Bombay HC Finds Accounts Manager Fired During Covid Was A Workman, Replaces Reinstatement With ₹25 Lakh Compensation

In brief

The question

Whether the Respondent was a “workman” within the meaning of Section 2(s) of the Industrial Disputes Act, 1947, having regard to his actual duties and responsibilities.

The court held

The Court upheld the finding that the Respondent was a “workman” and found no reason to disturb the conclusion that his termination was illegal.

It also directed

It modified the Labour Court’s award by directing the employer to pay Rs. 25,00,000 in lieu of reinstatement and backwages within two months; failing payment within that period, the amount would carry interest at 8% per annum from the expiry of the two-month period.

The Respondent was held not entitled to any other service-related benefits.

The petition was partly allowed and disposed of, with no order as to costs.

01Facts

The Respondent was appointed as Manager, Accounts and Finance on 22 July 2019, confirmed in February 2020, and terminated on 3 May 2020 after allegations of misconduct.

¶ 1–4, 6–8, 10–16

The Labour Court held the termination illegal and directed reinstatement with continuity of service and 50% backwages.

¶ 1–4, 6–8, 10–16

The employer challenged the award, contending that the Respondent was not a “workman” under Section 2(s) of the Industrial Disputes Act, 1947.

¶ 1–4, 6–8, 10–16

It also relied on his managerial designation, salary and alleged supervisory responsibilities.

¶ 1–4, 6–8, 10–16

The High Court considered the parties’ evidence concerning his duties and authority, as well as the appropriate relief in light of his short service and remaining working life.

¶ 1–4, 6–8, 10–16

02Issues

i.Whether the Respondent was a “workman” within the meaning of Section 2(s) of the Industrial Disputes Act, 1947, having regard to his actual duties and responsibilities.

¶ 6, 9–13

ii.Whether reinstatement with 50% backwages was appropriate, or whether compensation should be awarded instead.

¶ 14–16

03Law Applied

Section 2(s) of the Industrial Disputes Act, 1947 defines a “workman” by the nature of the work performed—manual, unskilled, skilled, technical, operational, clerical or supervisory—and excludes, among others, persons employed mainly in a managerial or administrative capacity, and certain supervisory employees earning above the statutory wage limit or performing mainly managerial functions.

¶ 9

Designation alone does not determine workman status.

¶ 9

Salary is relevant to the supervisory-capacity exclusion only where employment in a supervisory capacity is established; otherwise, salary is immaterial to that determination.

¶ 9

The Court also applied the principle that, once the Respondent produced evidence that his work was routine and clerical, the employer had to establish that he fell within an excluded managerial, administrative or supervisory category.

¶ 10–12

Provisions in the judgment · 1

Industrial Disputes Act, 1947 Section 2

04Reasoning

The Respondent’s evidence described routine accounting and clerical duties, including bank and sales reconciliations, payment entries, TDS workings and preparation of accounts under instructions from senior officers. The employer did not establish that other employees reported to him or that he could assign work, make service-related decisions, sanction leave, impose discipline or take independent decisions binding the company. The evidence instead indicated that the other employees reported to the Chief Finance Officer. The Court therefore found no basis to classify the Respondent as managerial, administrative or supervisory; his designation and salary did not alter that conclusion.

¶ 10–13

Although the termination was stigmatic and no inquiry had been held to prove the alleged misconduct, the Court considered reinstatement inappropriate given the Respondent’s less-than-one-year service, limited remaining working life and strained relationship with the employer. It substituted lump-sum compensation for reinstatement and backwages.

¶ 14–16