Illegal Termination Over Three Decades Entitles Superannuated Workers to Enhanced Lump Sum Compensation in Lieu of Reinstatement

The petitioners were employed by the respondent University since 1985 and 1980

Their services were terminated on 08.06.1987 without prior notice, notice pay, or retrenchment compensation

The petitioners alleged this was a malafide reaction to their demands for higher salary

They approached the Labour Court, Anand, in Reference (LCA) No. 414 of 1987. The Labour Court held the termination illegal but granted only nominal compensation (Rs. 614 and Rs. 3,488 respectively) under Section 25F of the Industrial Disputes Act, refusing reinstatement or back wages

The petitioners challenged this award via Article 226/227, though they abandoned the prayer for reinstatement during pendency as they reached the age of superannuation

1. Whether the termination of the petitioners’ services was in violation of the statutory requirements of the Industrial Disputes Act, 1947

2. Whether the compensation awarded by the Labour Court was adequate and just in lieu of reinstatement, considering the illegality of the termination

Section 25F of the Industrial Disputes Act, 1947, which mandates the payment of retrenchment compensation and one month's notice (or wages in lieu) for any workman who has been in continuous service for not less than one year

precedent set by the Hon’ble Division Bench in Bhikhabhai Fatabhai Solanki vs. Executive Engineer, Narmada Project Canal System (LPA No. 908 of 2023), which established specific guidelines for awarding lump-sum compensation in lieu of reinstatement, particularly where a significant period has elapsed or the employee has reached superannuation

The Court found that the petitioners successfully proved, via uncontroverted salary slips, that they had completed more than 240 days of service in the twelve months preceding their termination

Consequently, the respondent's failure to issue notice or pay retrenchment compensation constituted a clear violation of Section 25F

While the Labour Court correctly identified the termination as illegal, it erred in granting a negligible amount of compensation that was deemed 'unreasonable' and 'inadequate' given the petitioners’ years of service (approximately two and seven years respectively)

Since reinstatement was no longer feasible due to superannuation, the Court applied the Bhikhabhai framework to determine that a lump-sum award was the appropriate remedy to meet the ends of justice

It held that the original compensation was inadequate and directed the respondent University to pay enhanced lump-sum compensation of Rs. 2,00,000/- to Petitioner No. 1 and Rs. 3,00,000/- to Petitioner No. 2. This payment must be made within 45 days, failing which an interest rate of 6% per annum shall apply from the date of the original award until realization