Termination Law in India – What You Need to Know About Your Salary and Rights

Got the pink slip and wondering if you’ll get paid what you deserve? You’re not alone. In India, the rules around termination can feel confusing, but the basics are pretty simple. You’re entitled to certain payments, and the law tells the employer exactly what to hand over. Let’s break it down so you can chase what’s yours without the headache.

Salary, Notice Pay, and Final Settlement

First up, the basics. When a company ends your job, they must clear all dues on your last working day, unless the contract says otherwise. That includes your basic salary up to that day, any earned overtime, and the notice period pay. If your contract requires a 30‑day notice but the employer chooses to let you go immediately, they have to give you 30 days’ salary in lieu of notice.

On top of that, you’ll get any accrued leave encashment – that’s pay for unused vacation days. The exact amount depends on your company’s leave policy, but the law says you can’t lose earned leave without compensation.

Now, the big one: gratuity. If you’ve worked for the same employer for at least five years, you’re eligible for a gratuity payment. The formula is (last drawn salary × 15/26) × years of service, capped at 20 years. Even if you’re let go before completing five years, you won’t get gratuity, but you still get the other dues.

How to Claim Your Dues Without Losing Sleep

Step one: get everything in writing. Ask your HR for a written breakup of salary, notice pay, leave encashment, and gratuity. A clear statement helps avoid disputes later.

Step two: check your payslips. Make sure the amounts match what’s on the breakup. If something looks off, raise it right away. Most companies will correct errors once you point them out.

Step three: if you’re not getting paid on time, send a formal demand letter. Keep it polite but firm. Mention the specific sections of the Industrial Employment (Standing Orders) Act and the Payment of Wages Act that protect your right to receive dues.

Step four: when the employer still ignores you, approach the labour commissioner in your state. They can issue a notice to the employer and often get the money out faster than a court.

Step five: as a last resort, file a civil suit for recovery of wages. This can take months, but the court can order the employer to pay interest on delayed amounts, which adds pressure.

Remember, the law also protects you from wrongful termination. If you suspect the dismissal was discriminatory or in retaliation for raising concerns, you can file a complaint under the Industrial Disputes Act. That’s a separate track, but it’s worth mentioning if you feel the termination wasn’t justified.

Bottom line: you have a right to get paid for every day you worked, your notice period, accrued leave, and possibly gratuity. Keep records, ask for written statements, and don’t shy away from using the labor department if things stall. With the right steps, you’ll get your money without endless battles.