On March 27, 2026, the Madras High Court (“Court”) dismissed a Writ Petition filed by Cognizant Technology Solutions India Private Limited (“Cognizant” or “Company”) challenging an order passed by the Joint Commissioner of Labour (“Labour Commissioner”) that directed the reinstatement of a long-serving employee. The central question before the Court was whether the employee’s termination was lawful under the Tamil Nadu Shops and Establishments Act, 1947 (“TN S&E Act”).

FACTS

Mr. K.N. Naresh (“Employee”) had been employed with Cognizant since January 4, 2000. Over eighteen years, he received promotions and was recognised for strong performance.

In April 2018, Cognizant issued him a show cause notice alleging poor performance. He responded promptly, stating the charges were baseless and that suitable roles had not been assigned to him for two years. Following this, a HR Manager advised him to proceed on leave, assuring him the matter would be resolved.

When he returned from leave in late May 2018, he found his office access card had been blocked and INR 5,00,000 (Indian Rupees Five Lac) had been credited to his bank account (according to the Employee), with no formal communication explaining either. He issued a legal notice in July 2018 and filed an appeal before the Joint Commissioner of Labour, Chennai (“Labour Commissioner”) seeking reinstatement with back wages on the ground that his termination was illegal.

Cognizant claimed that the Employee was absent without authorisation from April 19, 2018, that multiple notices sent by courier had gone undelivered, and that a formal written termination order was eventually issued on June 6, 2018, after he failed to report back to work. They further claimed that the Employee was paid INR 3,48,476 (Indian Rupees Three Lac Forty-Eight Thousand Four Hundred and Seventy-Six) as full and final settlement.

The Labour Commissioner found that the termination order had not been properly served, that no enquiry had been conducted into the charges, and that the termination was therefore illegal. Cognizant challenged this order before the Court.

ARGUMENTS OF THE PETITIONER

Cognizant raised three principal arguments. First, it contended that there was no oral termination on May 30, 2018, pointing to access card records which indicated that the Employee was present in the office on the following day and had, in fact, met HR personnel on May 31, 2018. Second, it argued that the Employee’s services stood terminated with effect from June 6, 2018, pursuant to a notice dated May 30, 2018, which required the Employee to report for work on June 6, 2018, failing which his employment would be deemed terminated. Cognizant emphasized that this termination order was never challenged by the Employee. However, the Court found this contention unpersuasive, noting that the termination order had not been duly served. Third, even if the termination were found procedurally defective, Cognizant argued that this was a case warranting compensation only, not reinstatement with back wages- particularly since it sought to lead evidence demonstrating that the performance-related charges would have justified termination in any event.

ARGUMENTS OF THE RESPONDENT

The Employee maintained that his version of events was consistent throughout. He had responded to the show cause notice, the HR Manager had advised him to go on leave, and he had never abandoned his job. When he returned, he found himself locked out without any formal communication. He pointed to several contradictions in Cognizant’s case − notably that the termination order referred to unauthorised absence from May 18, 2018, while earlier communications suggested a different timeline. On May 31, 2018, he had gone to the office to plead his case, but was only permitted to meet HR and not allowed to return to his workspace. He argued that after eighteen years of service, the abrupt blocking of his access without any formal process violated his basic rights as an Employee.

ANALYSIS AND CONCLUSION

The Court examined the Company’s claim that the Employee’s presence on May 31, 2018 disproved oral termination the previous day. It found this unpersuasive as the access records themselves showed he was only allowed limited access to the premises to meet the HR personnel, not his regular workspace, which was consistent with his account of going there to seek resolution rather than returning to duty.

On the written termination order, the Court found that Cognizant had failed on every front. The order was not sent by registered post with acknowledgement due as required under Rule 9(2) of the Tamil Nadu Shops and Establishments Rules, 1948. Courier delivery had failed, and when the Employee appeared personally before the HR manager on May 31, 2018, Cognizant chose not to hand over any of the undelivered notices in person. Despite claiming email delivery, the Company produced no proof of it. Having failed to establish service of the written order, the Court held that the facts pointed to a de facto or inferred termination, brought about not through any formal declaration but effectively by blocking the Employee’s access.

