BACK WAGES FOR REINSTATED DISMISSED EMPLOYEE

[Mr. M. GOVINDARAJAN]

INTRODUCTION

Every management has their own procedure for recruiting employees, maintaining discipline in work, leave matters, taking disciplinary action against erring employees, subject to relevant labor laws. The result of disciplinary action will amount to imposing punishment whether it may be minor or major punishment. Dismissal from service is the major penalty. The dismissed employee will not get retirement benefits almost. The dismissed employee will try to get the dismissal order quashed by the Court. The litigation may take a long time. In case the employee wins the case he will be ordered to be reinstated in his employment.   In such a situation a question will arise as to whether the employee is eligible to get back wages after his reinstatement from the date of his dismissal to the date of reinstatement. The same is discussed in this article with reference to decided case laws.

DENIAL OF BACK WAGES

In ‘Mukund Engineer Works V. Bansi Purusotham’ – 1993 (10) TMI 345 - SUPREME COURT OF INDIA it was held that since the misconduct was proved the petitioner would not be entitled to back wages.

Involvement of the employee in criminal case is considered as the ground for denial of back wages.

In ‘Ranchhodji Chaturji Thakore V. Superintendent Engineer, Gujarat Electricity Board’ – 1996 (10) TMI 471 - SUPREME COURT OF INDIA the reinstatement of the petitioner into the service has been ordered. The only question is whether he is entitled to back wages? It was his conduct of involving himself in the crime that was taken into account for his not being in service of the respondent.   Consequent upon his acquittal, he is entitled to reinstatement for the reason that his service was terminated on the basis of conviction by operation of proviso to the statutory rule, applicable to the situation. The question of back wages would be considered only if the respondents have taken action by way of disciplinary proceedings and the action was found to be unsustainable in law and he was unlawfully prevented from discharging his duties.   In that context, his conduct becomes relevant. Each case requires to be considered in his own backdrops.   In this case, since the petitioner had involved himself in a crime, though he was later acquitted, he had disabled himself from rendering the service on account of conviction and incarceration in jail, under these the petitioner is not entitled to payment of back wages.

In ‘Prabhakar Mahadeorao Bangre V. Maharastra State Road Transport Corporation’ – 2012-I-LLJ-535 (Bom) the High Court held that it is trite that the standard of proof required in a departmental enquiry stands apart from the standard of proof required in a criminal trial, in so far as the departmental proceedings are concerned, the principle of preponderance of probabilities is applicable, once that is so and considering that the charges in the instant case have been held to be proved against the petitioner, the denial of back wages by both the courts below on the basis of the material that was before them, cannot be faulted with.   No case for interference is made out.   The writ petition was accordingly dismissed.

In ‘Inderjeet Singh V. Delhi Transport Corporation’ – 2010 (11) TMI 862 - CESTAT NEW DELHI the petitioner was dismissed from service in May 2004 after he was convicted on charges of murder and sentenced 10 years rigorous imprisonment. He was acquitted on appeal made to the High Court in November 2004.   Despite the intimation of his acquittal by letter dated 06.12.2004 he was not reinstated in service till July 2007. He claimed back wages for the period from November 2004 to June 2007. The CAT dismissed his claim.   The High Court observed that there was a delay of two and half years from the date of his acquittal till reinstatement of the petitioner in service. There was no explanation to this delay.   The delay and laches in reinstating petitioners could not be justified and could not be a ground to deny back wages. They were therefore directed to be paid with interest at 8% and costs of Rs.10,000/- to the petitioner.

In ‘Pramod Singh V. Divisional Forest Officer and others’ – 2012-II-LLJ-202 (MP) the High Court quashed the order of the labor court to the extent the petitioner has been denied the back wages since the labor court has not assigned any reason whatsoever for denying back wages.

In ‘Mohammed Abdur Raheem V. State Bank of India, Rajaji Salai, Chennai - 1 and another’ – 2009 (1) TMI 782 - MADRAS HIGH COURT the petitioner was an Assistant (Accounts) in the bank.   He was discharged from service when he was convicted by a criminal court inter alia under Dowry Prohibition Act.   The conviction was set aside by appellate court and he was then reinstated with back wages. He challenged the denial of back wages to him.   The High Court observed that in spite of suspension of sentence, respondents did not allow him to work. The discharge of the petitioner was solely on the basis of conviction by the local court and on his acquittal by the appellate court, he was entitled to reinstatement.   There was absolutely no justification for respondent to deny back wages to the petitioner as no fault could be found with him.

BACK WAGES NOT TO BE GRANTED AUTOMATICALLY

In the earlier period if the dismissed employee won his case he was allowed to reinstatement and awarded back wages from the date of dismissal to the date of reinstatement.   But this legal position has now been changed.   Back wages will not be granted automatically.

