In India, Labor law is a concurrent subject in the Indian Constitution, which implies that labor and employment regulations in the country are governed at both the federal and state levels. The main federal statutes that regulate the termination of employment include the Industrial Employment (Standing Orders) Act (IESA), 1946 and the Industrial Disputes Act (IDA), 1947, as amended.

Additionally, the Indian labor is regulated by the Shops and Establishments Act, which is enacted in most states with minor differences in rules of implementation. The Shops and Establishments Act regulates labor and employment in all premises where a trade, business, or profession is carried out. Further, the implementation of respective state laws differs according to the area of operations of the employer—these are outlined in the laws and their supporting rules.

We summarize the types of employers and employees, and termination of employment recognized in India, and examine state laws for termination in several prominent investment destinations in India here.

Wrongful termination, or not following due process as defined by the respective state laws, will result in legal punitive consequences for the employer. In addition, the courts may order the employer to pay fines and award additional compensation to an employee that was terminated.

Employers that review labor laws and, explicitly, state procedures for terminating employees in their contracts, significantly reduce the potential for labor disputes related to the termination of an employee.

Beyond this, however, employers must ensure that management teams and HR professionals are fully briefed on termination procedures. Contracts can protect employers; yet, management teams and HR professionals must ensure labor law compliance to protect them from any adverse litigation.

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