When can an employee or workman seek reinstatement of services in India?

By Simran Nandwani and Moksh Roy

The employment laws in India have classified employees into two categories:?

a.????Workman is generally understood to be an employee who is working in a non-managerial capacity.

b.????Non-Workman is generally an employee who is working in a managerial role etc.

For the purposes of this article, we have analyzed the employment laws applicable in Delhi and Mumbai. Depending on the grievances we recommend the reader to refer to the state-specific employment laws if any.

The employer and employee relationship for a workman and non-workman in Delhi and Mumbai is governed by the following legislations.

Legal Framework

I.?????For workman in Mumbai:

(i) Industrial Disputes Act, 1947

(ii) Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices, 1971

(iii) Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017

II.???For workman in Delhi:

(i) Industrial Disputes Act, 1947

III.?For non-workman in Delhi:

(i) Delhi Shops and Establishment Act, 1954

?IV.?For non-workman in Mumbai:

Mumbai does not have a specific regulation that regulates the services of a non-workman.

These legislations are discussed in depth below:

I. For workman in Mumbai:

(i) Industrial Disputes Act, 1947 (hereinafter referred “ID Act”)

Applicability: It is an act enacted to make provision for the investigation and settlement of industrial disputes, and for certain other purposes.

Section 2 (g), (j) and (s), of the ID Act lays down the definition of an ‘employer’, ‘industry’ and ‘workman’ and it is reproduced below for your reference: -?

“(g) “employer” means,— (i) in relation to an industry carried on by or under the authority of any department of the Central Government or a State Government, the authority prescribed in this behalf, or where no authority is prescribed, the head of the department; (ii) in relation to an industry carried on by or on behalf of a local authority, the chief executive officer of that authority;

(j) “industry” means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen”

(s) “workman” means any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied, and for the purposes of any proceeding under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person—

(i) who is subject to the Air Force Act, 1950 (45 of 1950), or the Army Act, 1950 (46 of 1950), or the Navy Act, 1957 (62 of 1957); or?

(ii) who is employed in the police service or as an officer or other employee of a prison; or?

(iii) who is employed mainly in a managerial or administrative capacity; or?

(iv) who, being employed in a supervisory capacity, draws wages exceeding ten thousand rupees per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.”?

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Private Entity -?Employer under the ID Act

The definition of employer does not clearly specify if a private entity will fall under the ambit of employer under the ID Act. However, the erstwhile Federal Court[1] has opined on the scope of the definition of employer in Western India Automobile Association vs. Industrial Tribunal, Bombay, and Others (1949 SCC OnLine FC 12) and has held as follows:

“As regards the first contention raised on behalf of the Association that the scope of the Industrial Disputes Act, 1947, is only limited to cases of industries or of undertakings carried on by Government or Local authority?and?that it does not include within its scoped industries carried on by private individuals, we have no hesitation in repelling it. The argument on this point is based on the definition of term “employer” given in cl. (g)(i) of s. 2 of the Act, which runs thus:— “‘Employer’ means— (i) in relation an industry carried on by or under the authority of any department of a Government in British?India, the authority Prescribed in this behalf, or where no authority is prescribed, the head of the department;???