In ‘Chairman-cum-Managing Director, Coal India Limited and others V. Anantha Saha and others’ –2011 (4) TMI 1216 - SUPREME COURT the Supreme Court held that the issue of entitlement of back wages has been considered by this court time and again and consistently held that even after punishment is imposed upon the employee is quashed by the Court or Tribunal, the payment of back wages still remains discretionary.   Power to grant back wages is to be exercised by the Court/Tribunal keeping in view the facts in their entirety as no strait jacket formula can be evolved, nor a rule of universal application can be laid for such cases.   Even if the delinquent is reinstated, it would not automatically make him entitled for back wages as entitlement to get back wages is independent of reinstatement.

In ‘Ram Ashrey V. Ram Bux Singh’ – 2003 (2) TMI 468 - SUPREME COURT OF INDIA, it was held by the Supreme Court that a workman has no automatic entitlement to back wages since it is discretionary and has to be dealt with in accordance with the facts and circumstances of each case.

In ‘General Manager, Haryana Roadways V. Rudhan Sing’ – 2005 (7) TMI 618 - SUPREME COURT OF INDIA it has been held by the Supreme Court that an order for payment of back wages should not be passed in a mechanical manner but, a host of factors are to be taken into consideration before passing such order.

In ‘Senior Superintendent of Telegraph Traffic, Bhopal V. Santosh Kumar Seal and others’ – 2010 (4) TMI 965 - SUPREME COURT the Supreme Court held that it is true that the earlier view of the Supreme Court articulated in many decisions reflected the legal position that if the termination of an employee was found to be illegal, the relief of reinstatement with full back wages would ordinarily follow.   However in recent past there has been shift in a legal position and in a long times of cases, this court has consistently taken the view that relief by way of reinstatement with back wages is not automatic and may be wholly inappropriate in a given situation even though the contravention of an employee is in contravention of the prescribed procedure.

CRITERIA TO BE CONSIDERED FOR BACK WAGES

In ‘Ramesh Singh V. Agragami Kshetra Vikas Agency, Kanpur & another’ – 2012-II-LLJ-97 (ALL) the High Court held that setting aside the order of termination would not necessarily lead to grant of back wages.   Reinstatement of the employee in service is to restore his status as a workman.   These are two independent contingencies.   Awarding the back wages necessarily does not follow the order of termination.   The payment of back wages is a discretionary power which has to be exercised keeping in view the facts and circumstances of each case. While awarding the back wages, it is necessary that the employee must discharge the burden of proof that he had not gainfully employed during the period he was out of service.   The employer is justified in raising objection with regard to payment of wages on reinstatement of the workman.   There are many factors which would weigh in granting back wages, namely:-

• Length of service rendered by the employee and nature of his appointment whether adhoc, short term, daily wages, temporary or permanent;
• Any special qualification required for the job;
• As to whether he has been gainfully employed during the course he remained out of service.

BACK WAGES

The back wages may be awarded either fully or in partial which is awarded according to the facts and circumstances of the case. The following case laws deals with the circumstances in which full back wages may be awarded to the employee:

Acquittal in a criminal case

In ‘Shivram Gadekar V. Board of Trustees of the Port of Mumbai and another’ – 2009 (3) TMI 916 - BOMBAY HIGH COURT wherein the facts were that the workman concerned was acquitted in a criminal trial and since the material so far as the criminal trial and the department proceedings in that case was admittedly the same, the Division Bench remanded the matter back to the labor court for consideration of the aspect of the basic wages.

In ‘The Secretary, Vallalar Gurukulam Higher Secondary School, Vadalur, Cuddalore District V. District Educational Officer, Cuddalore’ – (2005) I MLJ 488 the Division Bench of Madras High Court held that once a person is acquitted in a criminal case it has to be deemed that he never committed that offence.   This is because every judgment operates retrospectively unless expressly made prospectively unlike a legislation which normally operates prospectively. Consequently the teacher is entitled to his salary for the period of his unemployment and he is entitled to reinstatement.   The position may be different if disciplinary proceedings had also been initiated against the employee but that was not done in this case.

Non conducting proper enquiry

In ‘K. Ramesh V. Presiding Officer, Principal Labor Court, Chennai and another’ – 2014 (2) TMI 584 - MADRAS HIGH COURT the petitioner was working as an electrician. He went on leave for two days which was duly sanctioned.   On joining his duty he found that out of 9 coils, 8 coils of wire were found missing. He reported the same to the college.   He was forced to sign a letter without disclosing the contents of the letter.   But orally he was informed that he should pay a sum of Rs.16,200/- being the cost of missing coils. No enquiry was conducted. Therefore the petitioner was forced to file a complaint to the Police.   In the meanwhile the petitioner was put under suspension.   A domestic enquiry was conducted by an Advocate from outside. The petitioner was prevented from having the assistance of his choice to help him in the enquiry.   The Enquiry Officer gave report against the petitioner on which the petitioner was dismissed from service. An industrial dispute was raised. The Labor Court gave him no relief.   The High Court observed that neither in the show cause notice nor in the enquiry report nor in the dismissal order was there any finding that the petitioner had stolen the coils entrusted to him.   It was shocking that the labor should go off on a tangent and making him responsible for the alleged theft.   This clearly showed that the labor court did not even refer to the findings of the enquiry officer. The findings of the labor court were held to be perverse and charges were not proved. In the result the High Court ordered for reinstatement of petitioner with back wages, continuity of service and attendant benefits was ordered.

