TCS, the country's largest private employer, announced around 12,000 job cuts in 2025, roughly 2% of its global workforce, concentrated among middle and senior management, and analysts have estimated that 400,000 to 500,000 roles across the sector could be at risk over the following two to three years. The vocabulary is sanitised: rightsizing, restructuring, skill realignment. But the experience on the receiving end is singular and disorienting. What almost no one is told is that a lay-off is not one event with one script. It is a legal process, and the person being let go has far more standing inside it than they are encouraged to believe. The only question is whether they know it before they sign.
Resigned, or retrenched? The distinction you cannot afford to blur
The first move an employer often makes is also the most consequential, and the most easily missed. You are asked, warmly, to resign. To move on with dignity. To take the package and go silently. What is rarely said aloud is that resignation and retrenchment are two entirely different events in the eyes of Indian law. One is something you choose, and in choosing it you may surrender a body of statutory protection built precisely for this situation. The other is something done to you, and it carries obligations the employer cannot simply wish away. The language used in the room is designed, consciously or not, to move you from the second category into the first.
There is no legal basis for asking an employee to resign; at best it can be a private negotiation between employer and employee. Retrenchment, on the other hand, is a mass removal or termination of the services of workers due to business or financial considerations. When an employee is being asked to resign, the employee can say no. In the case of retrenchment, the process is legal and covered by the Industrial Relations Code, 2020.
A resignation and a retrenchment may look similar on paper, but legally they are very different. A resignation is your decision to leave. Once you resign, you may give up certain protections and claims that would otherwise arise if the employer ended your employment. Retrenchment, on the other hand, is the employer's decision to terminate services due to business, restructuring, or financial reasons. In such cases, the employer must follow the process laid down under the Industrial Relations Code, 2020, including notice and compensation requirements where applicable.
The catch is that these statutory retrenchment protections mainly apply to employees who qualify as "workers" under the law. Many middle and senior managers fall outside that category and are often governed more by their employment contracts than by labour law protections.
That is why the most important question in a lay-off conversation is simple: "Are you asking me to resign, or are you terminating my employment?" The answer can make a significant difference to your legal rights and bargaining power.
What the law owes you
For employees who fall within the protection of the Industrial Relations Code, retrenchment is not a matter of the employer's goodwill. The law sets a floor: written notice or pay in its place, retrenchment compensation measured against each completed year of service, and an order in which people may be let go. For those who fall outside that protection, like senior management, the floor is whatever the employment contract says it is, which makes the contract the single most important document in the conversation.
The law sets a minimum, not a maximum. For employees covered by the Industrial Relations Code, 2020, an employer carrying out retrenchment must generally provide notice (or salary in lieu of notice), pay all outstanding dues, and provide retrenchment compensation, which is typically calculated at 15 days' average pay for every completed year of continuous service, or any part thereof exceeding six months.
For employees outside the statutory protection framework, particularly many middle and senior managers, the starting point is usually the employment contract. In those cases, the notice period, severance entitlement, bonus payments, stock options, and other exit benefits often depend more on contractual terms than labour legislation.
Employees should also remember that the statutory amount is merely the floor. Companies frequently offer enhanced severance packages to secure a smooth exit, avoid disputes, protect reputation, and obtain closure. Factors such as length of service, seniority, performance record, difficulty of finding comparable employment, and the circumstances of the lay-off can all strengthen an employee's negotiating position.
The key principle is simple: when a company says, "This is our final offer," it is often the beginning of a negotiation, not necessarily the end of one. The law guarantees a minimum; it does not prevent an employee from negotiating something better.
"Resign, or we'll terminate you"
It is the sentence that ends more careers on the employer's terms than any other: resign, or we will terminate you and you would not want that on your record. It sounds like a kindness and a threat at once, and it is engineered to produce a signature. But a resignation tendered under that pressure is not always the clean, voluntary act it appears to be, and what you give up by signing it can be considerable.
The phrase "resign or we'll terminate you" should not be treated as a legal instruction; it is a negotiation tactic. An employer is free to offer resignation as an option, but an employee is equally free to decline and ask the company to take whatever formal action it believes is justified.
