Termination letter was issued to a Business Development Manager in my company. He was compensated as per the employment agreement with three months' pay in lieu of notice, but he says this termination is illegal as per the Industrial Dispute Act. Please advise if a BDM falls under the ID Act as he is a manager or what can be done in such a case.
From India, Gurgaon
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1From India, Gurgaon
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Dear Nisha,
The designation of a job alone cannot be the sole criterion for determining the status of a job. Any employee, by their designation as well as the predominant managerial or administrative nature of duties attached to their job, would certainly fall outside the definition of the term "workman" as defined under section 2(s) of the IDA, 1947.
If the above principle squarely applies to the incumbent designated as a BDM and separated as per the exit clause of their contract of service, they cannot seek recourse under the IDA, 1947 for any grievance at a later date.
Simply communicate this fact to him.
Thank you.
From India, Salem
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The designation of a job alone cannot be the sole criterion for determining the status of a job. Any employee, by their designation as well as the predominant managerial or administrative nature of duties attached to their job, would certainly fall outside the definition of the term "workman" as defined under section 2(s) of the IDA, 1947.
If the above principle squarely applies to the incumbent designated as a BDM and separated as per the exit clause of their contract of service, they cannot seek recourse under the IDA, 1947 for any grievance at a later date.
Simply communicate this fact to him.
Thank you.
From India, Salem
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Then sir, in this case if the BDM wants to make raise a dispute against the company what would be the alternative processes for him... will he has to go for civil court procedure??
From India, Kolkata
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From India, Kolkata
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Dear Debasish,
So far as the process of conciliation under the IDA, 1947 is concerned, a person employed as a manager or supervisor in an industrial establishment can stake a claim under Section 2-A(1) against his discharge, dismissal, or retrenchment before the Conciliation Officer under the Act. However, the Conciliation Officer cannot decide the issue on his own as the process of conciliation is only an administrative function in character. Therefore, he only has to record conciliation failure and submit a report under Section 12(4) of the Act.
Subsequently, if the person moves the Labor Court under Section 2-A(2), whether the individual was a workman under Section 2(s) of the IDA would be decided by the court as the preliminary issue.
If the individual has the legal acumen, he would not prefer to waste his time, money, and energy in such a futile exercise; on the contrary, he would file a Civil Suit to get the dismissal or discharge declared as illegal and claim damages only.
From India, Salem
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So far as the process of conciliation under the IDA, 1947 is concerned, a person employed as a manager or supervisor in an industrial establishment can stake a claim under Section 2-A(1) against his discharge, dismissal, or retrenchment before the Conciliation Officer under the Act. However, the Conciliation Officer cannot decide the issue on his own as the process of conciliation is only an administrative function in character. Therefore, he only has to record conciliation failure and submit a report under Section 12(4) of the Act.
Subsequently, if the person moves the Labor Court under Section 2-A(2), whether the individual was a workman under Section 2(s) of the IDA would be decided by the court as the preliminary issue.
If the individual has the legal acumen, he would not prefer to waste his time, money, and energy in such a futile exercise; on the contrary, he would file a Civil Suit to get the dismissal or discharge declared as illegal and claim damages only.
From India, Salem
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Thank you, sir.
As you mentioned above, the conciliation officer has only an administrative role. Their obligation is to record conciliation failure and submit a report to the appropriate government authority within 45 days of receiving the application. The government authority then has the power to refer the case to the adjudication body, such as the labor court, as it falls under Schedule 2 of the act.
This process is applicable only to workmen and excludes individuals in managerial or supervisory positions from its scope. Therefore, it raises a question of how the Business Development Manager (BDM) could follow this process under the Industrial Disputes (ID) Act.
From India, Kolkata
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As you mentioned above, the conciliation officer has only an administrative role. Their obligation is to record conciliation failure and submit a report to the appropriate government authority within 45 days of receiving the application. The government authority then has the power to refer the case to the adjudication body, such as the labor court, as it falls under Schedule 2 of the act.
This process is applicable only to workmen and excludes individuals in managerial or supervisory positions from its scope. Therefore, it raises a question of how the Business Development Manager (BDM) could follow this process under the Industrial Disputes (ID) Act.
