Reference no: EM132809791

Nirmal has been running his own business for years. Some of his staff have been with him since he was working out of his home garage 20 years ago. Sidharth has been with him for 19 years, he joined when they moved to their first proper factory. Sidharth never had a written contract and has covered all sorts of roles over the years. He is paid slightly differently to the other staff to recognise his seniority and experience.

Nirmal is very good at bringing in business and running the factory. He tries to keep up to date with HR; he chats to his staff when he has time and expects them to let him know if they have any issues or need training or other support. He communicates policy by memo as and when he has something important to say.

Sidharth has started to be unreliable; he is often late; has failed to turn up for agreed overtime. Nirmal considers taking disciplinary action about the poor timekeeping but he has a long history with Sidharth and hopes the problem will sort itself out.

Sidharth raises a grievance about his pay. He has consulted a lawyer who has told him, among other things, that he is entitled to a written contract and should not have money deducted from his wages without it being in that contract or his written permission.

Nirmal holds a grievance meeting and says he will provide a contract. They discuss the issue of pay and arrange the disputed amounts. Sidharth says he would like more overtime; Nirmal says they can't give him overtime if they can't rely on him to turn up as they have to pay a manager who covers for him. Sidharth agrees that if he does not turn up the cost of the manager's lost time will be deducted from his wages.

Matters did not improve, Sidharth continued to be late and did not turn up to agreed overtime. Nirmal deducts the manager's costs of covering overtime from Sidharth's wages and he then complains about this deduction. Nirmal does not find the time to organise a written contract. Sidharth comes in one day and shouts at the payroll manager who, frustrated about the repeated absences and difficulties caused by Sidharth, loses his temper and says if it were up to him, he would have sent Sidharth out by now.

The next day Nirmal gets a letter from Sidharth's lawyer saying that he is resigning claiming unfair treatment by Nirmal and his associates.

Answer the following Questions:

1. If trust is an important factor in an organizational set-up, why is a written contract necessary? Why can't verbal contracts be considered valid?

2. Devise a plan for Raghu to stop a similar thing happening again.

3. What do you think are the reasons for Sidharth's actions? If Sidharth was unhappy why did he work in the same company for 19 years?