Lump-sum compensation in lieu of reinstatement is appropriate for illegal termination after eight years of service.

The respondent-workman served as a Watchman in the petitioner’s department for eight years with a monthly wage of Rs. 4,000/-.

He alleged illegal oral termination on 20.12.2015 and filed a claim before the Labour Court, Valsad.

The State contested the claim, asserting that the work was seasonal/grant-based, no permanent post existed, and the workman had not completed 240 days of service in a year.

On 20.02.2024, the Labour Court partly allowed Reference (LCV) No. 135 of 2016, granting 50% compensation in lieu of reinstatement and consequential benefits.

The State challenged this award via the present writ petition.

Whether the Labour Court's award of 50% compensation in lieu of reinstatement was legally sustainable despite the State's contention regarding the nature of work and the 240-day rule.

Whether the dispute warranted a modification of the award to a lump-sum compensation to subserve the interests of justice.

The Court applied the provisions of the Industrial Disputes Act, 1947.

It relied on the precedent set by the Hon'ble Supreme Court in *Maharashtra State Cooperative Marketing Federation Limited v. Suresh S/o Dadarao Gadge* (2015) 4 SCC 542, which supports awarding lump-sum compensation in lieu of reinstatement in specific circumstances.

Additionally, the Court followed the Division Bench of the Gujarat High Court’s formula from *Letters Patent Appeal No. 908 of 2023*, which categorized lump-sum compensation based on the length of service (specifically Rs. 3.00 lacs for 5 to 10 years of service).

The Court noted that while the Labour Court found the termination irregular, the State's arguments regarding the non-permanent nature of the work and availability of grants carried weight.

However, the State failed to effectively rebut the workman’s evidence of long-term service.

To balance the equities—considering the workman's eight-year tenure, the nature of his appointment, and the significant time elapsed since termination—the Court determined that reinstatement or a percentage-based award was inappropriate.

Following the structured compensation table established by recent Division Bench rulings for similarly situated workmen, the Court found that a fixed lump-sum amount would provide a final settlement and resolve the litigation.

It held that instead of 50% compensation/reinstatement benefits, the respondent-workman is entitled to a lump-sum compensation of Rs. 3,00,000/- as a full and final settlement of all dues.

The State was directed to pay this amount via RTGS/NEFT within eight weeks of receiving the order.

Rule was made absolute to this extent.