The reason this matters is simple: the moment an employee resigns, the company may later argue that the departure was entirely voluntary. In doing so, the employee may lose the opportunity to challenge the separation, claim statutory protections, or question whether the employer followed the correct legal process.
A resignation obtained through coercion, intimidation, or undue pressure is not automatically immune from challenge. Courts and tribunals look at the reality of the situation, not just the label on the document. If the employee can show that the resignation was effectively forced and there was no genuine choice, it may be argued that the resignation was actually a termination in disguise.
Employees should also remember that a threat of termination is not the same thing as a lawful termination. If an employer wishes to terminate employment, it must still comply with the applicable law, contractual obligations, and internal procedures. The most important thing in that moment is not to panic and sign immediately. Ask for the reasons in writing, ask for time to review the proposal, and understand exactly what rights may be affected before making a decision. Sometimes the most valuable sentence an employee can say in that room is: "I would like some time to consider this."
When a mass lay-off needs the government's permission
There is a layer of protection most employees never hear about, because employers have little incentive to mention it. Under the Industrial Disputes Act, establishments above a certain size (historically 100 workmen) have been required to seek government approval before mass retrenchment, and it was on exactly this basis that IT employees' unions argued the TCS lay-offs were unlawful, alleging the company had also failed to honour a three-month severance understanding. The new Industrial Relations Code, in force since 21 November 2025, raises that threshold from 100 to 300, a change with direct consequences for how easily large employers can let people go.
For most private-sector employees, the government-permission requirement is not a universal protection; it applies only in specific circumstances. Traditionally, larger industrial establishments employing a prescribed number of workers were required to obtain prior government approval before carrying out retrenchments. Under the Industrial Relations Code, 2020, that threshold has been increased from 100 workers to 300 workers.
In practical terms, this means that establishments employing fewer than 300 workers can now undertake retrenchment without seeking prior government permission, making workforce restructuring easier than before. For employees, that does represent a reduction in one layer of protection that previously applied to a larger number of workplaces.
However, employees should not assume that the absence of government approval means the absence of legal rights. Employers must still comply with applicable labour laws, contractual obligations, notice requirements, retrenchment compensation provisions where applicable, payment of statutory dues, and principles of fairness in the termination process.
It is also important to remember that these protections primarily benefit employees who fall within the legal definition of a "worker" under labour laws. Many managerial and senior executive employees often derive their protection from employment contracts, company policies, and negotiated severance arrangements rather than statutory retrenchment provisions.
The shift from 100 to 300 has certainly made large-scale workforce reductions easier for many employers, but it has not created a free pass for arbitrary terminations. The legal question has simply moved from "Did the company obtain permission?" to "Did the company follow the law, the contract, and the correct process?"
What not to sign in the first 48 hours
If there is a single, portable piece of advice in this entire conversation, it lives here. The hours immediately after the call are when the most is lost, because they are when the most is signed. Resignation letters, full-and-final settlements, releases that quietly extinguish the right to bring any future claim. Almost none of it is as urgent as it is made to feel.
The first 48 hours after a lay-off are often the worst time to make permanent decisions. Shock, anxiety and uncertainty are exactly what lead people to sign documents they have not fully understood.
As a rule, employees should avoid immediately signing resignation letters, settlement agreements, "full and final" declarations, waiver letters, or any document stating that they have no further claims against the company. There is usually far less urgency than the situation suggests.
A "full and final" release is not just an acknowledgement of receiving money. In many cases, it is a legal promise that you will not pursue future claims relating to your employment, termination, compensation, benefits, bonuses, stock options, or other disputes. Once signed, it can significantly weaken your ability to challenge the circumstances of your exit later.
The smartest response is often the simplest one: "Thank you, I will review the documents and get back to you." A company may be ending your employment, but it rarely gets to impose a deadline on your right to understand what you are signing. Sometimes the most expensive signature is the one made in the first hour, and the most valuable decision is waiting 48 hours before making it.