In ‘Union of India V. Madhusudan Prasad’ – 2003 (10) TMI 626 - SUPREME COURT OF INDIA, the Supreme Court found that the employee, who was found guilty in an inquiry, was not furnished the inquiry report.   No show cause notice was served in him.   In view of the facts and circumstances the Court directed appropriate order should be passed regarding the back wages.   The appellate authority directed reinstatement and held that he was not entitled to get back wages for the period he was out of service. The Supreme Court held that there was fault on the part of the employer in not following the principles of Natural Justice.   These factors were considered and the lowers courts ordered for basic wages.   The Supreme Court found no merit in the appeal and dismissed the same.

In ‘Kalyanasundaram V. Management of Tamil Nadu State Transport Corporation and another’ – 2012-II-LLJ-698 (Mad) the appellant driver was terminated from service for rash driving resulting in the death of a pedestrian.   He has not paid subsistence allowance when suspended. The Management did not show service conditions or rule to show rash and negligent driving was misconduct.   He was acquitted in the criminal case based on same set of facts not considered by the Management while terminating his service.   The Labor Court held him entitled to reinstatement with full back wages.   A single Judge of High Court set aside the Labor Court order for fresh disposal.   Hence the present appeal. The High Court observed that if an employee was under suspension without payment of subsistence allowance, as appellant here was, the entire departmental enquiry became vitiated in law. The appellant was held not guilty by the criminal court and the judgment based on the same set of facts as those in the departmental enquiry was brought to the notice of authority concerned and yet the termination order was passed without full opportunity of hearing. There was a further lapse on the part of management.   It failed to produce relevant service conditions or rules under which rash driving was a misconduct.   The High Court set aside the order under appeal and the management was directed to satisfy the Labor Court’s award.

NON EMPLOYMENT WHILE OUT OF SERVICE

While granting back wages for a reinstated dismissed employee, as discussed above, non employment while out of his service is considered for granting the quantum of basic wages. Without income the dismissed employee cannot survive. It is the burden of the employee to prove that he is not in gainful employment while he was out of service. If it is proved then the ball is in the court of the employer to prove the contrary.

In ‘Bhojabhai Danabhai Raberi V. State of Gujarat’ – 2012-I-LLJ-174 (Guj) the appellant has filed this appeal on the ground that the appellant was entitled to back wages that the appellant was not gainfully employed during the period.   The Court is at a loss to understand how the workman or his family could survive without an employment or income.   The appellant was not entitled to back wages even though relief of reinstatement has been granted to him.   At the most, the appellant could have claimed for compensation but such claim was not raised by the appellant before the learned Single Judge.   Therefore in appeal the Court cannot grant a relief which was not claimed before the learned Single Judge by the respondent to the writ petition.

In ‘Kendriya Vidyasala Sangathan and another V. S.C. Sharma’ – 2005 (1) TMI 646 - SUPREME COURT OF INDIA the Supreme Court held that for entitlement of back wages, employee should show that he was not gainfully employed during the period from the termination till the date of reinstatement.

In ‘J.K. Synthetics Limited V. K.P. Aggarwal and another’ – 2007 (2) TMI 584 - SUPREME COURT OF INDIA the Supreme Court held that even if the Court finds it necessary to award back wages the question will be whether back wages should be awarded fully or partially and if so the percentage.   That depends upon the facts and circumstances of each case.   Any income received by the employee during the relevant period on account of alternative employment or business is a relevant factor to be taken note of while awarding wages. It is necessary for the employee to plead that he was not gainfully employed from the date of his termination.   While an employee cannot be asked to prove the negative, he has to at least assent on oath that he was neither employed or nor engaged in any gainful business or venture and that he did not have any income.   Then the burden will shift to the employer.   But there is, however, no obligation on the terminated employee to search for or secure alternative employment.

In ‘Rajendar Kumar Kindra V. Delhi Administration through Secretary (Labor) and others’ – 1984 (9) TMI 272 - SUPREME COURT OF INDIA the Supreme Court held that the employee during termination period however helps his relatives in their business and living with them having no other alternative source of maintenance cannot be held that it was gainfully employment.

