and the respondents are directed to reinstate the petitioners as Home Guards subject to their physical fitness. However, the petitioners are not entitled to any benefit of continuity of service, seniority and arrears of pay by virtue of the orders passed by this Court.

Back Wages can't be claimed as Right of employee on reinstatement in service if gainful employment (include self-employment). Supreme Court of India


Rajasthan State Road Transport Corporation, Jaipur Vs Shri Phool Chand(Dead) Through L.Rs.

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‘A workman / employee has no right to claim back wages from his employer as of right only because the Court has set aside his dismissal order in his favour and directed his reinstatement in service.’

The Supreme Court has held that the back wages could not be awarded by the court as of right to the workman consequent upon setting aside of employee dismissal / termination order.

In the first case the appellant, Rajasthan Road Transport Corporation, dismissed their driver Phool Chand from the service on the ground of dereliction of duties on various occasions while he was in the course of employment. The charge against the Phool Chand was his continuous absence from the work, which was proved.

Rajasthan State Road Transport Corporation vs. Shri Phool Chand, the Labour Court converted the punishment awarded to a driver (employee of the corporation) of removal from service to that of “stoppage/forfeit of four annual grade increments without cumulative effect” and directed the reinstatement of the deceased workman in service with award of full back wages for 13 years. As the high court dismissed the challenge against this order, the state assailed it before the apex court.

The bench comprising Justice Abhay Manohar Sapre and Justice S Abdul Nazeer observed that a workman has no right to claim back wages from his employer as of right only because the court has set aside his dismissal order in his favour and directed his reinstatement in service.

Initial Burden On Employee To Prove Entitlement To Back Wages It said:

“It is necessary for the workman in such cases to plead and prove with the aid of evidence that after his dismissal from the service, he was not gainfully employed anywhere and had no earning to maintain himself or/and his family. The employer is also entitled to prove it otherwise against the employee, namely, that the employee was gainfully employed during the relevant period and hence not entitled to claim any back wages. Initial burden is, however, on the employee.”.

However, the bench invoked Article 142, in this case, to award 50 percent of total back wages, taking into account the period and money spent in litigation by the deceased workman and, upon his death, by his legal representatives.

In order to claim back wages, it was necessary for the appellant to plead and prove that he was not gainfully employed after his dismissal with the aid of evidence. This was held in the following judgements by SC.

  • (See­ M.P. State Electricity Board vs. Jarina Bee(Smt.), (2003) 6 SCC 141,

  • G.M. Haryana Roadways vs. Rudhan Singh, (2005) 5 SCC 591,

  • U.P. State Brassware Corporation vs. Uday Narain Pandey, (2006) 1 SCC 479,

  • J.K. Synthetics Ltd. vs. K.P. Agrawal & Anr., (2007) 2 SCC 433,

  • Metropolitan Transport Corporation vs. V. Venkatesan, (2009) 9 SCC 601,

  • Jagbir Singh vs. Haryana State Agriculture Marketing Board & Anr., (2009) 15 SCC 327) and

  • Deepali Gundu Surwase vs.Kranti Junior Adhyapak Mahavidyalaya(D.Ed.) & Ors., (2013) 10 SCC 324.

Reference: CIVIL APPEAL No.1841 OF 2010 - M.L. Singla Vs Punjab National Bank and Anr

Full back wages is payable only when an order of dismissal of employee is defective: Supreme Court of India.

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Appeal (civil) 4601 of 2003

M.P. State Electricity Board vs Smt. Jarina Bee on 15 July, 2003.

Facts of the Case

here the petitioner was wife of an employee working in the respondent organisation, which had dismissed the said employee on the charges of theft and found guilty in the departmental enquiry. Set employee challenged the case before the court stating that the departmental enquiry was not conducted correctly on the dismissal was not correct.

During the pendency of cases before the industrial court the said employee died and his wife represented the case. Later the case came before the High Court and finally before the Supreme Court of India.

Court held that

"Considering the background of the case and the fact that the order of dismissal was found to be defective as the principles of natural justice were not properly followed, and an opportunity was granted to the Board to proceed in accordance with law, and the fact that the employee has expired in the meantime, we feel the payment of Rs.85,000/- towards back wages would meet the ends of justice".

Dismissal can be done even after retirement of an employee, if found guilty in enquiry: Supreme Court of India

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Chairman­ cum ­Managing Director, Mahanadi Coalfields Limited Vs Sri Rabindranath Choubey


Facts of the case

Respondent was an employee occupying the position as Chief General manager in the appellant coal company. There was very serious allegation of misconduct alleging dishonestly causing coal stock shortages amounting to Rs.31.65 crores and thereby causing substantial loss to the employer. The employee was thereafter suspended from service, pending departmental enquiry against him, attained 60 years of age and got superannuated. The said case came before the Supreme Court of india.

Court held that

Major punishment like dismissal or removal can be imposed even after retirement of an employee if an employee is found guilty in the disciplinary enquiry.

Several service benefits would depend upon the outcome of the inquiry, such as concerning the period during which inquiry remained pending. It would be against the public policy to permit an employee to go scot­free after collecting various service benefits to which he would not be entitled, and the event of superannuation cannot come to his rescue and would amount to condonation of guilt.

Continuance of disciplinary proceedings even after the final retirement of an employee, provided the disciplinary proceedings are instituted while the employee was in service whether before his retirement or during his reemployment. It provides that such disciplinary proceedings shall be continued and concluded by the authority by which it was commenced in the same manner as if the employee had continued in service.

