Daily-Wage Workers Out Of Work For Over 20 Years Get Compensation, Not Reinstatement; MP HC Sets ₹1.5 Lakh Per Year Worked

In brief

The question

1. Whether reinstatement was appropriate relief for the respondents’ termination in violation of Section 25-F, given their daily-wage status and the long period out of service.

The court held

The Court held that the Single Judge erred in directing reinstatement and that the respondents were entitled to monetary compensation instead.

It also directed

The writ appeals were partly allowed: the reinstatement relief was displaced, compensation was enhanced at ₹1.5 lakh per year of service, calculated pro rata for any part-year, and was directed to be paid within three months.

01Facts

The respondents were daily-wage workers whose services had been terminated.

¶ 4, 11

The Labour Court found violations of Section 25-F of the Industrial Disputes Act, 1947, and awarded compensation in some cases and reinstatement in others.

¶ 4, 11

On the workers’ writ petitions, the Single Judge set aside the Labour Court awards and directed reinstatement.

¶ 5

The employers appealed.

¶ 6

The respondents had not been reinstated by the time the appeals were considered and had been out of service for more than two decades.

¶ 6

02Issues

i.1. Whether reinstatement was appropriate relief for the respondents’ termination in violation of Section 25-F, given their daily-wage status and the long period out of service.

¶ 6, 12–13

ii.2. Whether monetary compensation should be granted instead, and, if so, whether the compensation should be enhanced.

¶ 13, 19–20

03Law Applied

Section 25-F of the Industrial Disputes Act, 1947, requires compliance with prescribed conditions before retrenchment; its breach does not, by itself, make reinstatement with back wages an automatic remedy.

¶ 13–18

The Court relied on the principle in U.P. State Brassware Corpn. Ltd. v. Uday Narain Pandey, Jagbir Singh v. Haryana State Agriculture Marketing Board, Assistant Engineer, Rajasthan Development Corporation v. Gitam Singh, and Bharat Sanchar Nigam Ltd. v. Bhurumal, among other authorities, that relief must be moulded to the circumstances and that lump-sum compensation may be appropriate for short-term or daily-wage workers, particularly where substantial time has elapsed.

¶ 13–18

It also applied the Supreme Court’s direction in Amit Kumar Dubey v. M.P.P.K.V.V. Co. Ltd. that compensation be calculated at ₹1.5 lakh per year of service, pro rata for a part-year.

¶ 19

Provisions in the judgment · 3 · Linked ones open on LawLens

Life Insurance Corporation Act, 1956 Section 23 Section 48 Section 49

04Reasoning

The Court treated the respondents’ daily-wage employment, limited periods of service, and absence from employment for more than two decades as making reinstatement inappropriate; it considered that reinstatement in those circumstances would not serve a useful purpose.

¶ 12–13, 15–18

Applying the principle that Section 25-F violations do not invariably require reinstatement, the Court concluded that compensation was the appropriate remedy.

¶ 13–18

It further found that the compensation should be enhanced in accordance with the formula stated in Amit Kumar Dubey.

¶ 19–20