…

In the Trade Disputes Act, VII of 1929, this expression was defined in s. 2(c) in the following terms:— “‘Employer’ in the case of any industry, business or undertaking carried on by any department of any Government in British?India, means the authority prescribed in this himself or, where no authority is prescribed, the head of the department.?It was conceded by Mr. Setalvad that the definition given in Act VII of 1929 was a limited definition in relation to Government department only. He, however, urged that the definition had been worded differently therein. The word “means” was not used in the beginning of the definition but was so put in?the context that it clearly indicated that the definition was restricted to businesses or undertakings of departments of Government. In Act XIV of 1947, however, the legislature by saying “‘employer’ means” has made the definition exhaustive. In our judgment, there is no such difference in the meaning of the two definitions given in the Act of 1929?and?in the Act of 1947. In one definition, the word “means” has been used after the industries had been particularized,?and?in the other it has been used in relation to those industries. The words “in relation” used in the definition make the intention of the legislature quite clear?and?they indicate that it was in relation to those particular industries only that the expression “employer” was defined. This interpretation is also consistent with the phraseology employed by the legislature in different sections of the Act. In s. 18 it has been laid down that a settlement arrived at in the course of conciliation proceedings under the Act or an award which was declared by the appropriate Government to be binding shall be binding on all parties to the industrial dispute?and?where a party referred to in clause (a) or cl. (b) is an employer, his heirs, successors or assigns in respect of the establishment to which the dispute relates. It is difficult to apply this provision in the Act to heads of Government department. The manner in which the section is drafted shows that disputes concerning all industrial concerns whether owned by Government or private person were included within the ambit of the Act.?The preamble to the Act gives a wide scope to it, when it says that it is expedient to make provision for the investigation?and?settlement of industrial disputes?and?for certain other purposes thereinafter appearing. It does not limit its sphere to businesses run only by the Government or local authorities. The scheme of the Act fits in with the interpretation we are placing on the expression “employer”?and?any other construction of it would create incongruity?and?repugnancy between different sections of the Act. The Act was intended to be a more comprehensive law on trade disputes than its predecessor, the Trade Disputes Act, 1929. It was not denied that under that Act, the term “employer” included within its scope industries owned by persons other than Government departments or local authorities.

….”

Analysis

In view of the above mentioned it is clear that a private entity will fall under the ambit of an employer under the ID Act and it is not just limited to businesses run by the government or local authorities.

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Disputes with respect to Dismissal - Application to Labour Court or Tribunal

“2A. Dismissal, etc., of an individual workman to be deemed to be an industrial dispute.—

(1) Where any employer discharges, dismisses, retrenches, or otherwise terminates the services of an individual workman, any dispute or difference between that workman and his employer connected with, or arising out of, such discharge, dismissal, retrenchment or termination shall be deemed to be an industrial dispute notwithstanding that no other workman nor any union of workmen is a party to the dispute.

(2) Notwithstanding anything contained in section l0, any such workman as is specified in sub-section (1) may, make an application direct to the Labour Court or Tribunal for adjudication of the dispute referred to therein after the expiry of forty-five days from the date he has made the application to the Conciliation Officer of the appropriate Government for conciliation of the dispute, and in receipt of such application the Labour Court or Tribunal shall have powers and jurisdiction to adjudicate upon the dispute, as if it were a dispute referred to it by the appropriate Government in accordance with the provisions of this Act and all the provisions of this Act shall apply in relation to such adjudication as they apply in relation to an industrial dispute referred to it by the appropriate Government.?

(3) The application referred to in sub-section (2) shall be made to the Labour Court or Tribunal before the expiry of three years from the date of discharge, dismissal, retrenchment or otherwise termination of service as specified in sub-section (1).”

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Power of tribunal to direct reinstatement or such other relief??

“11A. Powers of Labour Courts, Tribunals and National Tribunals to give appropriate relief in in case of discharge or dismissal of workmen.-- Where an industrial dispute relating to the discharge or dismissal of a workman has been referred to a Labour Court, Tribunal or National Tribunal for adjudication and, in the course of the adjudication proceedings, the Labour Court, Tribunal or National Tribunal, as the case may be, is satisfied that the order of discharge or dismissal was not justified, it may, by its award, set aside the order of discharge or dismissal and direct reinstatement of the workman on such terms and conditions, if any, as it thinks fit, or give such other relief to the workman including the award of any lesser punishment in lieu of discharge or dismissal as the circumstances of the case may require:

Provided that in any proceeding under this section the Labour Court, Tribunal or National Tribunal, as the case may be, shall rely only on the materials on record and shall not take any fresh evidence in relation to the matter.”

Analysis?