Disciplinary proceedings against a government servant who has been convicted by a criminal court is not barred merely because the sentence or order is suspended by the appellate court. : Supreme Court of India -

C.A. No. 1804 / 2020

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"When a public servant who is convicted of corruption is allowed to continue to hold public office, it would impair the morale of the other persons manning such office, and consequently that would erode the already shrunk confidence of the people in such public institutions besides demoralising the other honest public servants who would either be the colleagues or subordinates of the convicted person, if honest public servants are compelled to take orders from proclaimed corrupt officers on account of the suspension of the conviction, the fallout would be one of shaking the system itself..."

Hate tweets cost Delhi man his job

ET Bureau

May 15, 2018

A Delhi-based employee of a multinational company was made to quit after he was found to have sent abusive tweets against a particular community.

The J&K police has initiated an investigation against the man, Ashish Kaul, while social media platform Twitter has suspended his account. Development Dimensions International, a US-based HR consultancy firm, said as soon as it got to know about the tweets, it suspended the employee and launched a full investigation, following which it accepted his resignation. “DDI was alerted to the fact that an employee who worked as a consultant in India had made statements on social media that condoned violence against members of the community in the Kashmir region,” it said in a statement. The nature of the posts was in violation of the company’s mission and values, DDI added.

Employees are coming under increased scrutiny over what they post on social media platforms, some of which are resulting into termination of their work contract in cases where they are found to be propagating hate. Recently, Kotak Mahindra Bank sacked an employee over his remark on the Kathua rape. In April last year, a Dubai-based firm fired an employee after he was found to have abused a female journalist on Facebook.

India, Maruthi Suzuki India, Ltd. violence

18,July,2012: Maruthi Suzuki India Ltd.,general manager human resource was burnt to death at manufacturing plant located at Maneser (Haryana) by the workers in a dispute between workers and management due to the disciplinary action taken against worker by the management. Workers union alleges that this incident was caused due to the supervisor made objectionable remark against a permanent worker, who belongs to the Scheduled Caste category. When we opposed it, they misbehaved with us and suspended the worker that led to violence. Company had huge loss of property, damage and burned, police complaint was filed and the Indian penal code (IPC) against the workers who indulged in violence, killing general manager, severely hurting almost 100 workers and 40 executives and managers. Companies top Management decided to dismiss the workers who ever involved in these activities and declare that there is no further reinstatement of dismissed employees.

Termination of employee

Termination of employee means removal of employee from employment by his employer mainly on the following grounds,

    • Termination of employee due to the expiry of employment contract period between employee and his employer.

    • Termination of employee due to the Ill-health of the employee.

Being terminated for any of the items listed below may constitute wrongful termination:

    • Discrimination: The employer cannot terminate employment because the employee is a certain race, nationality, religion, sex, age, or in some jurisdictions, sexual orientation.

    • Retaliation: An employer cannot terminate an employee because the employee filed a claim of discrimination or is participating in an investigation for discrimination. In the United States, this "retaliation" is forbidden under civil rights law.

    • Employee's Refusal to Commit an Illegal Act: An employer is not permitted to terminate an employee because the employee refuses to commit an act that is illegal.

    • Employer Not Following Own Termination Procedures: Often, the employee handbook or company policy outlines a procedure that must be followed before an employee is terminated. If the employer fires an employee without following this procedure, the employee may have a claim for wrongful termination.

Forfeiture of gratuity either wholly or partially only in the event that the termination

Jaswant Singh Gill v. Bharat Coking Coal Limited and others (2007) 1 SCC 663

Forfeiture of gratuity either wholly or partially is permissible under sub-Section (6)(b)(ii) only in the event that the termination is on account of riotous or disorderly conduct or any other act of violence or on account of an act constituting an offence involving moral turpitude when he is convicted.

The Act provides for a close-knit scheme providing for payment of gratuity. It is a complete code containing detailed provisions covering the essential provisions of a scheme for a gratuity. It not only creates a right to payment of gratuity but also lays down the principles for quantification thereof as also the

conditions on which he may be denied therefrom. As noticed hereinbefore, sub-section (6) of Section 4 of the Act contains a non obstante clause vis-à-vis sub-section (1) thereof. As by reason thereof, an accrued or vested right is sought to be taken away, the conditions laid down thereunder must be fulfilled. The provisions contained therein must, therefore, be scrupulously observed. Clause (a) of sub-section (6) of Section 4 of the Act speaks of termination of service of an employee for any act, wilful omission or negligence causing any damage. However, the amount liable to be forfeited would be only to the extent of damage or loss caused. The disciplinary authority has not quantified the loss or damage. It was not found that the damages or loss caused to Respondent 1 was more than the amount of gratuity payable to the appellant. Clause (b) of sub- section (6) of Section 4 of the Act also provides for forfeiture of the whole amount of gratuity or part in the event his services had been terminated for his riotous or disorderly conduct or any other act of violence on his part or if he has been convicted for an offence involving moral turpitude. Conditions laid down therein are also not satisfied.”

What Supreme Court held on payment of Back Wages in case of wrongful termination

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Civil Appeal No 6188 of 2019

(Arising out of SLP(C) No 8112 of 2019)

Jayantibhai Raojibhai Patel Vs Municipal Council, Narkhed & Ors.

The Supreme Court reaffirmed the law that payment of full back wages for the period for which no service has been rendered would be the normal rule in case of wrongful termination of service.

The appellant, in this case, was appointed as a Headmaster in 1986 of a Nagar Parishad High School. In 1994, a showcase notice was issued to him levelling allegations of misappropriation of funds to the tune of Rs 5,000. An inquiry officer was appointed to look into the matter whose report concluded no misappropriation and found the appellant not guilty of misconduct.

