Award of Meager Compensation in Lieu of Reinstatement for Long-Term Service Mandates Upward Enhancement.

The petitioner-workman was appointed as a wireman by the respondent in 1984.

He was first terminated in 1990, but a Labour Court award in 1998 (Reference No. 125/1991) directed his reinstatement with continuity of service.

He was reinstated on 16.11.1998 but was terminated again on 17.04.2018 without the mandatory notice or notice pay required under Section 25F of the Industrial Disputes Act.

The Labour Court No. 2, Jamnagar, found the termination illegal but, considering the petitioner’s age (66 years), awarded a lump sum compensation of only ₹27,000/- in lieu of reinstatement.

The petitioner challenged this award, seeking a modification of the compensation amount.

1. Whether the lump sum compensation of ₹27,000/- awarded by the Labour Court was just and reasonable given the petitioner's 33 years of service.

2. Whether the compensation should be modified in light of judicial precedents governing lump sum payments in lieu of reinstatement.

The Court applied Section 25B(1) of the Industrial Disputes Act, 1947, regarding the definition of continuous service.

Where reinstatement is not feasible due to the age of the workman, reasonable lump sum compensation must be awarded in lieu of reinstatement and back wages.

The Court followed the scale of compensation established by the Division Bench of the Gujarat High Court in Bhikhabhai Fatabhai Solanki vs. Executive Engineer, Narmada Project Canal System & Anr. (2024), which categorized compensation amounts based on the length of service.

The Court found that the petitioner had established continuous and uninterrupted service since 1984, satisfying the requirements of Section 25B(1).

While the Labour Court correctly determined that reinstatement was inappropriate given the petitioner was 66 years old, the High Court held that the awarded amount of ₹27,000/- was "too meager" and "unreasonable".

Applying the framework from the Bhikhabhai Fatabhai Solanki case—which suggests ₹7.5 lacs for service between 15-20 years—the Court reasoned that a workman with over 30 years of service deserved at least that maximum threshold to meet the ends of justice.

The petition was allowed and the award dated 04.11.2023 was modified; the respondent was directed to deposit the amount within six weeks, failing which it attracts interest at 6% per annum from the date of termination (17.04.2018) until realization.