In view of the ID Act a workman has the right to file an application with the labour court or the tribunal where such a workman is aggrieved by the termination of his or her employment. In such a matter if the labour court or the tribunal is satisfied that the order of termination is not justified then it may by its order direct the employer to reinstate the employee.

?(ii) Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices, 1971 (hereinafter referred “MRTU & PULP Act”)

Applicability: It is an act that provides for the recognition of trade unions for facilitating collective bargaining for certain undertakings; to state their rights and obligations; to confer certain powers on unrecognised unions; to provide for declaring certain strikes and lock-outs as illegal strikes and lock-outs; to define and provide for the prevention of certain unfair labour practices; to constitute courts (as independent machinery) for carrying out the purposes of according recognition to trade unions and for enforcing the provisions relating to unfair practices; and to provide for matters connected with the purposes aforesaid.?

This Act extends to the whole of the State of Maharashtra.

Section 3 (5), (6) and (7) the MRTU & PULP Act lays down the definition of an ‘employee’, ‘employer’ and ‘industry’ and it is reproduced below for your reference: -

(5) “employee”, in relation to an industry to which the Bombay Act for the time being applies, means an employee as defined in Clause (13) of Section 3 of the Bombay Act, and in any other case means a workman as defined in clause (s) of Section 2 of the Central Act, and a sales promotion employee as defined in clause (d) of Section 2 of the Sales Promotion Employees (Conditions of Service) Act, 1976 (11 of 1976);?

(6)“employer” in relation to an industry to which the Bombay Act applies, means an employer as defined in Clause (14) of Section 3 of the Bombay Act; and in any other case, means an employer as defined in clause (g) of Section 2 of the Central Act;

(7) “Industry” in relation to an industry to which the Bombay Act applies, means an employer as defined in Clause (19) of Section 3 of the Bombay Act, and in any other case, means an industry as defined in Clause (j) of Section 2 of the Central Act”

Section 3?

“(1) “Bombay Act” means the Bombay Industrial Relations Act, 1946 (Bom. XI of 1947);

(2) “Central Act” means the Industrial Disputes Act, 1947 (XIV of 1947)”

Procedure for dealing with complaints relating to Unfair Labour Practices?

“28. Procedure for dealing with complaints relating to unfair labour practices.—(1) Where any person has engaged in or is engaging in any unfair labour practice, then any union or any employee or any employer or any Investigating Officer may, within ninety days of the occurrence of such unfair labour practice, file a complaint before the Court competent to deal with such complaint either under Section 5, or as the case may be, under Section 7, of this Act:?

Provided that, the Court may entertain a complaint after the period of ninety days from the date of the alleged occurrence, if good and sufficient reasons are shown by the complainant for the late filing of the complaint.

(2) The Court shall take a decision on every such complaint as far as possible within a period of six months from the date of receipt of the complaint.

…”

The MRTU & PULP Act also defines Unfair Labour Practices in the following manner:

“SCHEDULE IV

General Unfair Labour Practices on the part of employers

1. To discharge or dismiss employees—

(a) by way of victimisation;

(b) not in good faith, but in colourable exercise of the employer's rights;

(c) by falsely implicating an employee in a criminal case on false evidence or on concocted evidence;

(d) for patently false reasons;

(e) on untrue or trumped up allegation of absence without leave;

(f) in utter disregard of the principles of natural justice in the conduct of domestic enquiry or with undue haste;

(g) for misconduct of a minor or technical character, without having any regard to the nature of the particular misconduct or the past record of service of the employee, so as to amount to a shockingly disproportionate punishment.

…”

Consequences of engaging in Unfair Labour Practices - Power of the Industrial and Labour Courts to order reinstatement of the employee(s) with or without back wages, or the payment of reasonable compensation?

