For daily wagers, lump-sum compensation may replace reinstatement, with reference delay deducted from service.

The petitioner worked as a Gardener with respondent No. 1 from 2005. His services were terminated with effect from 1 May 2019, allegedly without compliance with the Industrial Disputes Act, 1947.

The petitioner raised a reference before the Labour Court after a delay of approximately two years and two months. The Labour Court, Godhra, dismissed Reference (LCG) No. 97 of 2021 by order dated 2 September 2025.

The petitioner challenged that order before the High Court and sought reinstatement, continuity of service, full back wages and interest.

During the hearing, he alternatively relied on the Gujarat High Court Division Bench’s decision dated 18 April 2024 in Letters Patent Appeal No. 908 of 2023 and allied matters, which granted lump-sum compensation in lieu of reinstatement and back wages in comparable cases.

Whether, in the circumstances of the case, the petitioner was entitled to reinstatement, continuity of service and full back wages, or whether lump-sum compensation would be an appropriate relief.

Whether the petitioner’s delay of approximately two years and two months in raising the reference should be deducted while calculating the period of service relevant for determining lump-sum compensation.

Whether the petitioner was entitled to compensation under the scale prescribed by the Division Bench in Letters Patent Appeal No. 908 of 2023 and allied matters.

The Court applied the principle that even where termination of a daily-rated workman violates the statutory retrenchment procedure under Sections 25F, 25G and 25H of the Industrial Disputes Act, 1947, reinstatement and back wages are not automatic; monetary compensation may be awarded depending on the nature and manner of appointment, length of service, delay, and the time elapsed since termination.

Relying on Bhopal v. Santosh Kumar Seal, (2010) 6 SCC 773; Jagbir Singh v. Haryana State Agriculture Marketing Board, (2009) 15 SCC 327; Rajasthan Development Corporation v. Gitam Singh, (2013) 5 SCC 136; Uttaranchal Forest Development Corporation v. M.C. Joshi, (2007) 9 SCC 353; and BSNL v. Bhurumal, (2014) 7 SCC 177, the Court recognised compensation in lieu of reinstatement as an appropriate remedy for daily-wage workers in suitable cases.

The Division Bench’s applicable compensation scale was: 5–10 years’ service—₹3 lakh; 10–15 years—₹5 lakh; and 15–20 years—₹7.5 lakh.

The period attributable to delay in raising the reference could be deducted from the total service period for this purpose.

The petitioner had approximately 14 years of service, but he was a daily-rated worker rather than a regular employee. Applying the established principle that reinstatement is not an automatic consequence of an illegal termination, the Court considered lump-sum compensation to be the appropriate relief.

Although the petitioner’s total service was 14 years, the Court deducted the two years and two months’ delay in raising the reference, leaving 11 years and 10 months for calculating compensation.

Since this period fell within the 10–15 years bracket under the Division Bench’s scale, the petitioner was held entitled to ₹5 lakh.

The Court did not undertake an independent determination of the merits of the termination and instead granted relief in terms of the Division Bench’s precedent, with the consent or absence of serious objection from the State.

The Labour Court’s order dated 2 September 2025 dismissing the reference was quashed and set aside.

The respondent No. 1 was directed to pay the petitioner lump-sum compensation of ₹5 lakh within four weeks from receipt of the High Court’s order.

In default, the amount would carry interest at 9% per annum.

The claims for reinstatement, continuity of service and full back wages were not granted.