From India, Kolkata
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Dear Debasish,
First, I would request you to carefully go through both of my earlier replies. My second reply was only in response to your query.
Whether an employee is a workman under the IDA, 1947 is a mixed question of law and fact. As conciliation under sec 12 and reference of disputes u/s 10 are purely administrative functions, neither the Conciliation Officer nor the appropriate Government can decide such a question. It is a matter fit for adjudication only. Therefore, they cannot arrogate to themselves the power of adjudication vested in a Labor Court by refusing to admit such a dispute raised by a person who is apparently outside the ambit of the definition of the term 'workman' under the Act. There are even cases instituted by persons with no locus standi to do so under such an Act. It is for the Court to decide the case based on the validity of the arguments and the evidence presented before the Court.
One may be designated as a manager without any managerial functions but only to do clerical nature of duties. In such a case, that person can seek remedy under the IDA, 1947 if he is able to prove his stand.
Only in this backdrop, my answers should be reviewed.
From India, Salem
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First, I would request you to carefully go through both of my earlier replies. My second reply was only in response to your query.
Whether an employee is a workman under the IDA, 1947 is a mixed question of law and fact. As conciliation under sec 12 and reference of disputes u/s 10 are purely administrative functions, neither the Conciliation Officer nor the appropriate Government can decide such a question. It is a matter fit for adjudication only. Therefore, they cannot arrogate to themselves the power of adjudication vested in a Labor Court by refusing to admit such a dispute raised by a person who is apparently outside the ambit of the definition of the term 'workman' under the Act. There are even cases instituted by persons with no locus standi to do so under such an Act. It is for the Court to decide the case based on the validity of the arguments and the evidence presented before the Court.
One may be designated as a manager without any managerial functions but only to do clerical nature of duties. In such a case, that person can seek remedy under the IDA, 1947 if he is able to prove his stand.
Only in this backdrop, my answers should be reviewed.
From India, Salem
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Dear Umakanthan sir,
You have very well explained the criteria under Workman or Managerial status.
For my knowledge, I would like to ask:
Even if the employee is working under the capacity of a Manager (not a Workman), can he challenge the dismissal? If so, where and how can it be processed? Should he file a suit in the Civil Court, or can he also approach the Labour Office?
As per my knowledge, the dismissal should follow the "Natural Law of Justice."
Dismissal merely by paying compensation (as per the employment terms) can be treated as justified, or should the company give proper justification by issuing a Charge Sheet and following the process as given in the Company Standing Order or Industrial Employment Standing Orders.
What is the difference between such dismissal and retrenchment/layoff?
Whether in the above case, the employee (Being a Manager, not a workman) can claim retrenchment for his service period (15 days' wages for every completed year).
Please explain the above for my knowledge.
Thanks in advance.
From India, Delhi
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You have very well explained the criteria under Workman or Managerial status.
For my knowledge, I would like to ask:
Even if the employee is working under the capacity of a Manager (not a Workman), can he challenge the dismissal? If so, where and how can it be processed? Should he file a suit in the Civil Court, or can he also approach the Labour Office?
As per my knowledge, the dismissal should follow the "Natural Law of Justice."
Dismissal merely by paying compensation (as per the employment terms) can be treated as justified, or should the company give proper justification by issuing a Charge Sheet and following the process as given in the Company Standing Order or Industrial Employment Standing Orders.
What is the difference between such dismissal and retrenchment/layoff?
Whether in the above case, the employee (Being a Manager, not a workman) can claim retrenchment for his service period (15 days' wages for every completed year).
Please explain the above for my knowledge.
Thanks in advance.
From India, Delhi
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Mr. Dangwal, you have raised core questions on service jurisprudence.
1. As rightly observed by you, the workman category can challenge the termination of service as per the provisions of the Industrial Disputes Act 1947. The violation of the Principles of Natural justice is a substantial ground for challenging the termination and it can interfere with punishment (Section 2A of ID Act). For those not covered by the ID Act, for employees in the private sector, the remedy lies before the Civil Court by seeking compensation for wrongful termination. The civil court does not enjoy the powers of the Labour Court to order reinstatement in service for the violation of principles of natural justice.
