Tag Archives: labour law

Retrenchment Compensation – Condition Precedent

As per Section 25-F(b) of the Industrial Disputes Act, a workman is required to be paid retrenchment compensation equivalent to 15 days of average pay of every completed year of continuous service or in part thereof in excess of six months at the time of retrenchment. It is clear from the plain reading of aforesaid provision that requirement prescribed under sub-sections (a) and (b) is condition precedent to retrenchment and failure, if any, to comply with the same, would render the retrenchment invalid and inoperative.         Hon’ble Apex Court in National Iron and Steel Company Ltd. v. State of West Bengal, 1967 (14) FLR has dealt with a situation wherein, employer while issuing notice dated 15.11.1958 under Section 25 of the Industrial Disputes Act directed the workman to collect retrenchment compensation on November 20 or thereafter. The Hon’ble Apex Court held that manifestly the provisions of Section 25-F of the Industrial Disputes Act had not been complied and as such, termination in violation of the same deserves to be quashed and set aside. Executive Officer v. Anil Kumar, 2019 (163) FLR 299.

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Abandonment and Termination – Are Both Positive Acts

Abandonment and Termination are both positive acts, with the former requiring positive intent, on the part of the workman, not to work, and the latter requiring positive intent, on the part of the management, not to allow the workman to work. Requisite animus is the sine qua non in either case. There is, however, the subtle jurisprudential distinction between termination (at the instance of the employer) and abandonment, in that, in the former case, it would always be possible for the employer to unequivocally indicate, to the employee, that his services were no longer required and, therefore, that they stood “terminated”, whereas, in the latter case, often, the intention not to continue working for the employer has to be presumed from the conduct of the employee. It is only for this reason that a jural concept of “deemed abandonment” has evolved over a period of time. In Engineers India Ltd. v. Labour Court, (2018) 2 LLJ 442, examined the concept of “abandonment”, and the law that has evolved, by various pronouncements of the Supreme Court in that regard. Certain guiding principles on the issue of abandonment as culled out in Engineers India Ltd. v. Labour Court, (2018) 2 LLJ 442 are as under:

  • Intention, or animus, to abandon, is the necessary sine qua non, for any case of abandonment to be said to exist. In the absence of intention, there is no abandonment.
  • Whether the intention to abandon exists, or not, is a question of fact, to be determined in each case.
  • Termination, or removal from service, is a positive act of the employer, per contra, abandonment is a positive act of the employee.
  • Any evidence, to indicate that the employee or workman, desired to join duty, but was prevented from doing so, would, by itself, militate against any presumption of “abandonment”.

In each case, the onus, to prove the termination, or abandonment, had taken place, would be on the party so contending. Dev Narayan v. Management, 2018 (158) FLR 255.

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Ingredients and Purpose of Section 17-B of Industrial Disputes Act, 1947

The three necessary ingredients for the application of Section 17-B of the Industrial Disputes Act, 1947 are (i) the Labour Court should have directed reinstatement of the workman, (ii) the employer should have preferred proceedings against such award in the High Court or in the Supreme Court; and (iii) the workman should not have been employed in any establishment during such period.

It is apparent that Section 17-B of the Industrial Disputes Act was introduced for the purposes of mitigating hardship faced by the workman who had been reinstated but the reinstatement had been delayed on account of the contest laid by the employer before the High Court or the Supreme Court. It is also clear that Section 17-B of the Act, 1947 proposed to provide “payment of wages last drawn”. The object of introducing Section 17-B of the Act appears to ensure that a workman, in whose favour an award for reinstatement has been passed, is at least paid his last drawn wages. The purpose of introducing Section 17-B of the Act appears to be not to provide for a punitive measure or a disincentive for the employers to challenge the award passed by the Labour Court, but to mitigate the hardship faced by the workman on account of delays occasioned because of pendency of litigation before the High Courts and the Supreme Court. The Parliament in its wisdom, obviously thought it fit that the workman having succeeded in obtaining an award of reinstatement ought to be paid at least last wages that were drawn by him. It is also made a condition that for purposes of obtaining wages under Section 17-B of the Act, the employee should not be gainfully employed elsewhere. This object appears to be not to discourage an employer from assailing the award but to ensure that the workman who has prevailed before the Labour Court does not suffer for want of subsistence allowance for his sustenance. Management Committee v. Presiding Officer, 2016 (150) FLR 518.

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Industrial Dispute – Meaning of

The term “industrial dispute” connotes a real and substantial difference having some element of persistency, and likely, if not adjusted, to endanger the industrial peace of the community. The expression “dispute or difference” as used in the definition given under section 2(k) of the Industrial Disputes Act, 1947, therefore, means a controversy fairly definite and of real substance, connected with the terms of employment or the conditions of labour of any person, and is one in which the contesting parties are directly interested in maintaining the respective contentions.