“30. Power of Industrial and Labour Courts.—(1) Where a Court decides that any person named in the complaint has engaged in, or is engaging in, any unfair labour practice, it may in its order—

(a) declare that an unfair labour practice has been engaged in or is being engaged in by that person, and specify any other person who has engaged in, or is engaging in the unfair labour practice;

(b) direct all such persons to cease and desist from such unfair labour practice, and take such affirmative action (including payment of reasonable compensation to the employee or employees affected by the unfair labour practice, or reinstatement of the employee or employees with or without back wages, or the payment of reasonable compensation), as may in the opinion of the Court be necessary to effectuate the policy of the Act;

(c) where a recognised union has engaged in or is engaging in, any unfair labour practice, direct that its recognition shall be cancelled or that all or any of its rights under sub-section (7) of Section 20 or its right under Section 23 shall be suspended.

(2) In any proceeding before it under this Act, the Court may pass such interim order (including any temporary relief or restraining order) as it deems just and proper (including directions to the person to withdraw temporarily the practice complained of, which is an issue in such proceeding), pending final decision:

Provided that, the Court may, on an application in that behalf, review any interim order passed by it.

…”?

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Analysis?

In view of the above mentioned, an employee who alleges that there has been an unfair labour practice (such as unfair dismissal) has the right to approach the labour court to seek relief against it. In such a matter if the labour court is satisfied that there has been an unfair labour practice then it may order the employer to either reinstate the employee (with back wages or without back wages), or pay reasonable compensation.

The labour court has also been given the power to grant interim relief or restraining orders in such matters.?

The MRTU & PULP Act also provides that an aggrieved person is barred from instituting multiple proceedings with respect to the same subject matter. If a proceeding is instituted under the MRTU & PULP Act with respect to a subject matter then any authority will not entertain a proceeding under the Industrial Disputes Act 1947 or the Bombay Relations Act with respect to the same subject matter. The relevant provision is set out hereunder:

Bar on instituting proceedings under the Central or Bombay Act with respect to same subject matter?

“59. Bar of proceedings under Bombay or Central Act.—If any proceeding in respect of any matter falling within the purview of this Act is instituted under this Act, then no proceeding shall at anytime be entertained by any authority in respect of that matter under the Central Act or, as the case may be, the Bombay Act; and if any proceeding in respect of any matter within the purview of this Act is instituted under the Central Act, or as the case may be, the Bombay Act, then no proceeding shall at anytime be entertained by the Industrial or Labour Court under this Act.”

Analysis

In view of Section 59 of the MRTU & PULP Act it is clear that an aggrieved workman employee (non-managerial) may proceed to take action against his or her employer under the ID Act or the MRTU & PULP Act.

(iii) Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017 (hereinafter referred “MSE Act”)

Applicability: It is an act which provides for the regulation of conditions of employment and other conditions of service of workers employed in shops, residential hotels, restaurants, eating houses, theatres, other places of public amusement or entertainment and other establishments and for matters connected therewith or incidental thereto.

It extends to the whole of the State of Maharashtra.

Section 2 (3), (4) and (26) the MSE Act lays down the definition of an ‘worker’, ‘employer’ and ‘establishment’ and it is reproduced below for your reference: -

? “Section 2

(3) “employer” means a person owning or having ultimate control over the affairs of an establishment, and includes,— (i) in the case of a firm or association of individuals, a partner or members of the firm or association; (ii) in the case of a company, a director of the company; (iii) in the case of an establishment owned or controlled by the Central Government or a State Government or any local authority, the person or persons appointed to manage the affairs of such establishment by the Central Government or the State Government or the local authority, as the case may be;?

