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 1 January 2010.

His services were terminated with effect from 9 December 2019, allegedly in breach of Section 25F of the Industrial Disputes Act, 1947.

The petitioner raised a dispute before the Labour Court, Godhra, after a delay of approximately one year and eight months.

The Labour Court dismissed Reference (LCG) No. 118 of 2021 by order dated 2 September 2025 and did not grant compensation, back wages, or continuity of service.

The petitioner challenged that order before the Gujarat High Court and sought full back wages with interest and continuity of service.

His total period of service was calculated as nine years and eleven months; after deducting the delay in raising the reference, the relevant period was eight years and three months.

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 be an appropriate relief despite the alleged breach of Section 25F of the Industrial Disputes Act

Whether the delay of one year and eight months in raising the reference was required to be deducted while computing the petitioner’s qualifying period of service for determining lump-sum compensation

Whether the petitioner was entitled to compensation under the compensation slabs formulated by the Division Bench in Letters Patent Appeal No. 908 of 2023 and allied matters, decided on 18 April 2024

The Court applied the principle that reinstatement with back wages is not an automatic consequence of an illegal termination or breach of Section 25F of the Industrial Disputes Act; monetary compensation may be awarded instead, particularly in the case of daily-wage employees.

It relied on Bhopal v. Santosh Kumar Seal, (2010) 6 SCC 773, and Jagbir Singh v. Haryana State Agricultural Marketing Board, (2009) 15 SCC 327, for the proposition that compensation may replace reinstatement and back wages; Rajasthan Development Corporation v. Gitam Singh, (2013) 5 SCC 136, for considering the nature and length of daily-wage employment; Uttaranchal Forest Development Corporation v. M.C. Joshi, (2007) 9 SCC 353; and BSNL v. Bhurumal, (2014) 7 SCC 177, regarding compensation in lieu of reinstatement.

The Court followed the Division Bench’s formula under which, after deducting the period attributable to delay in raising the reference, compensation of ₹3 lakh is payable for 5–10 years of qualifying service, ₹5 lakh for 10–15 years, and ₹7.5 lakh for 15–20 years.

The Court treated the petitioner as a daily-wage worker and considered the nature and duration of his engagement, the time elapsed, and the delay in raising the reference.

Following the Division Bench precedent, it held that reinstatement, continuity, and full back wages were not automatic remedies and that lump-sum compensation would meet the ends of justice.

The petitioner had served for nine years and eleven months, but the one-year-and-eight-month delay was deducted for compensation purposes, leaving eight years and three months of qualifying service.

This placed him within the five-to-ten-year slab, entitling him to ₹3 lakh.

The Court expressly proceeded without examining the merits further because the parties accepted that the Division Bench’s approach governed the case.

The Labour Court’s order dated 2 September 2025 was quashed and set aside.

Instead of granting reinstatement, continuity of service, or full back wages, the Court directed respondent No. 1 to pay the petitioner ₹3 lakh as lump-sum compensation within four weeks from receipt of the order.

In default, the amount would carry interest at 9% per annum.