Subsequently, a second inquiry officer was appointed to probe the matter though his appointment was objected to by the appellant. The second inquiry officer found the appellant guilty of misappropriation of funds and the appellant was terminated from service in July 1996.

The appeal filed by the appellant before the Regional Director, Municipal Administration, Nagpur Division under Section 79 (6) of the Municipal Councils, Nagar Panchayats and Industrial Townships Act 1965 was dismissed

The appellant then filed a Writ petition before the Bombay High Court challenging his removal.

The High Court held the removal to be illegal and added that the action of the Municipal Council to proceed with the second inquiry was vitiated given that no reasons were recorded to buttress the non-acceptance of the first inquiry report. Even the objection to second inquiry committee raised by the appellant was taken note of by the High Court.

It, therefore, quashed the order of termination of services. However, since the appellant had attained the age of superannuation by then, the High Court ordered retiral benefits to be paid to the appellant but held that no back wages could be paid for the period for which he did not render any services.

The question before the Supreme Court was whether back wages could be allowed for the period for which the appellant was not in service.

The Court adverted to the principles laid down in a catena of judgments on this issue.

In Hindustan Tin Works case, a three-judge Bench of the Supreme Court had held that if the employer terminates the service illegally and the termination is motivated, the termination may amount to unfair labour practice. In such circumstances, reinstatement being the normal rule, it should be followed with full back wages.

Similar rulings were rendered in Surendra Kumar Verma v. Central Government Industrial Tribunal-cum-Labour Court and Deepali Gundu Surwase v Kranti Junior Adhyapak Mahavidyalaya.

Having due regard to the principles enunciated in Deepali Surwase, the Supreme Court held that the High Court was not justified in denying the back-wages to the appellant altogether.

Considering the lapse of time, the Court held that reopening the proceedings would not be expedient in the interest of justice particularly when the appellant had, in the meantime, attained the age of superannuation in 2005. Further, relegating the appellant to a protracted course of action by restoring the proceedings before the disciplinary authority would also not be fair and proper after a lapse of nearly fourteen years since his retirement.

Hence, the Supreme Court ordered that a lump sum amount quantified at Rs. 5 lakh be paid in full and final settlement of his claim for back wages for the period between the date of the order of removal and the date on which he attained the age of superannuation. This payment shall be in addition to the retiral benefits to which he is entitled in terms of the order of the High Court.

Suspension of employee

Passing of suspension order on employee is of an administrative nature and suspension is not a punishment. Its purpose is to only forbid the delinquent to work in the office and it is in the exclusive domain of the employer to revoke the suspension order.

Long period of suspension does not make the order of suspension invalid. However, in State of H.P. v. B.C. Thakur,(1994) SCC (L&S) 835, this Court held that where for any reason it is not possible to proceed with the domestic enquiry the delinquent may not be kept under suspension.

Employee suspension is an immediate disciplinary action taken by the competent authority against indiscipline employee that would stop stop him / her from attending job for a certain period mostly with half salary or no pay sometimes in case of serious indiscipline. Suspension of employee is done by the competent authority in case of any misconduct or misbehaviour, dereliction of duties, indiscipline, disobedience, negligence and carelessness in performing duties. In a serious case such as gross misconduct, consideration must be given to a brief period of suspension from work (normally with half salary ) while a full investigation is done. If employee found guilty, the competent authority shall hold increment of salary.

During suspension, relationship of master and servant continues between the employer and the employee. However, the employee is forbidden to perform his official duties. Thus, suspension order does not put an end to the service. Suspension means the action of debarring for the time being from a function or privilege or temporary deprivation of working in the office. In certain cases, suspension may cause stigma even after exoneration in the departmental proceedings or acquittal by the Criminal Court, but it cannot be treated as a punishment even by any stretch of imagination in strict legal sense

A short period of suspension of employee may be helpful or necessary, but it should only be imposed after careful consideration and after an initial investigation and should be kept under review. Suspension should be for no longer than reasonably necessary according to the circumstances. There is no legal restriction on the length of a suspension, however the Honourable Supreme Court suspension must necessarily be for a very short duration. If the any serious offense warrant suspending the employee, it may well be that this constitute gross misconduct and should therefore attract dismissal.

What is the objective behind suspension of an employee?

Suspension is a device to keep the delinquent out of the mischief range. The purpose is to complete the proceedings unhindered. Suspension is an interim measure in aid of disciplinary proceedings so that the delinquent may not gain custody or control of papers or take any advantage of his position. More so, at this stage, itis not desirable that the court may find out as which version is true when there are claims and counter claims on factual issues. The court cannot act as if it an appellate forum de hors the powers of judicial review.

State of Orissa v. Bimal Kumar Mohanty, AIR 1994 SC2296,

Court observed as under:–

“...... the order of suspension would be passed taking into consideration the gravity of the misconduct sought to be inquired into or investigated and the nature of evidence placed before the appointing authority and on application of the mind by the disciplinary authority.Appointing authority or disciplinary authority should consider ..... and decide whether it is expedient to keep an employee under suspension pending aforesaid action. It would not be as an administrative routine or an automatic order to suspend an employee. It should be on consideration of the gravity of the alleged misconduct or the nature of the allegations imputed to the delinquent employee. The Court or the Tribunal must consider each case on its own facts and no general law should be laid down in that behalf......In other words, it is to refrain him to avail further opportunity to perpetuate the alleged misconduct or to remove the impression among the members of service that dereliction of duty will pay fruits and the offending employee may get away even pending inquiry without any impediment or to provide an opportunity to the delinquent officer to scuttle the inquiry or investigation to win over the other witnesses or the delinquent having had an opportunity in office to impede the progress of the investigation or inquiry etc. It would be another thing if the action is actuated by mala fide,arbitrarily or for ulterior purpose. The suspension must be a step in aid to the ultimate result of the investigation or inquiry. The Authority also should keep in mind public interest of the impact of the delinquent’s continuation in office while facing departmental inquiry or a trial of a criminal charge.”

