Understanding Severance Pay and Relieving Letters Upon Termination of Employment

Introduction

Frequently, there is no written document dealing with the termination of employment. However, unless the organization is extraordinarily large, a written document is not always necessary. Words spoken often suffice as verbal agreements, but written documents can provide clarity and legal protection for both employees and employers.

Definitions and Differences

The terms 'normal relieving letter' and 'termination letter' may seem similar but come with distinct legal implications. While a relieving letter is generally issued when an employee is being relieved of their duties, a termination letter is issued when an employee is being formally terminated from the job due to certain reasons. These letters differ in their content and intent, but both may have implications for the issuance of severance pay.

Severance Pay

Severance pay is a monetary compensation provided to an employee being laid off or terminated due to a lack of work, not due to any misconduct or unlawful actions on the part of the employee. This pay often serves as an additional support during times of transition, ensuring that employees are financially secure after their departure.

Termination Circumstances

Termination can occur for a variety of reasons, such as poor performance, absenteeism, or even employee resignation. Typically, if an employee is relieved immediately, the company is obligated to pay them the equivalent notice period, which can range from 1 to 3 months. In many cases, the employee is immediately relieved of their duties, and the payment is made.

Legally Mandated Obligations

However, if the employee is terminated for misconduct, fraudulent behavior, or violent actions, the company is under no obligation to provide severance pay. In such cases, the employee is usually immediately dismissed without any benefits.

Normal Relieving Letters

A normal relieving letter is typically issued when an employee is being relieved for a reason other than misconduct or underperforming. For these cases, the company must pay the appropriate notice period. An example is when a company is winding up its operations due to financial difficulties. The employee will be paid the equivalent notice period, typically 1 to 3 months, and then relieved of their duties.

Employee Resignation

If an employee chooses to submit their resignation, the employer has the right to relieve them on the same day, provided they are paid the notice period salary. Alternatively, the employee can complete the notice period, and the final settlement is made as part of the full final settlement process. This practice is common and ensures that the employee receives their due notice period salary.

Conclusion

Understanding the differences between a relieving letter and a termination letter is crucial for both employees and employers to navigate the complexities of the termination process. Whether it is a case of normal relieving or termination, providing appropriate severance pay is often mandated by labor laws, ensuring that both parties are protected and treated fairly.

Keywords

severance pay, relieving letter, termination letter