Compensation in lieu of reinstatement enhanced to ₹2 lakh for four years’ daily-wage service.

The appellant was employed as a Beldar/daily-wager in the Irrigation Department on 02.01.1986 and was allegedly terminated on 01.12.1989, after approximately four years of service.

He was earning Rs.630 per month at termination.

He alleged violation of Sections 25-F, 25-G and 25-H of the Industrial Disputes Act, 1947, on the grounds that the statutory retrenchment requirements were not followed, juniors were retained, and fresh appointments were made without offering him re-employment.

The Labour Court, Gurdaspur, accepted the reference and awarded reinstatement with continuity of service and 50% back wages on 19.05.1999, drawing an adverse inference against the Management for non-production of relevant records.

In the Management’s writ petition, the learned Single Judge, by judgment dated 11.09.2024, substituted reinstatement with compensation of Rs.1,00,000.

The workman appealed, seeking enhancement of compensation.

Whether the compensation of Rs.1,00,000 awarded in lieu of reinstatement was inadequate and required enhancement, considering the appellant’s length of service, wages and nature of employment.

Whether, in the circumstances of the case, monetary compensation rather than reinstatement was the appropriate relief for the illegal termination of the daily-wage workman.

The Court applied Sections 25-F, 25-G and 25-H of the Industrial Disputes Act, 1947, which respectively require compliance with retrenchment conditions, adherence to the “last come, first go” principle, and preference in re-employment to retrenched workmen.

It held that there is no straitjacket formula for determining compensation in lieu of reinstatement; relevant factors include the nature and mode of appointment, wages at termination and length of service.

Relying on BSNL v. Bhurumal, as quoted in State of Uttarakhand v. Raj Kumar, the Court applied the principle that reinstatement with back wages is not automatic where a daily-wage worker’s termination is illegal only because of procedural non-compliance with Section 25-F; monetary compensation may instead meet the ends of justice.

It also considered Ranbir Singh v. Executive Engineer, PWD, where Rs.3.25 lakh was awarded to a workman who had served for approximately eight years.

The exception that reinstatement may ordinarily be appropriate where unfair labour practice or retention/regularisation of juniors is established was also noted.

The Court treated the appellant as a daily-wage workman who had served for nearly four years and whose last drawn wages were Rs.630 per month.

Although the Labour Court had found violations of Sections 25-F, 25-G and 25-H, the appeal was confined to the adequacy of compensation, and the Court accepted compensation in lieu of reinstatement as the appropriate remedy after the substantial lapse of time and in view of the appellant’s daily-wage status.

Applying the factors of length of service, wages and nature of employment, and comparing the case with Ranbir Singh, the Court concluded that Rs.1,00,000 was inadequate.

It quantified compensation at Rs.50,000 for each year of the appellant’s approximately four years of service, resulting in Rs.2,00,000.

The judgment dated 11.09.2024 was modified, and compensation in lieu of reinstatement was enhanced from Rs.1,00,000 to Rs.2,00,000.

The respondents were directed to pay the enhanced amount within two months from 31.08.2026; failing payment within that period, the amount would carry interest at 6% per annum from the date of judgment until realization.

The Letters Patent Appeal and pending miscellaneous application(s) were disposed of accordingly.