'Denial of back wages would amount to indirect punishment': Allahabad HC upholds Labour Court's order for workman's reinstatement

The Allahabad High Court recently upheld the decision of a Labour Court whereby a sacked workman in the Department of Irrigation had been directed to be reinstated along with payment of 50% of back-wages.

Court referred to the decision of the Supreme Court in Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya and Others (2013) wherein it had been held that "denial of back wages to an employee, who has suffered due to an illegal act of the employer would amount to indirectly punishing the concerned employee".

The case pertains to a workman who worked regularly at Camp Dhawak for the Department of Irrigation since October 1988. On the 1st day of 1991, he was orally informed about his termination. The man was even refused payment of salary for the 9-month period between March and December 1990. He then filed a case regarding it before the Controlling Authority, Deoria under the Payment of Wages Act.

Regarding the method of his termination, the workman submitted that his termination did not stand the test of Sections 6-N, 6-P and 6-Q and Rule 42 of the U.P. Industrial Disputes Act, 1947. He also submitted that his total work period was more than 240 days and he was unemployed since his termination.

Before the Labour Court, the Department of Irrigation said that they could not pay the workman as he had not worked during the said period. Department said that the workman used to work as a daily wage labourer and his payment was based on work he did. Both parties submitted muster rolls, though the one produced by the department was found to be constricted.

The Labour Court ordered the department to reinstate the worker along with 50% of back-wages. It was reasoned that even if the workman worked as a daily wage labourer, he had finished the requirement of 240 days of work.

When the matter reached the high court, the department argued that he was just a daily wage employee and had left working himself. According to the department's counsel, even if the case was accepted, the workman's working period was too small so the Labour Court’s order was illegal.

Workman’s counsel argued that even if he is treated as a daily wage workman, Industrial law does not allow for any distinction.

After listening to both sides of the argument, the high court cited multiple Supreme Court judgments to sort out the contentions regarding the right of daily wage and terminated labourers.

Relying on cases namely Krishan Singh case, Jasmer Singh case, R.M. Kellaty case, and Casteribe Rajya Parivahan Karmchari Sanghatana case, the court agreed with workman's counsel’s argument regarding the rights of daily wage labourers. Ratios of these judgments were considered to validate the reinstatement of daily wage workers with back wages.

Dealing with the question of regularization of daily wage workers, the court referred to Hari Nandan Prasad case. In that case, the Apex Court had held that the labour court couldn’t give direction for regularization of daily wage workers based on the number of years they served. The top court had reasoned that such an entry may amount to backdoor entry, which is not in consonance with Article 14 of the Constitution.

“However, wherever it is found that similarly situated workmen are regularized by the employer itself under some scheme or otherwise and the workmen in question who have approached Industrial/Labour Court are at par with them, the direction of regularization in such cases may be legally justified, otherwise, non-regularization of the leftover workers itself would amount to invidious discrimination qua them in such cases and would be violative of Article 14 of the Constitution,” the Top Court had added.

Regarding the award of back wages, the Allahabad High Court referred to Apex Court’s observation in the Rudhan Singh case. The Top Court had held that even if an industrial tribunal finds that termination violated Section 25-F of the act, entire back wages should be awarded. Factors to be considered for it are manner and method of selection and appointment, exchange, nature of the appointment, namely, whether ad hoc, short term, daily wage, temporary or permanent in character, any special qualification required for the job and length of service. In fact, in the Bhuvnesh Kumar Dwivedi case, the Apex Court reversed the high court’s order to grant compensation, the high court noted.

The high court further referred to the Deepali Gundu Surwase case. In that case, the Apex Court had looked deep into the physiological and psychological impact of unemployment on terminated workers and their families. Additionally, the Supreme Court had said that if an action taken by the employer is illegal, the employee is entitled to claim full wages.

“If the employer wants to deny back wages to the employee or contest his entitlement to get consequential benefits, then it is for him/her to specifically plead and prove that during the intervening period, the employee was gainfully employed and was getting the same emoluments. Denial of back wages to an employee, who has suffered due to an illegal act of the employer would amount to indirectly punishing the concerned employee and rewarding the employer by relieving him of the obligation to pay back wages including the emoluments,” the Top Court had added.

However, the court cautioned that no straight-jacket formula can be evolved and payment of back wages having a discretionary element involved in it has to be dealt with, in the facts and circumstances of each case.

Deciding on the case at hand, the Allahabad High Court observed that the workman possessed oral and documentary evidence to back his claims. The same level of consistency was not found with claims and supportive evidence furnished by the Department of Irrigation.

Therefore, the court held that it could be a case where a workman was entitled to 100% back wages. However, it did not interfere with the Labour Court’s award of 50% of back wages.

Case Title: State of U.P and Ors vs. The Labour Court And anr

Statute: U.P. Industrial Disputes Act, 1947