To understand the meaning of the word “dispute”, it would be appropriate to start with the grammatical or dictionary meaning of the term:

“Dispute.—to argue about, to contend for, to oppose by argument, to call in question—to argue or debate (with, about or over)—a contest with words; an argument; a debate; a quarrel;”

Black’s Law Dictionary, 5th Edition, P. 424 defines “dispute” as under:

“Dispute.—A conflict or controversy; a conflict of claims or rights; an assertion of a right, claim, or demand on one side, met by contrary claims or allegations on the other. The subject of litigation; the matter for which a suit is brought and upon which issue is joined and in relation to which jurors are called and witness examined.”

Thus, a dispute or difference arises when demand is made by one side (i.e. workmen) and rejected by the other side (i.e. the employer) and vice versa. Henc an “industrial dispute” cannot be said to exist until and unless the demand is made by the workman and it has been rejected by the employer. How such demand should be raised and at what stage may also be relevant. Prabhakar v. Joint Director, Sericulture Department, (2015) 15 SCC 1.

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Increments – During Suspension

Increment has a definite concept in service law jurisprudence. It is an increase or addition on a fixed scale; it is a regular increase in salary on such a scale. As noted in SBI v. Central Government Labour Court, (1972) 3 SCC 595, under the labour and industrial laws, an increment is when in a timescale of pay an employee advances from the lower point of scale to the higher by periodic additions. In other words, it is addition in the same scale and not to a higher scale. An increment is an incidence of employment and an employee gets an increment by working the full year and drawing full salary. During the period of suspension, the contract of service remains suspended. The order of suspension by the departmental enquiry has the effect of temporarily suspending the relations between the master and servant with the consequence that the servant is not bound to render service and, therefore, an employee is not entitled to increments during this period which is taken as period not spent on duty. State of Punjab v. Jaswant Singh Kanwar, (2014) 13 SCC 622.

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Absorption – Subsistence of Contract of Employment

It is a settled principle of law that absorption and regularisation in the service can be claimed or/and granted only when the contract of employment subsists and is in force inter se employee and employer. Once it comes to an end either by efflux of time or as per the terms of the contract of employment or by its termination by the employer, then in such event, the relationship of employee and employer comes to an end and no longer subsists except for the limited purpose to examine the legality and correctness of its termination. Oshiar Prasad v. Employers, 2015 (144) FLR 830.

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Reinstatement of an Employee

As per Shorter Oxford English Dictionary, Vol. 2, 3rd Edition, the word “reinstate” means to reinstall or re-establish (a person or thing in a place, station, condition, etc.) ; to restore to its proper or original state; to reinstate afresh and the word “reinstatement” means the action of reinstating; re-establishment. As per Law Lexicon, 2nd Edition, the word “reinstate” means to reinstall; to re-establish; to place again in a former state, condition or office; to restore to a state or position from which the object or person had been removed and the word “reinstatement” means establishing in former condition, position or authority (as) reinstatement of a deposed prince. As per Merriam-Webster Dictionary, the word “reinstate” means to place again (as in possession or in a former position), to restore to a previous effective state. As per Black’s Law dictionary, 6th Edition, “reinstatement” means:”to reinstall, to re-establish, to place again in a former state, condition, or office; to restore to a state or position from which the object or person had been removed.”
The very idea of restoring an employee to the position which he held before dismissal or removal or termination of service implies that the employee will be put in the same position in which he would have been but for the illegal action taken by the employer. The injury suffered by a person, who is dismissed or removed or is otherwise terminated from service cannot easily be measured in terms of money. With the passing of an order which has the effect of severing the employer-employee relationship, the latter’s source of income gets dried up. Not only the employee concerned, but his entire family suffers grave adversities. They are deprived of the source of sustenance. The children are deprived of nutritious food and all opportunities of education and advancement in life. At times, the family has to borrow from the relatives and other acquaintance to avoid starvation. These sufferings continue till the competent adjudicatory forum decides on the legality of the action taken by the employer. The reinstatement of such an employee, which is preceded by a finding of the competent judicial/quasi-judicial body or court that the action taken by the employer is ultra vires the relevant statutory provisions or the principles of natural justice entitles the employee to claim full back wages. If the employer wants to deny back wages to the employee or contest his entitlement to get consequential benefits, then it is for him/her to specifically plead and prove that during the intervening period the employee was gainfully employed and was getting the same emoluments. The denial of back wages to an employee, who has suffered due to an illegal act of the employer would amount to indirectly punishing the employee concerned and rewarding the employer by relieving him of the obligation to pay back wages including the emoluments. Deepali Kundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya, (2013) 10 SCC 324.

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