Employee suspension order can be passed considering the gravity of the alleged misconduct, if proved, imposition of major punishment i.e. removal or dismissal from service, or reduction in rank etc.: Supreme Court of India

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Union of India & Anr Vs Ashok Kumar Aggarwal

Court held that

The power of suspension should not be exercised in an arbitrary manner and without any reasonable ground or as vindictive misuse of power. Suspension should be made only in a case where there is a strong prima facie case against the delinquent employee and the allegations involving moral turpitude, grave misconduct or indiscipline or refusal to carry out the orders of superior authority are there, or there is a strong prima facie case against him, if proved,would ordinarily result in reduction in rank, removal or dismissal from service. The authority should also take into account all the available material as to whether in a given case, it is advisable to allow the delinquent to continue to perform his duties in the office or his retention in office is likely to hamper or frustrate the inquiry.

In view of the above, the law on the issue can be summarised to the effect that suspension order can be passed by the competent authority considering the gravity of the alleged misconduct i.e. serious act of omission or commission and the nature of evidence available. It cannot be actuated by mala fide, arbitrariness, or for ulterior purpose. Effect on public interest due to the employee’s continuation in office is also a relevant and determining factor. The facts of each case have to be taken into consideration as no formula of universal application can be laid down in this regard. However, suspension order should be passed only where there is a strong prima facie case against the delinquent, and if the charges stand proved, would ordinarily warrant imposition of major punishment i.e. removal or dismissal from service, or reduction in rank etc.

According to Section 10A of the Industrial Employment (Standing Orders) Act, 1946 , Payment of subsistence allowance is complusory

Section 10A - Payment of subsistence allowance

(1) Where any workmen is suspended by the employer pending investigation or inquiry into complaints or charge of misconduct against him, the employer shall pay to such workman subsistence allowance-

(a) at the rate of fifty per cent of the wages which the workman was entitled to immediately preceding the date of such suspension, for the first ninety days of suspension; and

(b) at the rate of seventy-five per cent of the such wages for the remaining period of suspension if the delay in the completion of disciplinary proceedings against such workman is not directly attributable to the conduct of such workman.

(2) If any dispute arises regarding the subsistence allowance payable to a workman under sub-section (1) the workman or the employer concerned may refer the dispute to the Labor Court, constituted under the Industrial Disputes Act, 1947 (14 of 1947), within the local limits of whose jurisdiction the industrial establishment wherein such workman is employed is situate and the Labor Court to which the dispute is so referred shall, after giving the parties an opportunity of being heard, decide the dispute and such decision shall be final and binding on the parties.

(3) Notwithstanding anything contained in the foregoing provisions of this section where provisions relating to the payment of subsistence allowance under any other law for the time being in force in any state are more beneficial than the provisions of this sections, the provisions of such other law shall be applicable to the payment of subsistence allowance in the state.

Suspension of employee is not reasonable for trival issues: High Court of Telangana

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WP 28907/2017

J.V.G. Reddy, Vs The Telangana State Road Transport Corpn.,

Facts of the case

Orders were passed by the respondent suspending the petitioners on the ground that they are found sleeping during working hours. Learned counsel for petitioner submitted that keeping the petitioners under suspension mechanically without considering the gravity of the alleged misconduct as illegal, while placing reliance on the Union of India vs Ashok Kumar Aggarwal 2013 (16) SCC 147 .

Court held that

Reling upon the Deputy Inspector General of Police, Kurnool Range Kurnool District vs R.S.Madhubabu, RSI, Kurnool District, Kurnool 2009 (4) ALT 530 (DB) the court held that “the power of suspension should not be exercised in an arbitrary manner and without any reasonable ground or as vindictive misuse of power. Suspension should be made only in a case where there is a strong prima facie case against the delinquent employee and the allegations involving moral turpitude, grave misconduct or indiscipline or refusal to carry out the orders of superior authority are there, or there is a strong prima facie against him, if proved, would ordinarily result in reduction in rank, removal or dismissal from service. The authority should also take into account all the available material as to whether in a given case, it is advisable to allow the delinquent to continue to perform his duties in the office or his retention in office is likely to hamper or frustrate the inquiry.”

Suspension Must Necessarily Be For A Short Duration: SC Upholds Revocation Of 6-Yr Long Suspension Of IPS Officer.

Civil Appeal No.8427-8428 of 2018

(Arising out of S.L.P. (Civil) No.12112-12113 of 2017)

(State of Tamil Nadu vs. Pramod Kumar IPS).

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‘This Court in Ajay Kumar Choudhary v. Union of India, (2015) 7 SCC 291 has frowned upon the practice of protracted suspension and held that suspension must necessarily be for a short duration.

Reiterating that suspension must necessarily be for a short duration, the Supreme Court has upheld a Madras High Court judgment that had quashed the disciplinary proceedings against an Inspector General of Police in Tamil Nadu and revoked the suspension.

On the question of suspension continuing for six years, the bench observed: “There cannot he any dispute regarding the power or jurisdiction of the State Government for continuing the first Respondent under suspension pending criminal trial. There is no doubt that the allegations made against the first Respondent are serious in nature. However, the point is whether the continued suspension of the first Respondent for a prolonged period is justified. ”

Non-Payment Of Subsistence Allowance To An Employee During Suspension Will Be Antithetical To Article 21: Madras High Court [Read Judgment]

While encompassing the payment of subsistence allowance to a suspended employee under Article 21 of the Constitution, the Madras High Court has held that its non-payment shall violae the Fundamental Right..