If you have been short-changed: the real route to recourse
Recourse exists, but it is rarely the recourse people imagine. The instinct is to threaten a lawsuit; the reality is a more specific set of doors (the labour authorities, conciliation, the industrial tribunal), each with its own logic, cost and timeline. Knowing which door, and when, is the difference between a remedy and a grievance that goes nowhere.
The first step is not a lawsuit; it is understanding which forum actually has jurisdiction over your case. Many employment disputes are resolved through labour authorities, conciliation proceedings, labour courts, or industrial tribunals long before they ever reach a traditional courtroom. For employees who qualify as "workers" under labour laws, the usual route is to approach the labour authorities, seek conciliation, and if the dispute remains unresolved, pursue remedies before the appropriate labour court or tribunal. For managerial and senior employees, the options often involve contractual claims, civil proceedings, or negotiated settlements.
Employees should also keep their expectations realistic. Employment disputes are rarely resolved in weeks. They can take months and, in some cases, years. However, the existence of a valid legal claim often creates pressure for a negotiated settlement long before a final order is passed.
The most important thing is evidence. Emails, employment contracts, salary records, termination communications, severance offers, and settlement documents often determine the strength of a case. The law can provide remedies, but it works best for the employee who has preserved the paper trail.
The practical reality is that not every unfair termination becomes a landmark court victory. Sometimes the best outcome is reinstatement, sometimes additional compensation, and quite often a better settlement than what was originally offered. The key is knowing that a bad exit package is not necessarily the final word just because the company says it is.
What every professional should keep on file before they ever need it
The professionals who come through a lay-off with their footing intact tend to share one thing: they were ready before they had any reason to be. The offer letter and every revision of it, the appraisal record, the email trail, the policy documents held somewhere that is not a work laptop you may lose access to within the hour.
If I had to pick just one thing, it would be this: keep a complete personal record of your employment documents outside your office systems.
That means your offer letter, employment contract, salary revisions, appraisal records, promotion letters, important HR communications, company policies, and key work-related emails that may become relevant later.
Most employees think they need these documents only when changing jobs. In reality, they become most valuable on the day access to the company laptop, email account, and internal portals is suddenly switched off. In employment disputes, memories fade and conversations are denied. Documents survive. The employee with records has facts; the employee without them has recollections. And in any negotiation, inquiry, or legal proceeding, facts almost always win.
The best time to organise your employment file is when everything is going well. By the time you need it, it may already be too late to retrieve it.
A lay-off feels like something that happens to you, and in the first instance it is. But the gap between leaving on the employer's terms and leaving on your own is rarely about luck and almost always about knowledge, about understanding, in a moment built to rush you, that you are a party to a process and not merely its subject. Wocult exists to hand working professionals that understanding before the moment arrives, not after. The call may still come. What happens next does not have to be decided by the person on the other side of the table.
A note on signing under pressure: If you are handed documents in the meeting itself, you are almost always entitled to take them away, read them and seek advice before signing. "We need this now" is a request, not a legal requirement. The most protective sentence you can say in that room is a calm "I will review this and revert."
Sources
- Expert commentary: Ajay Veer Singh, Advocate, Supreme Court of India; Managing Partner, BSJ Legal Law Offices.
- Tata Consultancy Services: workforce reduction announcement, 2025 (company statements; Reuters reporting).
- IT sector at-risk role estimates: industry analysts (UnearthInsight and others), 2025.
- IT employees' union representations to the Ministry of Labour and Employment, 2025.
- Industrial Disputes Act, 1947 (as amended): Chapter VA/VB, sections 25F, 25G, 25N.
- Industrial Relations Code, 2020: retrenchment provisions; effective 21 November 2025.
- Ministry of Labour and Employment: notifications on the four Labour Codes, November 2025 to May 2026.
About Ajay Veer Singh
Ajay Veer Singh is an advocate with close to three decades of experience and managing partner at BSJ Legal Law Offices, a firm specialising in Supreme Court of India practice. A member of the Supreme Court Bar Association since 2000, his practice spans litigation, constitutional law and arbitration. He studied negotiation at Harvard Law School and holds a Master's degree in History from Jawaharlal Nehru University.