In ‘G.K. Pandey V. Regional Director, International Airport Authority of India’ – 2008 (9) TMI 881 - BOMBAY HIGH COURT the High Court observed from the mere fact that during the period the petitioner remained unemployed, he assisted members of his joint family in the cultivation of ancestral lands it could not be legitimately inferred that the petitioner was gainfully employed and on the ground his claim for back wages could not be rejected.

PARTIAL BACK WAGES 

Granting back wages is still the discretionary of the judicial authority.   But the same has to be exercised rationally. If back wages are not granted the authorites may consider for granting the percentage and period of the back wages.

In ‘Reetu Marbles V. Prabhakant Shukla’ – 2009 (12) TMI 853 - SUPREME COURT OF INDIA the Supreme Court held that the employee did not place any material or evidence to show that he was not gainfully employed during 15 years when he was out of service of the company.   The Labor Court having found termination illegal and unjustified in not granting any back wages at all.   Therefore the employee is entitled to 50% of back wages from the date of termination of service till reinstatement.                 

In ‘Managing Director, Shree Panchanga Sahakari Sakar Kharkhana Limited, Kolhapur and another V. Kallappa Narasappa Sangale and others’ – 2012-I-LLJ-225 (Bom) the High Court found that the order refusing payment of back wages for the entire period as a punishment is too harsh. The charge against the employee was that he retained the keys of the powers house without the knowledge of the superiors.   Admittedly, the employee was a wireman and the keys of the powerhouse were with him because of his nature of work.   There is no evidence on record that there was any theft, or any other act due to which the employer has been caused losses because the employee had retained the keys.   In these circumstances, the employee was deprived of his back wages.   However he will not be entitled to the back wages for the period from 07.06.1985 to 07.02.1995 because the employee had taken no steps to approach the Court for about 10 years after the industrial Court has dismissed the appeal.   The employee has already attained the age of superannuation.   In these circumstances it would be appropriate to direct that the amount which has been deposited by the kharkhana in the labor court should be disbursed to the employer.                 

In ‘Ram Chander, Peon V. Presiding Officer, Labor Court, UT Chandigarh and another’ – 2012-II-:LLJ-142 (P&H) the petitioner workman was denied 50% back wages although the labor court held termination of his service was illegal and directed his reinstatement. The High Court observed that the labor court had recorded a finding that the petitioner workman was not gainfully employed after the termination of his service, there was no occasion for declining the 50% of back wages to him.                 

In ‘Ramesh Agarwal V. State of Jharkhand and others’ – 2012-III-LLJ-487 (Jhar) the High Court held that the award by Labor Court granting full back wages to workman was modified in this appeal limited said wages to 50% with the observation that there was no material to indicate that the workman was not in gainful employment during the period and he raised the dispute a year after his termination of his service.

In ‘Sudesh Yadav V. Oberai Flight Services’ – 2014 (2) TMI 585 - DELHI HIGH COURT the petitioner was employed by respondent company as cutlery packer for about 19 years and on one fine evening she was charged with having chocolate in her polythene bag and ultimately dismissed from service.   The Labor Court held that charge against her was proved but implred the respondent to reconsider the punishment.   The High Court observed that this was a case of no evidence as far as the charge of chocolate found with petitioner being stolen was concerned.   The respondent management could not be said to have discharged its burden of proving that the chocolates in the possession of petitioner were stolen chocolates. The High Court held that the award of Labor Court was not sustainable and was set aside.   Reinstatement of the petitioner with 40% back wages was ordered.

In ‘State of Gujarat V. Kalidas Bhikaabhai Dudhrejiya and another’ – 2012-III-LLJ-588 (Guj) the High Court held that neither age could wither nor custom render stale claims of workmen was demonstrated in this case, which ended more than two and half decades after termination of the respondent workman’s service in 1986.   The defence of delay of 15 years in workman in raising dispute and another 9 years in filing his statement of claim was taken by the employer but it failed.   The Labor Court gave its award directing him reinstating with 20% of back wages. The High Court held that there was no ground to justify by the objection against direction to reinstate the workman and the grant of said relief in view of proved breach of Section 25F of Industrial Disputes Act, 1947 did not call for interference.   However the respondent workman was held not entitled to back wages for the period of years of delay.   Even thereafter he was to be paid only 10% of back wages.

CONCLUSION

Managing the manpower is a difficult job. Proper supervision is there for getting the work done by them.   At the same time the welfare measures of the employees shall be taken care of.   If there is no industrial rest then there may be problems which may lead to dismissal of certain employees.   While dismissing the employee the management has to take correct course or otherwise there is the possibility of winning the case by the employee and liable to pay back wages either fully or partially for the period in which he is not at all working. The management may not take the tool of dismissal for threatening the employees.