It was held that,

"The underlying principle for making payment of subsistence allowance is to allow an individual to sustain himself. In the present context of the suspension of an employee, one has to keep in mind that services of an employee have not been snapped and the employer-employee relationship during suspension continues to subsist"

what is meant by subsistence allowance ?

"To "subsist" means to manage to stay alive, especially with limited resources or money. The state of living as such is known as subsistence, which is indicative of the fact that one has enough resources to sustain life with basic minimum needs. This means of existence or continuance with meagre resources of livelihood for a salaried employee is known as a subsistence allowance, which is an advance payment to cover immediate living expenses while being kept away from service.

It is, therefore, an income that is sufficient to provide bare necessities and is an adequacy of support that exists as a reality while undergoing a compulsory distress. The idea is to preserve sustenance at the minimum economic level to sustain a minimum standard of living."

Retrenchment (permanent removal of employee)

Retrenchment, like lay-off, also results in separation of the employee from the organisation. Retrenchment means a permanent termination of the services of an employee for economic reasons in a going concern. An employee to be retrenched is required to be given three months notice before his retrenchment or in lieu of the notice he must be paid his remuneration for the period of the notice. The retrenched employee is entitled to get gratuity payment from his employer. For retrenchment of the employee, notice is required to be given to the appropriate government authority and permission for retrenchment must be obtained from the authority. The principle of 'last come, first go* is followed for deciding which employee should be retrenched.

Case Laws

In K.C. Joshi v. Union of India [(1985) 3 SCC 153 : 1985 SCC (L&S) 656 : (1985) 3 SCR 869

It is observed that: (SCC p. 158, para 8) “If it is discharge simpliciter, it would be violative of Article 16 because a number of store-keepers junior

to the appellant are shown to have been retained in the service”.

Jarnail Singh case [(1986) 3 SCC 277 :1986 SCC (L&S) 524 : (1986) 1 ATC 208 : (1986) 2 SCR 1022]

it was observed as under: (SCC p. 292, para 35)

“In the instant case, ad hoc services of the appellants have been arbitrarily terminated as no longer required while the respondents have retained

other Surveyors who are junior to the appellants. Therefore, on this ground also, the impugned order of termination of the services of the appellants are illegal and bad being in contravention of the fundamental rights guaranteed under Articles 14 and 16 of the Constitution of India.”

After a careful perusal of the record,court satisfied that the juniors to the petitioner are retained. Therefore on this ground also the termination order is liable to be quashed.”

The primary reason organization engage in downsizing is to promote future, competitiveness. According to surveys, they do this by meeting five

1. Reducing costs. Labour is a large part of a company's total costs, so downsizing is an attractive place to start cutting costs.

Facts [+]

Aug-2015: Renault Nissan,India- Since struggling to increase in sales after market recovery, the company has decided to go for optimisation strategy by retrenching 1200 jobs from its workforce. Overall plant has 8000 employees with a plant capacity of 400000.

June 2014: Foxconn India announced layoffs/retrenchment to its employees due to continuous fall in business and fall in production since it is major supplier to Nokia India, which has been struggling to stand in its competitive market, subsequently it has started cutdown in its production and its employees.

4/12/2012, London: British Airways division planned to cut 400 cabin crew for the purpose of minimising cost due to slowdown in the economy. unlike other organisations, British airways opted for voluntary scheme to retrench its employees.


year 2012:The Indian telecom company Aircel, which has about 66 million customers and a pan-India 2G presence, scale down operations in Madhya Pradesh, Punjab, Haryana, Rajasthan and Gujarat in its bid to cut costs and reallocate resources to profitable zones. The company has about 800 employees and 6 million customers in these five circles.

TOKYO, 2012: Sony's cellphone division planned to cut nearly 1,000 jobs of its global workforce, mostly in Sweden by the next two fiscal years through March 2014. Sony Mobile Communications said the job cuts are an effort to reduce costs and boost profits. The Japanese electronics and entertainment company posted record losses for the fiscal year ended March-2012, battered by competition from Samsung Electronics Co and Apple Inc.

Zurich, Nov, 2012: SWISS airlines belongs to Lufthansa Germany airlines decided to cut almost 100 jobs in human resource, financial, sales departments as a cost cutting measure due increase in fuel cost and sluggish growth in market.

2. Replacing labour with technology. Closing outdated factories, automating, or introducing other technological changes reduces the need for labour. Often, the labour savings outweighs the cost of the new technology.

Dec,2012: The United States based Citigroup bank planned to cut jobs, which can be replaced by way of automation as a measure for minimising expenses due to financial crisis and slowdown in the economy.

3. Mergers and acquisitions. When organizations combine, they often need less bureaucratic overhead, so they lay off managers and some professional staff members. After software maker Oracle Corporation acquired PeopleSoft, it laid off about 5,000 employees, almost one out of ten. It kept most of PeopleSoft's technical employees so that the company could continue meeting plans for product development and support, meaning the vulnerable positions were those involving administrative functions.

4. Drop in demand: when there is a situation of a drop in demand for goods or commodities produced by concerned organisation, to save cost of employees will be retrenched. TATA Steel in United Kingdom cut nearly 900 jobs due to drop in demand for steel in European market.