(4) “establishment” means an establishment which carries on, any business, trade, manufacture or any journalistic or printing work, or business of banking, insurance, stocks and shares, brokerage or produce exchange or profession or any work in connection with, or incidental or ancillary to, any business, trade or profession or manufacture; and includes establishment of any medical practitioner (including hospital, dispensary, clinic, polyclinic, maternity home and such others), architect, engineer, accountant, tax consultant or any other technical or professional consultant; and also includes a society registered under the Societies Registration Act, 1860, and a charitable or other trust, whether registered or not, which carries on, whether for purposes of gain or not, any business, trade or profession or work in connection with or incidental or ancillary thereto; and includes shop, residential hotel, restaurant, eating house, theatre or other place of public amusement or entertainment; to whom the provisions of the Factories Act, 1948 does not apply; and includes such other establishment as the State Government may, by notification in the Official Gazette, declare to be an establishment for the purposes of this Act;

…

(26) “worker” means any person (except an apprentice under the Apprentices Act, 1961) employed to do any manual, unskilled, skilled technical, operational or clerical work for hire or reward, whether the terms of employment be express or implied.”

Analysis?

The MSE Act applies to a public trust in Mumbai. However, it does not require an employer to give a notice of one month or wages before terminating the employment of an employee.

There is no provision of reinstatement of employees covered under the MSE Act. There is also no provision for holding an enquiry or offering an opportunity to be heard.?

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II.????????For workman in Delhi?

(i) Industrial Disputes Act, 1947 (hereinafter referred “ID Act”)

In Delhi the issue of unfair dismissal of the services a workman?and reinstatement of services is governed by the ID Act. The provisions of which have been discussed in paragraph A(I)(i) above.

III.????????For non-workman in Delhi?

i) Delhi Shops and Establishments Act, 1954 (hereinafter referred “DSE Act”)

Applicability: It is an act which amends and consolidates the law relating to the regulation of hours of work, payment of wages, leave, holidays, terms of service and other conditions of work of persons employed in shops, commercial establishments, establishments for public entertainment or amusement and other establishments and to provide for certain matters connected therewith.

This Act extends to the whole of the Union Territory of Delhi.

Section 2 (5), (7), (8) and (9) the DSE Act lays down the definition of a ‘commercial establishment’, ‘employee’, ‘employer’,?and ‘establishment’ and it is reproduced below for your reference: -

“…(5) "commercial establishment" means any premises wherein any trade, business or profession or any work in connection with, or incidental or ancillary thereto is carried on and includes a society registered under the Societies Registration Act, 1860 (21 of 1860), and charitable or other trust, whether registered or not, which carries on any business, trade or profession or work in connection with, or incidental or ancillary thereto, journalistic and printing establishments, contractors and auditors establishments, quarries and mines not governed by the Mines Act, 1952 (35 of 1952), educational or other institutions run for private gain, and premises in which business of banking, insurance, stocks and shares, brokerage or produce exchange is carried on, but does not include a shop or a factory registered under the Factories Act, 1948 (43 of 1948), or theatres, cinemas, restaurants, eating houses, residential hotels, clubs or other places of public amusements or entertainment;

?…

(7) "employee" means a person wholly or principally employed, whether directly or otherwise, and whether for wages (payable on permanent, periodical, contract, piece-rate or commission basis) or other consideration, about the business of an establishment and includes an apprentice and any person employed in a factory but not governed by the Factories Act, 1948 (43 of 1948), and for the purpose of any matter regulated by this Act, also includes a person discharged or dismissed whose claims have not been settled in accordance with this Act;

(8) "employer" means the owner of any establishment about the business of which persons are employed, and where the business of such establishment is not directly managed by the owner, means the manager, agent or representative of such owner in the said business;

(9) "establishment" means a shop, a commercial establishment, residential hotel, restaurant, eating-house, theatre or other places of public amusement or entertainment to which this Act applies and includes such other establishment as Government may, by notification in the Official Gazette, declare to be an establishment for the purpose of this Act”

Employer to give one month’s notice or wages at the time of dismissal of an employee?

Section 30 regulates the termination of services of an employee in Delhi and provides as under.

“30. Notice of Dismissal. - (1) No employer shall dispense with the services of an employee who has been in his continuous employment for not less than three months, without giving such person at least one month's notice in writing or wages in lieu of such notice:

Provided that such notice shall not be necessary where the services of such employee are dispensed with for misconduct, after giving him an opportunity to explain the charge or charges alleged against him in writing.

