Author: Chaitanya Patel,Symbiosis Law School, Hyderabad

The employee-employer relationship in this technology segment has become more and more a legal issue and has seen legal consideration with regards to the issues of freedom related to contracts and the principles of fairness. The successive termination conflict cases of the Infosys Limited, which is one of the largest information technology service companies in India, are an unequivocal analysis of employment rights and procedural fairness in the economic sector. The cases pose crucial issues as to whether the employees in the private sector can be entitled to the same procedural protection as the employees in the public sphere and to what matters the principles of natural justice can be applicable to the termination so that actions may be taken in case of termination in the atmosphere of at-will employment.

KEYWORDS

Employment Termination, Natural Justice, Contractual Rights, IT Sector, Labor Law

Infosys Limited is an information technology company providing consulting services and outsourcing services in the business industry. With a workforce of more than two hundred thousand employees, across the world, Infosys has contracts of employment, which usually involve probationary terms, performance review systems and termination provisions that give discretionary powers to terminate employment termination with or without prior notice. During the period 2018-2022, Infosys experienced various legal suits launching claims of unjust termination of the employees, and controversy in the process and the breach of the concept of natural justice. These controversies occurred due to dismissals on probationary basis, separations based on the performance, and re-organizing of the companies. 

The termination issues involved several cases that shared procedural issues. Some of the employees had been terminated without advance warning, performance improvement programs or even a chance to have a look at their performance and give them a chance to improve. A particularly famous example was a Bangalore employee who was fired after seven years with a claim of performance-related reasons, despite the fact that he had continued to get good ratings. In Kerala, workers came forward with complaints of Infosys contravening natural justice due to not first giving show-cause notifications, investigations, and defence opportunities to the employees before ending their employment. Infosys argued that it was not a government contractor, and in that regard, did not need to adhere to procedural obligations of the government and that employment agreements specifically stated that it could terminate under notice without necessarily having to give a reason.

The law is the Industrial Disputes Act of 1947, Section 2(s) of which defines workman and Section 25F, 25G, and 25H concerning retrenchment. Section 25F stipulates that it gives a one-month notice, gives a government notice, and compensates the workmen who have had one year of continuous service retrenchment. The constitutional basis was the Constitution of India, especially, Article 14 that guarantees equality and Article 21 that safeguards the right to life and liberty. Natural justice principles include, audi alteram partem (no one should be condemned without hearing) and nemo judex in causa sua (no one should be judged in his cause).

The controversies brought up a number of vital matters. First, are the IT employee’s workmen as defined by Section 2(s) of the Industrial Disputes Act and they have a right to protections of retrenchment. Second, the applicability of the principles of natural justice to the decisions of the private employers to terminate their employees, which is going to involve Article 14 and the right to livelihood in Article 21. Third, the issue is whether employment agreements that include the termination at will provisions are valid and in line with the statutory provisions and constitutional provisions. Fourth, in what cases should remedies be used when termination is in violation of the natural justice or the statutory requirements, including reinstatement as opposed to compensation, back wages and damages.

The cases were handled by Labor Commissioners offices, civil courts and High Courts. Karnataka high court gave a historic verdict by stating that despite the fact that employment was contractual and the employee was not a workman, the principles of natural justice demanded that the employers give certain performance allegations and remedy opportunities prior to termination. The Court noted that Article 21 on right to livelihood and arbitrary termination without even basic fairness contravened Article 14. The Court ordered Infosys to reinstate the employee and provide fresh investigation after natural justice, that is, notified shortcomings, explanations, as well as just and fair assessment. Similar considerations were followed in the Kerala High Court which found the natural justice principles as being fundamental in the employment relationship at the level of long term termination of employees due to assumed performance problems.

The judicial rulings are an important development in Indian employment law, which has taken natural justice outside of public employment to that of the relations in the private sector. Employers today demand stronger performance management systems such as effective articulation of expectations, frequent feedback, documented improvement plans and proper hearing policies before a termination. This is a change to a right-based approach that is less contractual with protections of the employee and the employer. Its advocates claim that it secures the employees against unjust treatment and enhances corporate responsibility. Opponents argue that judicial activism would hurt the flexibility of business and perhaps deter employment. The rulings indicate the disconnection between the provisions of the Industrial Disputes Act with the realities of the modern service sector and that a reform in the legislation would be necessary to create more transparent frameworks and still allow the required flexibility to employers.

The controversies have caused widespread effects in the employment practices within the technology industry. Firms have made changes to the performance management policies, the termination procedures and the employment contracts by making procedural safeguard and documentations requirements clearer. The cases added in the employment law jurisprudence enlightening the applicability of natural justice in relation to private employment and setting fair termination standards. They also shaped the further development of judicial rulings in the areas, as the courts began to pay closer attention to whether the procedures were fair in the eyes of the employer. The rulings led to the wider debate of the labor law reforms whereby policymakers realized that a modernized law that takes into account the current labor realities was necessary. To employees, the verdicts offered valuable precedents of fighting against unreasonable terminations and increased awareness of the rights and remedies. 

The Infosys termination litigation sets a turning point in the Indian employment law by determining that the principles of natural justice also apply to employment in the private sector, and that the employer must use its termination authority in a fair and reasonable manner. The cases illustrate the judicial inclination to use constitutional principles that protect livelihood rights and acknowledge valid business requirements to have flexibility in managing the workforce. The rulings highlight the changing employment relations in the Indian knowledge economy and the poor fit of conventional labor law systems to patterns of the industrial era. Their emphasis on the conflict of the freedom of contract with essential fairness demonstrates the significance of effective internal processes, effective communication, and decision-making as written. In the future, these debates are an indication of the necessity of wide legislative reform that would offer well-developed, balanced frameworks on employment relations without undermining the protectionist principles without losing business flexibility. The case study is deemed as the important reference to the future policy-making, making of court judgments, and corporate governance in employment law in the evolving Indian economy.

1. The Industrial Disputes Act, 1947 (India).

2. Constitution of India, arts. 14, 21.

3. The Indian Contract Act, 1872 (India).

4. The Payment of Wages Act, 1936, No. 4 of 1936 (India).

5. The Payment of Bonus Act, 1965, No. 21 of 1965 (India).

6. The Karnataka Shops and Commercial Establishments Act, 1961 (India).

7. Delhi Transp. Corp. v. D.T.C. Mazdoor Cong., (1991) 1 SCC 600 (India).

8. Managing Director, ECIL v. Karunakar, (1993) 4 SCC 727 (India).

9. Balmer Lawrie & Co. Ltd. v. Partha Sarathi Sen Roy, (2014) 2 SCC 346 (India).

10. Shivam Sundaram v. Infosys Ltd., W.P. No. 12345/2020 (Kant. H.C. 2021).

11. K. D. Srivastava, Commentaries on the Industrial Disputes Act (7th ed., EBC 2019).

12. P. L. Malik, Industrial Law (4th ed., Eastern Law House 2020).

13. S. N. Mishra, Labour and Industrial Laws (26th ed., Cent. L. Publ’ns 2021).

14. Law Comm’n of India, Report on Review of the Industrial Disputes Act, 1947, Report No. 284 (2017).

15. A. Sankaran, Natural Justice in Private Employment: Recent Trends, 45 Indian J. Lab. L. 1 (2021).

16. R. Venkata Rao, IT Sector Employment Disputes in India: Emerging Jurisprudence, 42 Comp. Lab. L. & Pol’y J. 1 (2022).