Facts [+]

May 2012 Google Inc acquired (buyout) Motorola Mobility for $12.5 billion, following this in August 2012 Google Inc cut 4000 jobs in the United States due to drop in its profits due to drop in sales and announced severance package costs about $275 million for the retrenched employees . Google stated that his decision was taken to minimise its costs and make business profitable in future.

5. Moving to more economical locations. In recent years, British Columbia has been attractive to U.S. film and television production companies. Other moves, however, have shifted Canadian jobs to other countries. Celestica Inc. announced that it would close an electronics factory employing 700 people in the Montreal area. Celestica has been shifting operations from North America and Western Europe to low-cost Asian countries.

Facts [+]

Unilever to cut 500 jobs in Britain

LONDON: The Anglo-Dutch food and cosmetics giant Unilever planned to cut 500 jobs in Britain as part of a restructuring programme. The retrenchment would occur by the end of 2013, added the company whose brands include Lipton tea, Persil washing powder and Signal toothpaste. Unilever company has operations in more than 100 countries, employing over 171,000 employees.

NEW YORK: Global food and beverages giant PepsiCo will cut 8,700 jobs across 30 countries as part of a programme to save up to USD 1.5 billion by 2014 to offset high commodity costs and increased spending on advertising and marketing.

Finnish-German telecom equipment maker Nokia Siemens Networks, which had 74,000 employees worldwide, announced planned to reduce its global workforce by approximately 17,000 by the end of 2013, adding that its restructuring plan was aimed at cutting annual costs by one billion euros ($1.3 billion) compared to 2011 outlays. [2,900 job cuts in Germany and 1,200 in Finland.

More than 1000 to lose jobs in Finland as Nokia shifts base to Asia

Apr, 2012,: Squeezed by fierce competition from Apple Inc.'s iPhone, Samsung Electronics and cheaper brands running Google Inc.'s popular Android software, Nokia has been forced to slash costs, primarily affecting its operations in Europe. Nokia has already closed plants in Germany, Hungary and Romania; and now it's the turn of the Finnish assembly plant. Some 1,000 of the 3,500 jobs in Salo (Town in southern Finland) - which until recently was Nokia's flagship assembly hub - are being cut this year.

Feb, 2012, BOCA RATON: Procter & Gamble Co plans to cut a total of 5,700 non-manufacturing jobs as part of a new plan to reduce costs by $10 billion by the end of fiscal 2016, Chief Executive Officer Bob McDonald said.

Layoff of employee

This is the separation of an employee initiated by the employer due to business reverses, the introduction of labor-saving devices, or the reduction in the demand for particular skills. Management, as temporary measures during periods of business recession, industrial depression, or seasonal fluctuation, resorts to layoff or downsizing. Most managers say that downsizing is their toughest decision. To help employees who have lost their jobs, employees can provide services such as outplacement or helping employees find a new job, relocation assistance, and family counseling.

Companies can justify layoff decisions by such evidence as lagging sales, growing inventory, or a depressed economy. Employers should also provide evidence that they considered all other options, such as transferring employees into vacant positions, placing them in newly created part-time positions, or allowing them to work a shorter workweek.

Textile sector: 45 lakh persons become jobless in last 2 years

INDIA: About 45 lakh people in the textile sector have lost jobs in the last two years mainly due to global economic slowdown and problems at domestic front, apparel exporters body Apparel Export Promotion Council said.

The recent trend toward downsizing leading to massive layoffs has been triggered by three factors:

Decline or crisis in the firm - There is a decrease in the demand for the firms' products or services due to a recession in business climate and increased international competition.

    • Technological advances enabling many companies to produce more with fewer people

    • Organizational restructuring - modification of the firm's structure to become less hierarchical by cutting out the layer of middle management. More Detailed >>

The following are some of the alternatives to layoffs:

    1. Freeze hiring

    2. Restrict overtime

    3. Re-train/Re-deploy

    4. Switch to job sharing

    5. Use unpaid vacations

    6. Use a shorter workweek

    7. Use pay reductions

    8. Use sabbaticals

    9. Implement early retirement programs

IT companies which have announced job cuts in 2012.

In May, Hewlett Packard (HP) announced it will lay-off 27,000 employees across the globe. This included 9,000 job cuts in the USA, while CEO Meg Whitman assured that this move would not affect employees in India.

    • Sony in April said it will shed 10,000 employees as part of its 'One Sony' initiative. This means that the company will lose 6% of its global staff in a bid to once again become profitable.

    • As part of its restructuring programme, BlackBerry maker Research in Motion (RIM) would slash 5,000 jobs. In August, reports quoting insiders came that the company would fire another 3,000 staffers.

    • The embattled Japanese manufacturer Sharp in August announced it would cut 5,000 jobs as part of its cost cutting efforts. Later, sources said that the company would sell two plants and, thus, slash 3,000 jobs, while news reports said Sharp may eventually shed 10,000 jobs.

    • Nokia Siemens' restructuring programme includes 2,900 job cuts in Germany in March, while 630 jobs were slashed in Finland. The company shed 3,500 jobs in Latin America as it exited a service and maintenance deal with Brazil's Oi.

    • Alcatel-Lucent decided to let go off 5,000 employees in order to lower its spending and produce more profit. All divisions except research and development would be affected by this move, which would be completed by 2013-end.

    • Under Google, Motorola Mobility cut 4,000 jobs across the globe. This move, announced in August, translates into 20% employees of the company being laid off as part of the restructuring process. The company would also shut down approximately 30 offices across the world and 'shrink operations' in India.

    • In July, Cisco announced that it would lay off 1,300 people from its workforce, which amounts to 2% of its total staff. The technology giant was compelled to take this step as its sales reduced under intense competition and limping economic conditions.