The Court also noted that Cognizant’s case kept shifting, from poor performance to unauthorised absence, and that even its own witness admitted inconsistencies in the timeline mentioned in the termination order. There was no clear, consistent case put forward by the Company, and the appellate authority had been right to decide the matter on the legality of the termination itself.

On the alternative plea for compensation instead of reinstatement, the Court found no merit. The charge was one of underperformance, not dishonesty or any conduct that would destroy trust between employer and Employee. Reinstatement was therefore appropriate.

The Court reserved its strongest observations for how the termination had been carried out. An Employee of eighteen years’ standing deserved at the very minimum to be formally called in, served with an order, and relieved of his duties in a dignified manner. Instead, he simply found himself unable to enter his own office one day. The Court held that using a smart card access system as an instrument of termination was impermissible, and that such conduct was held to be inconsistent with the basic dignity of labour and the right to fair working conditions under Article 23(1) of the Universal Declaration of Human Rights, read with Section 2(d) of the Protection of Human Rights Act, 1993. Given these circumstances, the Court declined to exercise its equitable jurisdiction under Article 226 of the Constitution to grant any relief to the Company.

The Court dismissed Cognizant’s Writ Petition and upheld the appellate authority’s award of reinstatement with back wages. The Court found no basis to interfere, holding that the termination was illegal for want of due process and proper service of the termination order.

IMPLICATIONS

Employment contracts and HR policies should explicitly prescribe the mode and mechanism for service of termination orders, in accordance with applicable law, if not more stringent than the procedure laid down thereunder. Under Rule 9(2) of the Tamil Nadu Shops and Establishments Rules, 1948, service of a termination order must be effected either personally or by registered post with acknowledgement due. Accordingly, drafters must ensure that contractual termination provisions are aligned with the applicable statutory requirements on service, and should incorporate a fallback mechanism such as personal delivery against acknowledgement in cases where courier or postal delivery fails.

The principles articulated by the Court merit consideration even by establishments operating outside Tamil Nadu, including in Karnataka. For instance, offices of tech companies such as Cognizant in Bengaluru would fall within the scope of the Karnataka Shops and Commercial Establishments Act, 1961 (“Karnataka S&E Act”), which permits dismissal of employees with over six months’ service only for reasonable cause, with one month’s notice or pay in lieu, except in cases of proven misconduct following a proper enquiry. It is relevant to note, however, that employees in managerial positions would fall outside the ambit of the Karnataka S&E Act, depending on the nature of their functions and designation.

While the Karnataka Shops and Commercial Establishments Rules, 1963 do not prescribe a specific mode of service for termination orders, the reasoning of the Madras High Court would likely carry persuasive value. A termination that has not been demonstrably communicated to the employee may not be treated as validly effected. Employees dismissed without notice (or pay in lieu), without due enquiry, or without proper service of the termination order may challenge such dismissal before the jurisdictional authority and seek reinstatement or compensation.

Accordingly, establishments in Karnataka should treat this judgment as an indicator of judicial approach. Compliance with termination procedures is not merely a matter of drafting but of practice: statutory requirements such as proper service of notice and the conduct of an enquiry are substantive obligations, not technicalities. Employers who rely on inadequate modes of communication or bypass formal processes do so at their own risk. Termination procedures must therefore be followed rigorously in practice, and any revocation of access should be accompanied by a contemporaneous written termination order, served in a demonstrably effective manner, with HR and IT processes aligned to statutory requirements, rather than merely reflected in contractual language. In this context, the Court has also underscored that technological tools such as biometric or smart card access systems cannot be used as instruments of informal or covert termination.

Please find attached a copy of the judgment, here.

This update has been contributed by Tushar Thimmiah (Partner) and Amruth Rao (Associate).

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