A labour court in Chennai recently asked TCS to reinstate a former employee and clear all his past dues. This could become a reference for performance-related unlawful terminations in the IT industry
Thirumalai Selvan Shanmugam was told to leave TCS in 2015. The reason cited for his termination was underperformance. But Shanmugam wasn’t convinced. He moved the labour court in Chennai against the IT giant, seeking reinstatement. And after seven years of trial, he got what he wanted. Principal Labour Court in Chennai, directed TCS to reinstate Shanmugam.
This case might have some long-term effect. It shows that unions and workers are evolving in the new set up and asserting their rights in IT companies too. And, as a result, the IT firms could face greater push-back from employees in future cases of performance-related or large-scale terminations.
In setting aside Shanmugham’s termination, the Chennai court did not accept the IT giant’s argument that he was not covered under the Industrial Disputes Act’s ‘workman’ definition because his role had been supervisory in nature. A legal expert told a financial daily that the Shanmugham ruling suggests that employees of IT companies are not automatically exempt from the purview of the Industrial Disputes Act. Another legal expert said that the law has quite a wide definition of workman. This definition does not change under the new labour codes and exclusions to this definition are also limited.
At present, the IT industry is more concerned with incredibly high attrition rates. Retaining talent is the topmost priority. However, there are many who have not forgotten the mass layoffs seen in the past decade.
In 2021, the Indian IT sector employed around 16 million workers. As recently as June last year, the National Association of Software and Services Companies had to allay fears of job losses in the IT sector.
In response to a report projecting massive IT job losses, the IT industry body had said that the sector would continue to be a net hirer of skilled talent and that the top five IT firms had plans to add over 96,000 employees during FY22. A Bank of America report had said that with automation taking place at a much faster pace across industries, Indian software firms would slash jobs by a massive 3 million by 2022.
So going forward, this Chennai court ruling, combined with the upcoming labour codes, will make the employees’ position in IT companies much stronger. It will also force IT firms to improve their handling of performance-related exits or mass layoffs in a better way.