    • In February, Alliance@IBM, an organisation by IBM employees, released data that IBM laid-off 1,202 employees in various business units throughout the world. It reported the data based on the severance documents it received from the staffers who were let go by the company.

Transfer of employee

Employee transfer is a process of shifting an employee from one workplace to other workplace for the administrative reasons governed by concern service rules or standing orders or government orders. In some cases employee transfer is initiated as a disciplinary measures against an employee but in most of the cases employee transfer is done on periodical basis. In case of the government organisations, the very purpose of employee transfer is to ensure that the public servant shall not take advantage of his position due to longstanding at place of working, to perform his/ her duties unbiased and not to undue influence locally for his advantage. If an employee is placed in the same place permanently or for a longer period, that may affect the transparency in performing their duties and may conceal or suppress some facts which may be advantageous to him or her but not to the organisation. Hence transfer of employee will enable transparency in performing their duties as their position tomorrow may be occupied by the other person and one will have fear that previous acts and deeds should not be found fault by the successor, which will lead to disciplinary action against misdemeanour predecessor.

The other reasons for employee transfer especially in case of top government servants are to make an employee aware of culture, lifestyle, languages and get to know socialisation so as to have knowledge and to know how to deal with different kind of people and to have control on administration over the region or people.

Employees cannot have a choice to object transfer unless if it was proved to be mala fide and involves sexual harassment : Supreme Court of India

Read Judgement

A senior lady officer of a public sector bank of scale IV was sexually harassed by her superior and transferred to the distant place where the bank branch can be handled by officer of the scale I rank, as a reprisal to the complaints made by her to superiors as to the irregularities observed by her in the bank branch. Subsequently lady officer approached (internal complaints committee) ICC wherein, the matter was diluted because of the members were biased.

The order of transfer was challenged before the High Court of Madhya Pradesh under article 226 of the Constitution, where the High Court has taken note of the fact that the respondent had drawn several irregularities to the notice of the higher authorities and the transfer was mala fide, as a reprisal to the action which had been initiated by the lady officer and the allegations which she had levied against the higher authorities. Accordingly the transfer order was stayed by the horrible High Court.

The matter came before the Supreme Court of India, where it was held that internal complaints committee shall be formed strictly according to the section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, with an object to commit to the cause of women or a person familiar with issues relating to sexual harassment at workplace and directed the bank authorities to repost the lady officer to the branch where she was last working, with entitlement of litigation costs Rs. 50,000/- from the bank which shall be paid over within one month from the date of order of the Supreme Court of India.

Retirements of employee

Retirements occur when employees reach the end of their careers. The age for an employee's superannuation differs. In some States it is 58 years and in Central Government it is 60. There is a thinking to raise the limit to 60 and 62 respectively as there is shortage of skilled people to fill up the vacant jobs.

Retirement differs from quits. When the employee superannuates and leaves the organization, he or she carries several benefits with himself or herself. Such a privilege is denied to the employee who quits. Second, retirement occurs at the end of an employee's career but the quit can take place at any time. Third, superannuation shall not leave any soured relationship behind the retiree but a quit is likely to result in hurt feelings with the employer.

No Sanction required for criminal prosecution of Public Servants after Retirement : Supreme Court of India

View Judgement

The Supreme Court reiterated that the immunity given to public officials from criminal prosecution without State sanction would not continue after the official retires or demits office. On this aspect, the judgment rendered by a three judge Bench of Justices UU Lalit, Indu Malhotra and Krishna Murari points out,

"In S.A. Venkataraman vs. The State while dealing with the requirement of sanction (to initiate criminal prosecution of a public official/public servant) under the pari materia provisions of the Prevention of Corruption Act, 1947, it was laid down that the protection under the concerned provisions would not be available to a public servant after he had demitted his office or retired from service ... The law so declared by this Court has consistently been followed."

Continuance of disciplinary proceedings even after the final retirement of an employee : Supreme Court of India

Chairman­ cum ­Managing Director, Mahanadi Coalfields Limited Vs Sri Rabindranath Choubey


[Read Judgement]

Facts of the case

Respondent was an employee occupying the position as Chief General manager in the appellant coal company. There was very serious allegation of misconduct alleging dishonestly causing coal stock shortages amounting to Rs.31.65 crores and thereby causing substantial loss to the employer. The employee was thereafter suspended from service, pending departmental enquiry against him, attained 60 years of age and got superannuated.. The said case came before the Supreme Court of india.

Court held that

Several service benefits would depend upon the outcome of the inquiry, such as concerning the period during which inquiry remained pending. It would be against the public policy to permit an employee to go scot­free after collecting various service benefits to which he would not be entitled, and the event of superannuation cannot come to his rescue and would amount to condonation of guilt.

Continuance of disciplinary proceedings even after the final retirement of an employee, provided the disciplinary proceedings are instituted while the employee was in service whether before his retirement or during his reemployment. It provides that such disciplinary proceedings shall be continued and concluded by the authority by which it was commenced in the same manner as if the employee had continued in service.

"Withholding the gratuity payment during the pendency of the disciplinary proceedings of an employee and it further permits for ordering the recovery from gratuity of the whole to be paid to an employee or recovery of gratuity to the extent of any pecuniary loss caused to the company, if have been guilty of offences/misconduct as mentioned in sub­section (6) of Section 4 of the Payment of Gratuity Act 1972, or to have caused pecuniary loss to the company by misconduct or negligence, during his service".

Facts [+]

A recent AARP national survey of 1,500 workers age 45 to 74 showed that nearly 70% plan to work in some capacity during their retirement years. Companies can leverage this tremendous source of experienced human capital. Mature, older workers can be positioned as mentors or assigned to cross-generational teams so that workers of all ages can learn from and appreciate each other.

