Illegally terminated daily wagers may receive lump-sum compensation instead of reinstatement and back wages.

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 provisions of the Industrial Disputes Act, 1947. The petitioner raised a dispute before the Labour Court, Godhra, but the reference was dismissed by judgment dated 2 September 2025 in Reference (LCG) No. 117 of 2021. Before the High Court, he sought quashing of the Labour Court’s decision and grant of reinstatement-related reliefs, including full back wages with 18% interest and continuity of service.

The petitioner alternatively relied on the Division Bench’s decision dated 18 April 2024 in Letters Patent Appeal No. 908 of 2023 and allied matters, under which lump-sum compensation could be granted instead of reinstatement, back wages and continuity of service. The State contended that the petitioner was only a daily-wage worker and that there was delay of approximately two years and four months in raising the reference, but acknowledged the applicability of the Division Bench’s approach.

The petitioner had approximately 14 years of service. After deducting the period of delay in raising the reference, the High Court treated the qualifying period for compensation as 11 years and 8 months.

1. Whether the Labour Court’s refusal to grant relief to the petitioner, whose services were allegedly terminated in breach of the Industrial Disputes Act, warranted interference by the High Court?

2. Whether, instead of reinstatement, continuity of service and back wages, the petitioner was entitled to lump-sum compensation having regard to his status as a daily-wage worker, length of service and delay in raising the reference?

3. Whether the petitioner’s 14 years of service, after deducting approximately two years and four months’ delay, placed him within the 10–15 years’ category attracting compensation of ₹5 lakh?

The Court applied the principle that reinstatement and back wages do not automatically follow merely because termination is found to be illegal or contrary to the procedure prescribed under the Industrial Disputes Act, including Sections 25F, 25G and 25H.

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 that monetary compensation may be appropriate in lieu of reinstatement and back wages, particularly in cases involving daily-wage workers, non-permanent employment, the nature and manner of appointment, length of service, lapse of time and delay in raising the dispute.

The Court also followed the Gujarat High Court Division Bench’s compensation formula in Letters Patent Appeal No. 908 of 2023 and allied matters, under which, after deducting the period attributable to delay, compensation was fixed at ₹3 lakh for 5–10 years, ₹5 lakh for 10–15 years and ₹7.5 lakh for 15–20 years of service.

The Court noted that the petitioner was a daily-wage worker and that reinstatement with back wages was not an automatic remedy, even assuming non-compliance with the Industrial Disputes Act.

Applying the Division Bench’s approach, it considered the petitioner’s total service of approximately 14 years but deducted the period of delay in raising the reference, stated to be two years and four months. This resulted in 11 years and 8 months of service for compensation purposes, placing the petitioner within the 10–15 years’ bracket under the prescribed formula.

The High Court therefore followed the established compensation-based approach without examining the merits of the termination in detail, particularly because the State had not seriously opposed relief on that basis.

The claim for reinstatement, continuity of service and full back wages was not granted. If payment was not made within the stipulated period, the outstanding amount would carry interest at 9% per annum.