Illegal termination of daily wagers does not automatically warrant reinstatement and back wages; lump-sum compensation may suffice.

The petitioner worked as a gardener with respondent No. 1 from 1 November 1992. His services were first terminated on 1 September 2010; pursuant to an earlier reference, he was reinstated with continuity of past service. His services were again terminated on 1 October 2016.

The petitioner contended that the termination violated Section 25F of the Industrial Disputes Act, 1947. The Labour Court, Nadiad, in Reference (LCN) No. 29 of 2019, partly allowed the claim and awarded lump-sum compensation of ₹20,000 in lieu of back-wages and continuity of service.

The petitioner challenged the Labour Court’s order and sought full back-wages, continuity of service, and 18% interest.

The State contended that the petitioner was a daily-wage worker and that there was a delay of approximately two years and seven months in raising the reference.

During the writ proceedings, the petitioner relied on the Division Bench decision dated 18 April 2024 in Letters Patent Appeal No. 908 of 2023 and allied matters, which prescribed lump-sum compensation based on length of service, after deducting the period of delay in raising the reference.

Whether the petitioner, a daily-wage worker whose termination was alleged to be contrary to Section 25F of the Industrial Disputes Act, was entitled to reinstatement, continuity of service, and full back-wages, or whether lump-sum compensation was an appropriate relief?

Whether the amount of compensation should be determined by deducting the period of delay in raising the reference from the petitioner’s total length of service?

Whether the Labour Court’s award of ₹20,000 should be enhanced in light of the Division Bench’s compensation framework?

The Court applied Section 25F of the Industrial Disputes Act, 1947, while recognising that breach of the retrenchment procedure does not automatically require reinstatement with back-wages.

Relying on Bhopal v. Santosh Kumar Seal, Jagbir Singh v. Haryana State Agriculture Marketing Board, Rajasthan Development Corporation v. Gitam Singh, Uttaranchal Forest Development Corporation v. M.C. Joshi, and BSNL v. Bhurumal, the Court held that compensation may be substituted for reinstatement depending on factors such as the worker’s daily-wage status, nature and manner of appointment, length of service, time elapsed since termination, and delay in raising the dispute.

It also applied the Division Bench’s framework in LPA No. 908 of 2023 and allied matters, under which compensation was fixed at ₹3 lakh for 5–10 years of qualifying service, ₹5 lakh for 10–15 years, and ₹7.5 lakh for 15–20 years, after deducting the period attributable to delay in raising the reference.

The Court accepted that the petitioner had approximately 24 years of total service, but treated him as a daily-wage worker and considered the delay of two years and seven months in raising the reference.

Applying the Division Bench’s approach, the Court deducted the delay from the total service, resulting in approximately 21 years and five months of qualifying service for compensation purposes.

Since reinstatement and full back-wages are not automatic remedies for an illegally terminated daily-wage worker, and since the applicable precedent favoured monetary compensation in appropriate circumstances, the Court declined to grant the relief of full back-wages and continuity of service.

As the qualifying service exceeded 20 years, the Court treated ₹7.5 lakh as appropriate lump-sum compensation under the framework adopted from the Division Bench decision.

The previously awarded ₹20,000 was directed to be adjusted against that amount.

The Labour Court’s award was modified by enhancing the lump-sum compensation from ₹20,000 to ₹7,50,000.

If the earlier amount of ₹20,000 had already been paid, respondent No. 1 was directed to pay the petitioner the balance amount of ₹7,30,000; if it had not been paid, the respondent was directed to pay the full ₹7,50,000.

Payment was to be made within four weeks of receiving a copy of the order.

In case of default, the outstanding amount would carry interest at 9% per annum from expiry of the four-week period until realisation.