A termination email arrives on a Friday evening. What are you owed, and was it lawful? The answer depends first on who you are in the eyes of the law.
Are you a “worker” or a managerial employee?
The four Labour Codes came into force on 21 November 2025. Under the Industrial Relations Code, 2020, a “worker” covers skilled, technical, clerical and similar staff. Some supervisory staff below a wage limit are included. Managers and administrators are outside it. Their rights come from the appointment letter and contract law. State shops and establishments laws may also apply.
Notice period
- Managerial staff: the notice clause in your contract governs. One to three months is common. The employer may pay in lieu of notice.
- Workers: on retrenchment, a worker with at least one year of continuous service is entitled to one month’s written notice with reasons, or wages in lieu (section 70).
Severance and retrenchment compensation
- A retrenched worker receives 15 days’ average pay for every completed year of service. A part of a year over six months counts as a full year.
- The Code also provides for a re-skilling fund contribution by the employer.
- Large industrial establishments generally need prior government permission before retrenching.
- The Code on Wages requires wages to be paid within two working days of removal from service.
- Gratuity is payable after five years of service. For fixed-term employees, it is payable after one year under the Code on Social Security.
When is a termination unlawful?
- A worker is retrenched without notice, wages in lieu or compensation.
- Dismissal for alleged misconduct follows no fair inquiry.
- The real reason is unlawful, such as pregnancy or maternity leave, or raising a complaint.
What can you do about it?
- Workers: an industrial dispute goes first to the grievance redressal committee, then to conciliation and the Industrial Tribunal. Time limits are short, so act early.
- Managerial staff: the usual claim is for notice pay and damages in a civil court. Reinstatement is rare.
Practical steps
- Ask for the reasons for termination in writing.
- Collect your appointment letter, salary slips and provident fund statement.
- Do not sign a resignation letter or a “full and final” release you do not understand.
- Read any non-compete clause. Restraints after employment are generally not enforceable under section 27 of the Indian Contract Act, 1872, but confidentiality duties usually continue.
Key takeaway
Work out whether you are a “worker”, then read your notice clause. Sign no release until you know what you are owed.