Employees must submit a written resignation. Section 30(2) requires written notice to end employment.

• Applies after three months of continuous service
• Requires at least one month of written notice

Under the Payment of Gratuity Act, 1972, which applies nationwide including Delhi, employees with more than 5 years of continuous service qualify for gratuity.

It is calculated as 15 days’ wages for each completed year (based on a 26-day month) and capped at ₹3,50,000.

Under Section 30 of the Delhi Shops & Establishment Act, 1954, employers may terminate an employee with three or more months of continuous service without notice or pay in lieu when the dismissal is for misconduct and the employee has been given a fair opportunity to respond to the charges in writing.

Rule 13 of the Delhi Shops & Establishments Rules, 1954 defines misconduct to include (non-exhaustive list):

• Willful insubordination or disobedience
• Illegal strikes or incitement
• Willful slowdown of work
• Theft, fraud, or dishonesty
• Habitual absence without leave or chronic lateness
• Drunkenness, disorderly behavior, or gambling
• Habitual neglect of duties or negligence
• Willful damage to property
• Disclosure of proprietary information

Employers must issue a written notice of dismissal, except in cases of misconduct where procedural safeguards (inquiry + written explanation) allow termination without notice.

Standard requirement is 1 month’s written notice, unless dismissal is for misconduct (where no notice is required).

• The Delhi Shops & Establishments Act does not require severance or gratuity when termination is for cause.
• If the employee has completed 5+ years of service, gratuity under the Payment of Gratuity Act, 1972 may still apply (subject to statutory conditions).

• Termination without cause is permitted under the Delhi Shops & Establishments Act as long as the employer provides the required one month’s written notice or wages in lieu of notice for employees with 3+ months of continuous service.
• There is no requirement to justify termination (i.e., no misconduct or fault needed), as long as proper notice or wages are provided.

The notice must be in writing.

Minimum 1 month of written notice after 3 months of continuous service

• The Delhi Shops & Establishments Act does not mandate severance pay beyond notice or payment in lieu.
• However, employees who qualify under the Payment of Gratuity Act, 1972 (i.e., 5+ years of service) remain entitled to gratuity under central law.

A mutual termination is a voluntary, contractual resolution rather than a mandated statutory route. It means both parties agree to end the employment relationship under specified terms.

The mutual termination should be formalized in writing, typically via a mutual termination agreement or settlement letter.

Statutory minimum of 1 month’s notice, or payment in lieu, is required for employees with 3+ months of continuous service. The agreement may specify a shorter or modified timeline only if both parties expressly agree, but cannot go below statutory minimum.

• There is no statutory requirement for additional severance pay beyond notice or notice-in-lieu under the DSE Act.
• If the employee qualifies for gratuity (i.e., 5+ years of service), then Payment of Gratuity Act, 1972 applies but that’s under central law and separate from mutual termination mechanics.

A fixed-term contract ends automatically on its stated end date under the Industrial Employment (Standing Orders) (Central) Amendment Rules, 2018. If the contract specifies an end date and does not include a renewal or notice clause, neither party is required to give notice when the term expires.

• Fixed-term employees become eligible for pro-rata gratuity after completing at least one year of service, even when the contract ends as planned.
• Gratuity must be calculated proportionately based on the employee’s tenure.

• Fixed-term employees must receive the same wages, allowances, work hours, and statutory benefits (such as EPF, ESI, bonus, and gratuity) as permanent employees in comparable roles, on a pro-rata basis.
• They are also entitled to leave encashment if covered under standing orders or company policy.

If an employer ends a fixed-term contract before its scheduled end date, current regulations require:

• At least one week’s notice if the employee has completed one month or more of service
• One week of notice per completed year of service if the employee has worked for two years or more

• If the employee has served for one year or more, they are entitled to pro‑rata gratuity, even if the contract ends early.
• Without reaching one year, gratuity is not due unless contractually specified.

• Employees terminated early should still receive all due wages, allowances, leave encashment, and other benefits to which they would have been entitled had they completed their term, reflecting the principle of equal treatment.

Employers should provide:

• Final payslip
• Settlement statement or summary
• Relieving letter and Experience certificate (typically issued within a reasonable time, often ~15 days post-exit)