Legal Recourse For Illegal Termination And Recovery Of Salary Due By The Employee

Q & A

To whom applicable:

  1. Employer- Person or organization that employs someone.
    1. Establishments – a term which encompasses all employers;
    2. Factories – a term which typically encompasses manufacturing units.
  2. Employee- Person employed for salary or wages.
    1. Person employed by another person or organization for wages or salary
    2. workmen[1], whose primary role is not to supervisory, managerial or administrative.
  3. Legal heir or representative of the employee.

Illegal Termination:

Termination of an employee refers to an end of the employee’s work with the company. The termination may be by the employee’s own will or by the decision made by the employer.

Illegal termination: Generally, the employer is required to give reasonable cause for dismissal of an employee. The notice period and opportunity to be heard is also to be provided for terminating the employee. If the termination is made without reasonable cause, or procedures specified in the employment contract or the respective legislation, the termination is illegal.

A contract of private employment is not similar to the public employment and in such private employment there is no scope of applicability of the principles of administrative law/public law.[2]  A public employment is protected as an employment with a State or an arm of State as per Article 12 of the Constitution of India. An employment in private sector is governed by the terms and conditions of employment, and unless the termination is shown to be violation of the terms and conditions of employment, it cannot be said that the termination is illegal.[3]

Termination of the employee made by the employer is considered as illegal for the following reasons:

  1. Violation of Contract: Employment contract is an agreement between the employer and the employee made in accordance with the Contracts Acts, 1972. If the termination is made by the employer violating the contract of employment, then the termination is illegal.
  2. Reasons related to maternity or pregnancy: In addition to Maternity Benefit Act, there are several other Acts which provide maternity benefits for pregnancy. Pregnant female employees are not to be dismissed on account of absence due to their pregnancy.
  3. Discrimination: If the termination of an employee is based on religion, race, caste, sex, etc., then the termination is considered to be an illegal one. As it is one of the basic rights guaranteed under the Constitution of India, it would amount to violation of basic right of an individual.
  4. Other reasons: If the dismissal is made due to some personal grudge or personal dispute or any other reasons by the employer towards the employee, then the dismissal is illegal.

Recovery of salary due by the employee:

An employee when terminated, if there is any amount due to be paid by the employer for the course of employment, then he is entitled to claim such amount due from the employer. An application by the employee or any person authorized by him or in case of death of the employee, his legal heir can be made for recovering the amount due.

Legal Remedies:

  1. Complaint to Grievance committee: A simple step for illegal termination and recovery of salary due on part of the employee is by sending a letter addressing the problems or issues faced by the employee, to the concerned committee of the Company or to the HR department.
  2. Labour commissioner/ Labour Court: A legal recourse start by sending legal notice. The notice is to be sent to the employer consisting of the whole issue in descriptive terms and signed by a lawyer. The Labour commissioner can resolve the dispute between the employer and the employee. If the Labour Commissioner fails to resolve the issue, then the employee can approach the Labour Court.
  3. Civil Suit: A suit by the employee against the employer can be filed in the Court of Law in accordance with the Civil Procedure Code, 1908.
  4. Arbitration: Arbitration is a process of resolving a dispute outside court. If the parties prefer or if there is any specific provision in the employment contract for resolving the dispute by way of arbitration, then the issues can be solved by the process of arbitration.

Relevant Statutes and its provisions:

  1. Industrial Disputes act, 1947: Section 25F deals with Condition precedent to retrenchment of workmen. It states that any person, who has been employed for not less than a year, is required to be provided with one month’s notice with reasons for termination in writing and the workman has to be paid for that month.
  2. Industrial Disputes Act, 1947: Section 33C deals with the Recovery of money due from an employer. It states that the employee or his legal heirs or any other person authorized by him can make an application to the appropriate government. The appropriate government if satisfied, makes a certificate to the Collector. If any question arises for computing the amount of money, the Labour Court shall decide and forward the same to the Collector.
  3. Factories Act, 1948: Section 82 deals with the Mode of recovery of unpaid wages. It state that any sum of required to be paid by the employer shall be recoverable as delayed wages under provisions of Payment of wages Act, 1936.
  4. Minimum Wages Act, 1948: Section 20 of the act deals with the claims that can be dealt by the Authority for any payment of amount due to the employee.
  5. Payment of Wages Act, 1936: Section 15 deals with the Claims arising out of deductions from wages or delay in payment of wages and penalty for malicious or vexatious claims. The employee can approach the payment of Wages Authority in case of delayed payment of wages.
  6. Tamil Nadu Shops and Establishment Act: Section 2(18) of the Act deal with the definition “wages” which states that it also includes any sum payable to such person by reason of termination of his employment.
  7. Industrial Disputes Act, 1947: Section 17B – Payment of full wages to workman pending proceedings in higher courts. In case of pendency of proceedings in High Court or Supreme Court against any award passed by the Labour Court, Tribunal or National Tribunal, the employer is liable to pay the workman full wages last drawn by him.
  8. The Contract Labour (Regulation and Abolition Act, 1970): Section 21 – Responsibility for payment of wages: It states that the contractor is responsible for any payment of wages. If he fails to pay within the prescribes time or makes short payment, then the principle employer is liable to pay the amount to the employee either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor.

Relevant case laws:

In Raj Kumar Dixit v. M/s. Vijay Kumar Gauri Shanker, Kanpur Nagar[4], where the employment is not a public employment. The termination of the employee worked from 1994 to 2001 was held to be illegal and the employee was compensated with rs. 2 lakhs in lieu of reinstatement with 50% of back wages.

In Mohan Lal Vs. Management of M/s. Bharat Electronics Ltd.[5], it was held that in case of illegal termination of service, worker is deemed to be continuing in service and is entitled to reinstatement with full back wages.

In Harjinder Singh vs Punjab State Warehousing Corporation[6], and Devindar Singh vs Municipal Council, Sanaur[7], the Court held that if the disengagement is held illegal, reinstatement and not compensation in lieu of reinstatement would follow.

Similarly, in last few years, it has been consistently held that relief by way of reinstatement with back wages is not automatic even if termination of an employee is found to be illegal or is in contravention of the prescribed procedure and that monetary compensation in lieu of reinstatement and back wages in cases of such nature may be appropriate.[8]

In Nithyanand M. Joshi v. Life Insurance Corporation of India,[9] it was held that Subsection (1) of Section 33 deals with an employer under a settlement or an award or under the provisions of Chapter V-A, while subsection (2) deals with case where a workman is entitled to receive from the empoyer any money or any benefit which is capable of being computed in terms of money.

But in Jagbir Singh v. Haryana State Agriculture Marketing Board and Anr[10], it was held that compensation instead of reinstatement has been held to meet the ends of justice.

Therefore, there is no hard and fast rule principle that on the termination of service being found to be illegal, the normal rule is reinstatement with back wages and instead the Labour Court can award compensation. The same view was followed by this Court in Haryana State Electronics Development Corpn. Ltd. v. Mamni.[11]

In case of daily wage worker, if the termination was found to be illegal, namely in violation of Section 25F of the Industrial Disputes Act, instead of reinstatement, monetary compensation is considered to meet the ends of justice.

Category:

  1. Labour Law.
  2. Employment Law.
  3. Contract Law.