(2) …

(3) In any case instituted for a contravention of the provision of sub-section (1), if a Magistrate is satisfied that an employee had been dismissed without any reasonable cause or discharged without proper notice or pay in lieu of notice, the Magistrate may, for reasons to be recorded in writing, award, in addition to one month's salary compensation to the employee as follows:

(a) Where immediately before his discharge or dismissal, the employee was in receipt of a salary not exceeding Rs. 100 per month, such amount of compensation not exceeding his month's salary, as the Magistrate may direct;

(b) Where immediately before his dismissal or discharge, the employee was in receipt of a salary exceeding hundred rupees per mensem, such amount of compensation not exceeding hundred rupees as the Magistrate may direct.

(4) The amount payable as compensation under this section shall be in addition to any fine payable under section 40.

(5) No person who has been awarded compensation under this section shall be at liberty to?bring a civil suit in respect of the same claim.”

“40. Penalties. - (1) If in any shop or establishment there is any contravention of any of the provisions of this Act, or any rule or order made thereunder except sections 33, 41 and 42, the proprietor, the employer or the manager thereof as the case may be, shall, on conviction, be punished with fine which shall not be less than twenty-five rupees and which may extend to two hundred and fifty rupees.

(2) …”

Analysis?

Under the DSE Act, the employer is required to give a notice of one month in writing, or wages in lieu of such notice at the time of termination of services of an employee. However, such a notice is not required where the services of an employee are being terminated for misconduct. Provided that such an employee has been given an opportunity to explain the charge or charges of misconduct alleged against him or her in writing.

An employee aggrieved by termination of services may approach the Magistrate. If the Magistrate is satisfied that an employee had been dismissed without any reasonable cause, or discharged without proper notice or pay in lieu of such a notice, the Magistrate may award one month’s salary as compensation along with the prescribed fine (graded between Rs. 25 (USD 0.30) to Rs. 250 (USD 3)). Please note that this is a very old legislation and the fines have not been revised as yet.

There is no provision of reinstatement of employees covered under the DSE Act. In case of termination of services for misconduct, there is a provision for holding an enquiry by giving the employee an opportunity to explain charges or charges alleged against such a person.?

C. Conclusion?

In view of the abovementioned analysis, an Indian employee can seek reinstatement in the following scenarios:

I.??For workman in Mumbai:

(i) Under the Industrial Disputes Act, 1947, a workman in Mumbai may seek reinstatement of services before the labour court or the tribunal in case such a person is not satisfied with the justification given for the termination of his or her services.

(ii) Under the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices, 1971, a workman in Mumbai who alleges unfair labour practices (such as wrongful termination) may seek reinstatement of services before the labour court or the industrial tribunal.??

(iii) Under the Maharashtra Shops and Establishments (Regulation of Employment and Conditions of Service) Act, 2017, for a workman there is no provision for reinstatement of services.

?II.?For workman in Delhi?

(i) A workman in Delhi may also seek reinstatement under the Industrial Disputes Act, 1947 if such a person is not satisfied with the justification given for termination of his or her services.

?III.?For an employee/ non-workman in Delhi?

(i) Under the Delhi Shops and Establishment Act, 1954, an employee in Delhi aggrieved by the termination of his or her services, there is no provision for reinstatement of his or her services.?

?IV.?For non-workman in Mumbai

There is no provision in law which provides for reinstatement of services of a non-workman.

Disclaimer:?The information contained in this site is provided for informational purposes only and should?not?be construed as?legal advice?on any subject matter.?Further, the information produced in this article is published by and reflects the author’s personal views, in their individual capacity. For any related query or assistance, reach out to us at?[email protected].

[1] The Federal Court of India was a judicial body, established in India in 1937 under the provisions of the Government of India Act 1935, with original, appellate and advisory jurisdiction. It functioned until the Supreme Court of India was established in 1950.