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Is Firing People with 3 Months Severance Pay Unfair? I don’t think so.


Our earlier post, The Inflexion Point for the IT industry, generated a lot of interest. There were more than 140 comments and it’s been quite a revealing debate, with views from all angles.

One of the players fighting the TCS “layoff” posted what they say is the recording of a “termination interview” recently.

Now, let’s be honest and say that this could have been handled with more subtlety. I’ve had my mistakes too in firing people, and that deep sinking feeling in your stomach stays for days because you know you took away something beloved to the person: a job. But this interview should make the TCS HR think about how to lessen the impact.

Secondly, I’d like to put it on record that the firing is fair:

  • The person does have a lower rating than other people and probably the pay-to-performance ratio was low; but this should or could have been communicated better.
  • The person gets a three month severance; she doesn’t have to report to office in the interim. This is quite fair.

Some people demand one month for every year served as severance. I think this is just too much about entitlement; if the company gives it, that’s nice, but it’s not anyone’s right to such a severance. Three months is fair, no matter what. You could argue it should be six, and that’s a matter of judgement, but to say that this is inhuman is nonsense.

Thirdly, the only thing the employee was unhappy about was that her performance was being questioned. You can’t question someone’s performance and say that the underlying data that proves such underperformance is “confidential”. That is stupid and unfair. If the deal is that you’re getting rid of all “C” rated people since they’re rated lower than “A” or “B”, then it might be easier to just say that.

It’s as real to anyone that’s less privileged; we routinely fire long-standing household help without much of a “severance” and will balk at even giving one month’s notice to such people, and we expect six months when we are fired ourselves? I think that’s quite unfair. (And of course no one will fight for that maid or driver!)

Let’s Get Real: This Could Happen To You

There’s nothing earth-shattering about being fired. You do not lose your dignity. You do not lose “face” with your relatives. The job market was tough, you couldn’t keep up, and you need to reskill yourself.

When I fired myself in 2005 (from my own company, because I was adding no further value and just eating up my salary) I realized one thing: that I couldn’t survive being an IT programmer alone. I had some programming chops, but I realized I needed more than that; managerial skills are a dime a dozen and that’s not an advantage. So what would it be?

I was broke, I was just married, and I needed a job. I got one, luckily, thanks to someone who I cannot name because he doesn’t like me to. I helped build that company and I kept learning about markets, money and trading. When the company was acquired, I had saved enough to startup once again; and when that didn’t work out I fired myself all over again. It’s now about 10 years since then, and it’s been a rough and crazy ride, but that change was the best thing I did with my life.

Everyone cannot be that crazy, but the lesson that I learnt was that there is no such thing as job security. There is no entitlement to a job. There is a darn good reason why you can be fired tomorrow, and you’ll never be able to avoid it. What you can do is to be prepared for it and be ready to move on.

What Can Be Done: My 2 paise

Prepare for an alternate source of income and have an emergency fund. I now have 12 months of expenses in a safe place. I also have a source of income (investing in stock markets) that helps. (But then I don’t have a salary at all, and have invested and lost a lot of money in the education, so don’t just blindly follow). Today, such opportunities are even more:

  • You have the ability to buy small stakes in startups which might give you a great exit
  • You can buy real estate with savings and have rental income
  • You can buy stocks that might serve you well with dividends
  • You can even write a blog or create a web site in your spare time which might be a great asset at a later date.

None of these are sure shot successes but the diversification helps. It’s easy to say that there is no time for such things. But as we’re increasingly finding out, it might turn out we get too much such time.

Update: TCS Denies Layoffs, Says Less than 3K “involuntary” attrition

TCS has denied that it’s kicking out people. It says the number of people who left “involuntarily” are just 2574 which is 0.8% of their workforce. But many might be forced into a resignation, which would not count as “involuntary”.

However, my opinion is: no matter what the reason, getting fired is normal. TCS can’t be forced to keep people they don’t want. They can only up their severance, which would be a nice gesture. (3 months is nice enough in my mind) If we try to create laws to force companies like TCS to keep paying high salaries, we will be the losers. If you can’t fire you will not hire.


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