Forced Resignations in India’s IT Sector: A Legal Blind Spot Demanding Urgent Reform

Forced resignation is a term that, despite its prevalence, lacks formal legal definition in Indian jurisprudence. At its core, it refers to a situation where an employee is compelled to resign under duress—either through direct pressure or sustained workplace hostility. Unlike voluntary resignation, which reflects an employee’s autonomous decision, forced resignation is a coerced act designed to circumvent legal protections afforded under termination laws.

The recent announcement of mass layoffs at Tata Consultancy Services (TCS), expected to impact approximately 12,000 employees globally, has reignited a longstanding debate about job security in India’s IT sector. While layoffs in themselves are distressing, the deeper concern lies in the method by which many of these separations are executed—through forced resignations. This practice, though widespread, remains legally ambiguous and ethically indefensible. It is time for India’s labour law framework to confront this issue head-on.

What Is a Forced Resignation?

In the case of TCS, employees have alleged that they were pressured to resign under threats that their future job prospects would be jeopardized. Similar allegations surfaced during the 2017 Verizon layoffs, where employees reported verbal harassment and intimidation by internal counsellors. Common tactics include withholding experience letters, inserting damaging remarks in termination documents, and spreading informal negative references to prospective employers.

Why Do Companies Resort to Forced Resignations?

The answer lies in the legal obligations tied to formal termination. Under the Industrial Disputes Act, 1947 (ID Act), employers are required to follow due process when terminating employees, including:

– Issuing a formal notice (Section 25F)
– Providing retrenchment compensation
– Notifying labour authorities
– Demonstrating reasonable cause

Forced resignations allow companies to sidestep these requirements. Since resignations are presumed to be voluntary, they absolve the employer of any obligation to pay compensation or justify the termination. This legal loophole has become a convenient escape route for employers seeking cost-effective workforce reductions.

The Legal Landscape: Layoff vs. Retrenchment

The confusion surrounding layoffs in the IT sector is compounded by the misuse of terminology. Under Section 2(kkk) of the ID Act, a “layoff” is defined as a temporary inability to assign work due to lack of demand or resources. The employee remains on the company’s rolls and is entitled to compensation.

In contrast, what the IT sector commonly refers to as “layoffs” are, in legal terms, retrenchments. Section 2(oo) of the ID Act defines retrenchment as the termination of service for any reason other than disciplinary action. Section 25F mandates that retrenchment must be preceded by:

– One month’s notice or payment in lieu thereof
– Retrenchment compensation equivalent to 15 days’ average pay for every completed year of service
– Notification to the appropriate government authority

State-specific laws, such as the Karnataka Shops and Commercial Establishments Act, 1961, further reinforce these protections. Section 39 of the Act requires employers to provide reasonable cause for termination and adhere to notice and compensation norms.

The Psychological and Financial Toll

Forced resignations not only violate legal norms but also inflict severe psychological and financial damage. Salaried employees operate under the assumption of income continuity. A sudden, coerced exit disrupts this expectation, often leading to:

– Defaulting on rent, EMIs, and loans
– Loss of housing, especially for migrant workers
– Anxiety, depression, and long-term mental health issues

A joint study by Onsurity and the Knowledge Chamber of Commerce and Industry revealed that 43% of IT professionals suffer from work-related physical and mental illnesses. The correlation between job insecurity and mental health deterioration is undeniable.

Benching: A Grey Zone of Exploitation

Another practice that skirts legal scrutiny is “benching”—where employees are kept on payroll but not assigned active projects. While benched employees may receive salaries, they are often required to complete irrelevant certifications, suffer career stagnation, and miss out on performance-based incentives.

Benching does not meet the legal definition of a layoff, as it is not caused by a lack of work but rather by arbitrary decisions about “suitability.” This managerial convenience undermines employee morale and raises serious questions about fairness and transparency.

Trade Union Resistance and Legal Precedents

Organizations like the Karnataka State IT/ITeS Employees’ Union (KITU) have been at the forefront of challenging forced resignations. In 2018, the 3rd Additional Labour Court in Bengaluru admitted KITU’s arguments against a tech company, citing “unfair labour practices” under Section 2(ra) of the ID Act. The court ordered reinstatement of the affected employee.

While Section 2(ra) and the Fifth Schedule of the ID Act penalize exploitative practices, they do not explicitly mention forced resignations. This legal ambiguity makes it difficult for courts to consistently uphold employee rights, and for unions to build strong cases.

The Enforcement Gap

The IT sector enjoys considerable leniency in labour law enforcement. For instance, Karnataka has exempted IT/ITeS companies from the Industrial Employment (Standing Orders) Act, 1946—a statute that mandates clear service conditions and termination procedures. This exemption weakens the regulatory oversight and emboldens companies to adopt questionable HR practices.

The Case for Legal Reform

The need for explicit legal recognition and penalization of forced resignations is urgent. Such reform would:

– Deter companies from coercive practices
– Empower employees to seek redressal
– Strengthen judicial interpretation
– Reinforce India’s commitment to fair labour standards

A proposed amendment to the ID Act could include:

– A definition of “forced resignation”
– A presumption of coercion in cases lacking proper documentation
– Mandatory investigation by labour authorities
– Penal provisions for non-compliance

Conclusion: Towards a Fairer Future

The TCS layoffs are not an isolated incident—they are symptomatic of a deeper malaise afflicting India’s IT sector. Forced resignations represent a betrayal of the trust that employees place in their organizations and a violation of the principles of natural justice.

As India positions itself as a global technology powerhouse, it must also ensure that its labour laws evolve to protect the very workforce that drives this growth. Legal reform, union empowerment, and ethical corporate governance must converge to eliminate forced resignations and restore dignity to employment.

The time to act is now. For further insights into the evolving workplace paradigm, visit