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27 September 2024

Compendium Of Key Labour And Employment Judgments: India (January - June 2024)

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Dentons Link Legal

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Supreme court affirms regularization rights of employees performing permanent service.
India Employment and HR

Part A – Supreme Court Judgements

Supreme court affirms regularization rights of employees performing permanent services

Vinod Kumar and Ors. v. Union of India and Ors. (2024 SCC OnLine SC 1533)

Brief Facts:

The Appellants reached to the Hon'ble Supreme Court against the order of the Hon'ble High Court of Allahabad for regularization of their posts after serving over 25 years as 'Accounts Clerks' under a temporary scheme. The Appellants argued that the nature of work, including continuous service for over 25 years, as well as promotions held by a regularly constituted departmental committee, resonates with the regular employees and not casual or temporary employees.

Findings of The Hon'ble Supreme Court:

The Hon'ble Supreme Court observed that the employment rights should be assessed based on the evolved duties and responsibilities over time, rather than the original temporary terms of their appointment. The uninterrupted service, which mirrored the functions of regular employees, along with a selection and promotion process akin to that for permanent positions, indicated a significant departure from their initial temporary engagement. The absence of any formal reiteration of their temporary status or the specification of employment duration necessitated a re-evaluation of their roles. Consequently, the Hon'ble Supreme Court found that procedural formalities at the beginning of employment cannot indefinitely deny the substantive rights that have been established through prolonged, continuous service. Ignoring the employee's substantial role and ongoing service comparable to that of permanent employees contradicts the principles of equity, fairness, and the intended spirit of employment regulations. Therefore, the Hon'ble Supreme Court upheld the plea for regularization by Appellants.

Employees could be transferred in accordance with terms of the contract

Divgi Metal Wares Ltd. v. Divgi Metal Wares Employees Association and Anr. (2024 SCC OnLine SC 366)

Brief Facts:

Divgi Metal Wares Ltd. operates two factories in Maharashtra and Karnataka, manufacturing automobile gears. The Employee Association, representing the workers, faced a legal challenge when the company transferred 66 workmen from Karnataka to Maharashtra. Despite the terms of appointment and Standing Orders under the Industrial Employment ("Standing Orders") Act, 1946, allowing for such transfers, the workmen did not report to the new location and raised Industrial Disputes. The tribunal ruled the transfers were not malicious, but the Employee Association disagreed, leading to a writ petition and appeal. The Employee Association contended that the Standing Order's transfer clause was the sole permissible basis for employee transfers, and any action beyond this was not allowed.

Findings of The Hon'ble Supreme Court:

The Hon'ble Supreme Court found that the terms of appointment clearly stated that employee services were transferable within the company's departments or offices. It was determined that the Standing Orders could not override the contract of service provisions. The Hon'ble Supreme Court thus held that the employer had the right to transfer employees based on the terms of appointment, and the transfers in question were not made with malice.

Contract labour are eligible for regularization and employment

Mahanadi Coalfields Ltd. v. Brajrajnagar Coal Mines Workers' Union (2024 SCC OnLine SC 270)

Brief Facts:

Mahanadi Coalfields Ltd. faced a legal challenge regarding the regularization of contract workers employed by a coal transport contractor. The Union sought permanent status for these workers, citing an agreement that prohibited engaging contract labour for permanent jobs. Out of 32 workers, only 19 were regularized, leading to a dispute for the remaining 13. The Industrial Tribunal directed their regularization, but Mahanadi Coalfields Ltd. appealed, arguing that the Tribunal lacked authority to grant permanent status and that the work was not perennial.

Findings of The Hon'ble Supreme Court:

The Hon'ble Supreme Court scrutinized the nature of the work performed by the 13 non-regularized workers and found it to be identical to that of the 19 regularized employees. The Hon'ble Supreme Court emphasized that the Tribunal, upon referral from the Central Government, had the authority to examine the matter and grant regularization. It rejected the notion of an 'artificial distinction' made by Mahanadi Coalfields Ltd. between the two groups of workers. The Hon'ble Supreme Court observed that the company did not provide any substantial evidence to differentiate between the tasks performed by the regularized and non-regularized workers. It was clear that all workers were engaged in the same kind of work, which was regular and perennial in nature, and thus, they stood on equal footing. Furthermore, the Hon'ble Supreme Court affirmed that the workers were entitled to back wages, as determined by the Tribunal. This decision was based on the principle that workers engaged in permanent or perennial tasks should not be deprived of the benefits of regularization simply because they were initially hired as contract labour.

Resignation is complete the instance it is accepted

Shriram Manohar Bande v. Uktranti Mandal and Ors. (2024 SCC OnLine SC 647)

Brief Facts:

The Appellant contested a judgment of tribunal that overturned their termination and ordered reinstatement with 50% back wages. The Tribunal had previously declared the termination unlawful and awarded 50% back wages without requiring proof of employment during the interim.

Findings of The Hon'ble Supreme Court:

The Hon'ble Supreme Court affirmed that the acceptance of a resignation by the appropriate authority effectively terminates employment, regardless of communication to the employee. The Hon'ble Supreme Court clarified that once a resignation is accepted by the appropriate authority, the employment is deemed terminated, even if the acceptance is not communicated to the employee. Consequently, the Hon'ble Supreme Court affirmed that the non-communication of acceptance does not invalidate the termination, as the resignation is deemed accepted upon approval by the appropriate authority.

Employer's financial capacity is major factor in fixing wage structure

The VVF Ltd. Employees Union v. M/s. VVF India Ltd. & Anr. (2024 SCC OnLine SC 534)

Brief Facts:

The Employees union filed a review petition against a 2019 judgment, claiming oversight of their demands for allowances. Originating from a 2008 charter, they sought revised wages and allowances, which the Tribunal partially granted in 2014, including Medical Allowance. The Hon'ble Bombay High Courts set aside the Tribunal's Award on a few demands and held the decision for the rest of the demands. The key issue in the matter was Whether the financial capacity of the employer is a relevant factor in fixing wage structures.

Findings of The Hon'ble Supreme Court:

The Hon'ble Supreme Court highlighted the 'industry-cum-region test' as a standard for wage revision, which necessitates comparing wages with similar units in the region. However, it stressed the employer's financial capacity as a key factor in this comparison. Citing cases like A.K. Bindal v. UOI and Mukand Ltd. v. Mukand Staff & Officers' Assn., the Hon'ble Supreme Court noted the importance of considering the employer's financial health when setting wages. The Hon'ble Supreme Court observed that the employer's financial status was not properly evaluated, despite evidence to the contrary. Consequently, the Hon'ble Supreme Court overturned the Hon'ble High Court's decision, affirming that the employer's financial capacity cannot be overlooked when applying the industry-cum-region test to determine wage revisions and allowances.

Access the complete compendium here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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