Firing employees for behaviour outside the office: What do HR policies and the law say?

Law experts say a company’s ‘Code of Conduct’ and ‘Code of Ethics’ are embedded in the terms of employment and employees themselves agree to follow the same through their journey with it.

American financial services company Wells Fargo recently sacked Shankar Mishra, its India Vice-President, after he allegedly urinated on a woman on an Air India flight. Max Life Insurance fired its deputy manager Manish Khattar, while PR firm Media Mantra gave Kamaljeet Kaur marching orders after both were arrested for allegedly torturing and sexually assaulting a 14-year-old girl who worked for them as a domestic help.

These incidents show that people’s professional lives are impacted by the choices they make in their personal lives. They also point to a larger resetting of the HR rulebook, which employees must keep in mind.

“We are today getting screened a lot on our personal side and people are also sharing their private lives more on social media. This has created an alter ego for every person, which sometimes is not in one’s control,” Ganesh S, Global CHRO of edtech major Emeritus, told Moneycontrol.

When a person gets caught up in an ‘outside the workplace’ controversy, his/her/their organisations also get dragged in, he said. “Public resentment or opinion about the individuals who get caught up in these issues gets extended to the organisations they work for, in pressurising the organisations to act.”

What does HR policy say?

Law experts say a company’s ‘Code of Conduct’ and ‘Code of Ethics’ are embedded in the terms of employment and employees themselves agree to follow the same through their journey with it.

ALSO READ | Experts decode the jobs, roles that ChatGPT may make a meal of

“These codes even govern employees’ conduct outside the workplace and if any such conduct brings disrepute to the company, the company is free to initiate appropriate disciplinary action against the delinquent employee, in terms of the code,” said Suyash Srivastava, Partner, DSK Legal, a law firm.
This is unlike in previous years, when ‘outside of work’ conduct had very little bearing on how an organisation evaluated a person, HR experts say.

“In fact, they sometimes never seem to have control. However, today the reputational and brand risks are too high,” said Emeritus' Ganesh S.

However, the question arises: is it legal to fire employees based on their behaviour outside?

What does the law say?

Matters relating to layoffs and retrenchment in industrial establishments are governed by the provisions of the Industrial Disputes Act, 1947 (ID Act), which also regulates various aspects of layoffs and conditions precedent to the retrenchment of workmen.

ALSO READ | No change in salary structure post-budget: Experts

Per the ID Act, establishments employing 100 persons or more are required to seek prior permission from the appropriate Government before effecting closure, retrenchment or layoffs. Further, any retrenchment and layoffs are deemed to be illegal if they are not carried out in line with the provisions of the ID Act.

“There is no standard process to terminate an employee in India. An employee may be terminated according to the terms laid out in the individual labour contract signed between the employee and the employer,” said Abhinay Sharma, Managing Partner, ASL Partners.

Equally, he asserted that the terms may be subject to the country’s labour laws, which supersede the provisions of labour contracts. Hence, any termination policy or clause outlined within a contract should be checked against the law.

Depending on state laws and employment terms, Sharma said the employer may not need to give notice if misconduct is the cause for termination.

However, the employee, in such circumstances, should have the opportunity to respond to the charges against them before termination, he added.

ALSO READ | Avoiding layoffs: Here are the crucial checks before joining a company

“Moreover, [if] any employee who has been laid off or whose employment has been terminated, does not fall under the category of a workman under the ID Act, then the terms in his/her contract will be given priority and dispute resolution as per the contract shall be resorted to,” he said.