Faced with the expected wave of retiring baby boom employees, organizations are looking to entice retirees and seniors back into their organizations as employees or as consultants. Several new websites have emerged to address these organizational needs. The websites are:,, and

Retirement in specific countries

The retirement age in Russia -- 55 for women and 60 for men -- is among the lowest in the world.

While state pensions are very low, with the demographic decline the system still represents a growing burden for the federal budget.

While liberals like Kudrin advocate a gradual increase in the retirement age to 63, tampering with this Soviet-era social benefit may prove unpopular in a country where retirees often have trouble making ends meet with their meager pensions.

Germany stands first in quiet low unemployment and it is still trying towards full employment next followed by France stands second in world countries . Due to the low unemployment, companies in these countries are facing hard situation in finding experienced and talented employees to attract in to their companies. Hence, the companies are planning to raise the payment of incentives to their employees with postponement of retirement age to retain the employees and also induce women workforce to maintain the required level of workforce.

80 is the new 65 when it comes to retirement

CHICAGO - When it comes to retirement, many middle class Americans said 80 is the new 65 and plan to delay retirement because of worries over money, according to a new survey.

Three-fourths of those surveyed said they expect to work in their retirement years. One quarter said they will "need to work until at least age 80" to live comfortably in retirement.

Of Americans who will work in retirement, "47% said that they are going to continue in the same job or a similar job of similar responsibility," Joe Ready, Well Fargo's director of institutional retirement and trust, told Reuters Insider.

"That raises a lot of social and economic implications. Will they have the physical ability to work, the mental capacity? What does that mean for the younger work force in terms of coming through and looking to get ahead?"

Three-fourths of Americans said it is more important to have a specific amount saved before retirement, regardless of age, while only 20% said it is more important to retire at a specific age regardless of savings.

"For several years now, we've seen that Americans are undersaving for retirement and a majority do not trust the stock market as a place to invest for retirement," Ready said.

"We did find a bright spot among middle class Americans — more than three-quarters do not want to retire with mortgage debt. This is an important goal, particularly for younger Americans," said Laurie Nordquist, director of Wells Fargo institutional retirement and trust.

Eighty-six percent of respondents said it's important to own their home debt-free by retirement.

Severance packages (Compensation that an employer gives to someone who is about to lose his or her job.)are most typically offered for employees who are laid off or retire. Severance pay was instituted to help protect the newly unemployed. Sometimes, they may be offered for people who resign, regardless of the circumstances; or are fired. More >>

There is no legal requirement in the U.S. to provide severance pay to terminated employees. Many employers routinely give severance packages to employees in order to bridge the gap between one job and the next and to hedge themselves against lawsuits. On average, severance-paying organizations provide terminated employees between one and two weeks pay for each year of service.

Severance contracts often stipulate that the employee will not sue the employer for wrongful dismissal or attempt to collect on unemployment benefits, and that if the employee does so, then they must return the severance money. More >>

Bankruptcy or Liquidation of Company

12,000 employees of bankrupt Alok Industries, lose jobs

Alok Industries liquidation effects about 12,000 permanent employees of the company to lose jobs in what could be the biggest labour casualty since the implementation of the bankruptcy code.These employees earned an average salary of Rs 1.45 lakh a year, show data compiled by Corporate Professionals that used the financials reported by the company for 2016-17. Alok Industries was subsequently referred for insolvency proceedings.There were 11,759 full-time employees as on March 31, 2017, while total staff strength was 18,000. Staff costs amounted to Rs 283.31crore during that financial year.Hundreds of small vendors and service providers to the company would also be affected. About 2.05 lakh equity shareholders, including public financial institutions and retail investors, are also staring at losses with the company heading into liquidation.Alok Industries is one of the few companies where the resolution professional called for a resolution plan multiple times after the borrower was admitted for bankruptcy proceedings.

There are 81 companies that have already gone into liquidation under the Insolvency and Bankruptcy Code. More than 100 other companies facing insolvency processes are on the verge of liquidation, according to Corporate Professionals.

ET Bureau

Updated: Apr 20, 2018,

Objectives :

Indian employees inadequately prepared for retirement: Survey

Millennials in India are inadequately prepared for their post-retirement life as retirees are facing challenges in form of rising consumerism, higher medical and education expenses, as also weakening joint family system, says a survey.

According to the Willis Towers Watson Global Benefits Attitudes Survey, employees are facing the issue despite the fact that Indians save more than their counterparts in the western world.

Increasing consumerism, spiralling medical and education expenses, inflationary pressures and a weakening joint family system are some key reasons for this concern, the report said adding that "if not acted upon soon, in the next decade or two, India might be faced with the critical challenge of retirees having inadequate income".

Moreover, research indicates the proportion of workers who are beneficiaries of a formal retirement savings plan (via either the state or an employer) is relatively low. Most workers have to provide the majority of their income in retirement from their own wealth.It is high time that employers seize the opportunity to educate and prepare employees for retirement.

Else, a decade or two down the line, the country could be facing a distressing scenario of retirees having inadequate income over a retirement period potentially longer than their earning lifetime.

Recent studies have indicated that the three foremost motivations for saving are buying a house, saving towards children's education and/or wedding and provision for an income in old age.

"Lack of awareness, unrealistic assessment of what to expect on retirement and a short-sighted approach to retiral savings are potential causes of this concern,

Patel added that employers should use retirement planning tools to understand the effect of their retirement plans on the overall savings for employees and must play a key role in educating them.

By PTI | Feb 18, 2016, 05.55 PM IST

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