Enhancement of Lump-Sum Compensation for Daily Wager Terminated After Thirty-Five Years of Continuous Service

The petitioner joined the respondent Corporation as a Daily Wager-Peon on July 1, 1986.

His services were first terminated in 1987, but he was reinstated with continuity of service in 2002 following a Labour Court order upheld by the High Court.

On January 31, 2021, his services were terminated again without written orders, notice, or retrenchment compensation.

The Labour Court found the termination illegal but, noting the petitioner was nearing superannuation and the Corporation was being wound up, awarded a lump-sum compensation of ₹1,25,000/- in lieu of reinstatement.

The petitioner moved the High Court seeking enhancement of this compensation.

1. Whether the lump-sum compensation of ₹1,25,000/- awarded by the Labour Court was adequate considering the petitioner’s 35 years of service.

2. Whether the winding up of the respondent Corporation justifies a lower compensation amount.

Section 25F of the Industrial Disputes Act, 1947, which mandates notice and retrenchment compensation for the termination of a workman who has been in continuous service for one year.

The precedent set by the Hon’ble Division Bench of the Gujarat High Court in Bhikhabhai Fatabhai Solanki v. Executive Engineer, Narmada Project Canal System Another (LPA No. 908 of 2023), which established a graduated scale for lump-sum compensation based on the length of service: ₹3 lakhs for 5–10 years, ₹5 lakhs for 10–15 years, and ₹7.5 lakhs for 15–20+ years.

The Court observed that the respondent admitted the petitioner worked continuously from 1986 to 2021 (35 years) and that the mandatory procedures under Section 25F of the ID Act were ignored.

While the respondent argued for lower compensation due to the Corporation’s winding up and the petitioner’s age (58 years), the Court rejected these as grounds for rendering "meager" compensation.

Applying the Bhikhabhai Fatabhai Solanki framework, the Court reasoned that since the petitioner served significantly more than 20 years, he falls into the highest bracket of compensation.

The Court calculated that for 35 years of service, a sum of ₹7,50,000/- is just and reasonable.

Having already received ₹1,25,000/-, the respondents were directed to pay the remaining balance of ₹6,25,000/- within eight weeks, failing which an interest rate of 6% per annum would apply from the date of the original award (December 21, 2023) until realization.