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

The petitioner worked as a Watchman with the Forest Department from approximately 1992 and was treated as a daily-wage workman.

His services were first terminated on 1 September 2010. In proceedings before the Labour Court, Nadiad, the petitioner was reinstated with continuity of past service.

His services were again terminated on 1 October 2016, allegedly without compliance with Section 25F of the Industrial Disputes Act, 1947.

The Labour Court partly allowed Reference (LCN) No. 30 of 2019 and awarded lump-sum compensation of Rs.20,000 in lieu of back-wages and continuity of service.

The petitioner challenged that order before the Gujarat High Court and sought full back-wages, continuity of service, and interest at 18%.

The parties accepted that the issue was governed by the Division Bench’s decision dated 18 April 2024 in Letters Patent Appeal No. 908 of 2023 and allied matters, which substituted lump-sum compensation for reinstatement and back-wages in comparable cases.

Whether the petitioner, a daily-wage Watchman whose services were allegedly terminated in breach of Section 25F of the Industrial Disputes Act, was entitled to reinstatement, continuity of service, and full back-wages, or whether lump-sum compensation was the appropriate relief.

Whether the lump-sum compensation awarded by the Labour Court should be enhanced by applying the compensation framework laid down by the Division Bench, after deducting the period of delay in raising the reference.

The Court applied the principle that breach of Section 25F of the Industrial Disputes Act, 1947 does not automatically require reinstatement with back-wages; monetary compensation may be appropriate depending on the circumstances.

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 recognised that relief for wrongful termination of a daily-wage worker depends on factors including the manner of appointment, nature of employment, length of service, lapse of time, and delay in raising the dispute.

The Court also applied the Division Bench’s compensation framework in LPA No. 908 of 2023: Rs.3 lakh for 5–10 years, Rs.5 lakh for 10–15 years, and Rs.7.5 lakh for 15–20 years of service, after deducting the period attributable to delay in raising the reference.

The principles previously identified in Bantva Municipality v. Amritlal Harji Chauhan—including daily-wage status, absence of a permanent post, nature and duration of employment, appointment method, delay, and the time gap since termination—were also treated as relevant.

The Court accepted that the petitioner was a daily-wage Watchman with approximately 24 years of service, taking into account his past service and the subsequent termination in 2016.

Consistent with the Division Bench’s approach, the Court held that reinstatement and full back-wages were not automatic remedies, particularly given the petitioner’s daily-wage status and the substantial lapse of time.

The petitioner had delayed raising the reference by approximately two years and seven months. That period was deducted from his approximate 24 years of service, resulting in 21 years and 5 months for compensation purposes.

Although this exceeded the highest bracket in the Division Bench’s tabular framework, the Court awarded the corresponding maximum amount of Rs.7.5 lakh and adjusted the Rs.20,000 already awarded by the Labour Court.

If the earlier Rs.20,000 had already been paid, the respondent was directed to pay a further Rs.7.30 lakh; if it had not been paid, the respondent was directed to pay the full Rs.7.50 lakh.

Payment was to be made within four weeks of receipt of the order, failing which the outstanding amount would carry interest at 9% per annum from expiry of that period until realization.