Lump-sum compensation may replace reinstatement and back wages for illegally terminated daily-wage workers.

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.

He raised a reference before the Labour Court, Godhra, after a delay of approximately two years and two months. The Labour Court dismissed Reference (LCG) No.96 of 2021 by order dated 2 September 2025. The petitioner challenged that order before the High Court and sought reinstatement-related reliefs, including full back-wages, 18% interest and continuity of service.

The respondent contended that the petitioner was only a daily-wage worker and relied on the delay in raising the reference. It nevertheless accepted that the Division Bench, in its common order dated 18 April 2024 in Letters Patent Appeal No.908 of 2023 and allied matters, had awarded lump-sum compensation 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 constitute appropriate relief?

Whether the delay of approximately two years and two months in raising the reference was required to be deducted from the petitioner’s total length of service for determining the quantum of lump-sum compensation?

Whether, after such deduction, the petitioner was entitled to compensation under the slab prescribed by the Division Bench?

The Court applied the principle that reinstatement with back-wages is not an automatic consequence of an illegal termination, including where there is a breach of Sections 25F, 25G or 25H of the Industrial Disputes Act.

In appropriate cases, particularly involving daily-wage workers, monetary compensation may be granted instead of reinstatement and back-wages.

The Court relied 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, which recognise factors such as the nature and manner of appointment, status as a daily wager, length of service, the time elapsed since termination and delay in raising the dispute.

Following the Division Bench’s order dated 18 April 2024 in LPA No.908 of 2023 and allied matters, the Court applied the compensation scale of Rs.3 lakh for 5–10 years, Rs.5 lakh for 10–15 years and Rs.7.5 lakh for 15–20 years of qualifying service, after deducting the period attributable to delay in raising the reference.

The petitioner’s service from 2005 until termination on 1 May 2019 amounted to approximately 14 years. Although the petitioner claimed violation of the Industrial Disputes Act, the Court held that reinstatement and back-wages were not automatic, particularly since the respondent treated him as a daily-wage employee and the reference had been delayed.

Applying the Division Bench’s approach, the Court deducted the delay of two years and two months from the petitioner’s total service. This resulted in 11 years and 10 months of qualifying service, placing the petitioner within the 10–15 year compensation bracket.

The Court therefore adopted the Division Bench’s precedent and granted compensation without entering into the merits of the underlying termination dispute.

The amount was directed to be paid within four weeks from receipt of the order. In default, the amount would carry interest at 9% per annum. The petitioner was not granted full back-wages, continuity of service or 18% interest.