HomeBUSINESSWhat is Termination with Cause?

What is Termination with Cause?

Experiencing job termination can be a daunting prospect for anyone. It’s a moment that can feel like a sudden jolt, leaving you uncertain about the future. However, being well-informed about your rights and the various aspects of job termination can transform this challenging situation into an empowering one. In India, job termination can occur for a multitude of reasons, each with its own set of implications. This guide aims to break down the complexities of termination with cause and without cause for you, the employee. It will provide you with a comprehensive understanding of the process, helping you navigate the situation with confidence and control.

What does “Termination WITH Cause” mean?

When you hear the term “termination with cause,” it means that the employment has been ended due to some form of misconduct. In India, the following can be grounds for termination with a cause:

  • Misconduct – Such as theft, harassment, or dishonesty
  • Attendance Issues – Habitual lateness or unexcused absences
  • Violation of Company Policies – Not adhering to the company’s code of conduct
  • Breach of Employment Contract – Not fulfilling the terms outlined in the contract, etc.

Now, you might wonder – do “Poor Performance” issues, such as a consistent failure to meet job requirements fall within the same category? No, and you can now read about Can employees get fired for poor performance? It’s shedding light on the legal aspects of job termination due to poor performance in India. It even breaks down the concept of Performance Improvement Plans (PIPs) and explains your rights as an employee. So, why wait? Dive in and empower yourself!

So, back to termination with or for “cause”. Here’s what you need to consider:

  • Professional Reputation: Being terminated with cause might raise questions for future employers. It’s imperative to maintain professionalism and be prepared to address these questions honestly and share what you have learned from the experience.
  • Legal and Financial Implications: It’s crucial to be aware of the labour laws and contractual obligations that apply to you. Consulting with legal counsel is advisable to ensure that you understand your rights and obligations.
  • Personal Growth: While challenging, this is an opportunity for introspection and development. Evaluate your actions, focus on areas of improvement, and use this as a stepping stone for personal and professional growth.

A step-by-step process for “Termination with Cause” in India

In India, terminating an employee with cause involves strict protocols:

  1. Provide a written explanation: A document clearly outlining the charges, must be given. This is commonly called a charge-sheet. The employer cannot justify actions on grounds not specified in the said document.
  2. Conduct an Inquiry: A fair and impartial inquiry must follow the charge sheet. During the inquiry, if the employee is suspended, they must receive wages at prescribed rates.
  3. Compliance with Laws: The termination must comply with laws like the Industrial Disputes Act of 1947, and relevant Shops and Establishment Acts. These laws usually mandate at least 1 month’s notice or equivalent pay, however, this requirement is not applicable if the termination is for misconduct.
  4. Payment of Dues: Any statutory and contractual benefits, including unpaid wages, leave encashment gratuity, must be paid if due. However, exceptions for deductions from gratuity might apply if the termination is due to conduct causing losses or offenses involving moral turpitude.

When exploring the intricacies of employment termination, it’s essential to also understand the framework surrounding employee retrenchment and lay-off rights under the Industrial Disputes Act 1947. This comprehensive article delves into the legalities and employee rights in scenarios of retrenchment and layoffs, providing clarity on when and how these actions can be legally taken by employers. It’s a valuable read for anyone looking to grasp the broader spectrum of job termination and employee rights in India. Get detailed insights into the procedures, legal requirements, and protections for employees facing retrenchment or layoffs.

What does “Termination WITHOUT Cause” mean?

Now, let’s talk about the other side of the coin. “Termination without cause” means the job ends, but not because of anything you did wrong. In India, terminations without cause are usually associated with a layoff or redundancy. Common reasons for this type of termination include:

  • Company restructuring
  • Financial issues within the company
  • Elimination of the position
  • Change in business strategy, etc.

How does the process for “Termination without Cause” unfold in India?

Termination without cause can be regarded as ‘retrenchment’, and has its own set of procedures:

  1. Notice or Payment in Lieu: The relevant Shops and Establishment Act and employment agreement usually require at least 1 month’s notice or payment in lieu thereof.
  2. Rule of ‘Last Come First Go’: This rule means the most recently employed worker in a category should be the first to be terminated. However, this rule is not rigid and can be deviated from for valid reasons recorded in the termination notice.
  3. Payment of Retrenchment Compensation: This compensation and at least 1 month’s notice or payment in lieu thereof is mandated for workmen with a minimum service of 240 days. This is equivalent to 15 days’ pay for every year of service.
  4. Settling of Benefits: Statutory and contractual benefits which become due must be paid. This includes gratuity if the employee has been in continuous service for at least 5 years.

What should you know about Severance Packages?

In the case of termination without cause, you might be entitled to a severance package. This could include:

  1. Payment in lieu of notice
  2. Compensation for unused leave
  3. Gratuity
  4. Unpaid salary for days already worked
  5. Other benefits mentioned in your employment contract

It’s essential to understand what your employment contract stipulates and ensure that your employer is abiding by it.

A Glimpse into Indian Employment Law

In India, employment law doesn’t strictly define terminations as “With Cause” or “Without Cause”. However, precedence and practices offer insights. There is a distinction between employees governed by statutory provisions and those by contracts. Termination “with cause” in India is often grounded in specific actions such as insubordination, theft, or habitual absence.

In contrast, termination “without cause” occurs due to organizational reasons not directly attributed to the employee’s actions. It’s essential to ensure compliance with relevant laws and agreements, including possible financial obligations upon termination.

In addition to understanding the legal aspects of termination with cause, it’s equally crucial to grasp the concept of workplace misconduct in India. Misconduct can lead to termination if not addressed properly. This enlightening article covers what constitutes misconduct, its implications, and how it’s handled within the Indian legal framework. By familiarizing yourself with what behaviors are considered misconduct and how they can affect employment, you can navigate the professional environment more securely and responsibly.


In conclusion, job termination, whether with cause or without, is a significant event in one’s career. However, it’s crucial to remember that it’s not the end, but often a turning point leading to new opportunities. Understanding the nuances of job termination in India, from the legal procedures to severance packages, can thus equip you with the knowledge to navigate this challenging situation with confidence. It’s an opportunity to reassess your career goals, learn from the experience, and chart a new path forward. Remember, every end is a new beginning, and with the right knowledge and perspective, you can turn job termination into a stepping stone for future success.

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