2. As regards the reliefs that can be obtained, a suit could lie for a permanent declaration that the termination of service is illegal and the employee continues in service. Even after having been removed from service, the employee can be deemed to be in service against the will and consent of the employer. However, such relief is a discretionary relief and extraordinary circumstances have to be shown to depart from the normal rule as per Section 34 of the Specific Relief Act that a Court should not ordinarily enforce a contract for personal services and give a declaration that the contract of service subsists.
3. The other relief that can be looked for is the compensation as per the Contract Act 1872, which provides for compensation in case of a breach of contract. But once both parties agree to the principle that "The appointment is liable to be terminated by either side with payment of three months' notice,” then no claim can lie for anything beyond that.
4. The claim of retrenchment compensation lies only under the ID Act, and for those not covered by the ID Act, there is no parallel provision. Retrenchment, as per law, has to follow the 'Last come first go' principle, and there cannot be any pick and choose method in terminating the employees. Layoff is a temporary shutdown of the affected employees to deal with certain contingencies provided in the ID Act. They continue to be employees and would resume duty after the layoff period is over. They are entitled to layoff compensation for the layoff period.
From India, Mumbai
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1. As rightly observed by you, the workman category can challenge the termination of service as per the provisions of the Industrial Disputes Act 1947. The violation of the Principles of Natural justice is a substantial ground for challenging the termination and it can interfere with punishment (Section 2A of ID Act). For those not covered by the ID Act, for employees in the private sector, the remedy lies before the Civil Court by seeking compensation for wrongful termination. The civil court does not enjoy the powers of the Labour Court to order reinstatement in service for the violation of principles of natural justice.
2. As regards the reliefs that can be obtained, a suit could lie for a permanent declaration that the termination of service is illegal and the employee continues in service. Even after having been removed from service, the employee can be deemed to be in service against the will and consent of the employer. However, such relief is a discretionary relief and extraordinary circumstances have to be shown to depart from the normal rule as per Section 34 of the Specific Relief Act that a Court should not ordinarily enforce a contract for personal services and give a declaration that the contract of service subsists.
3. The other relief that can be looked for is the compensation as per the Contract Act 1872, which provides for compensation in case of a breach of contract. But once both parties agree to the principle that "The appointment is liable to be terminated by either side with payment of three months' notice,” then no claim can lie for anything beyond that.
4. The claim of retrenchment compensation lies only under the ID Act, and for those not covered by the ID Act, there is no parallel provision. Retrenchment, as per law, has to follow the 'Last come first go' principle, and there cannot be any pick and choose method in terminating the employees. Layoff is a temporary shutdown of the affected employees to deal with certain contingencies provided in the ID Act. They continue to be employees and would resume duty after the layoff period is over. They are entitled to layoff compensation for the layoff period.
From India, Mumbai
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Dear Pansingh,
If you analyze the entire scheme of the Industrial Disputes Act, 1947 together with the amendments carried out to its sections 2(s) defining the term 'workman' and section 2-A enabling an individual workman to raise an industrial dispute himself against his discharge, dismissal, retrenchment or non-employment at the behest of his employer, I think such a right is available to only an employed person who fully satisfies the definition clause in its entirety.
If we scan the definition of the term 'workman' which I do hope you would be doing side by side while reading this post, we will understand that the definition can be divided into three parts for the sake of our objective and flawless comprehension, viz.,
- the first part which asserts who a workman is by inclusion with reference to the nature of work for which he is hired without any mention about the amount of wages/salary received for the work,
- the second part which specifically states who is not a workman by exemption with reference to the predominant capacity of his employment namely supervisory with a salary beyond a certain amount and managerial or administrative irrespective of the quantum of salary paid for the job, and
- the third part specifies who is not a workman by a clear-cut exclusion based on the specific nature of his service.
If we understand the implications of these exemptions and the exclusions, we can conclude only a workman can seek a remedy under the provisions of the IDA against his non-employment of whatever nature as a result of his employer's action.
Your next question about the remedy to the other persons is, in fact, a valid one and the answer lies certainly only somewhere outside the IDA, 1947. In the case of the exempted category, the remedy lies under the Indian Contract Act, 1872, for employment is basically a contract only and any breach of the terms and conditions of the contract would lead to a civil suit and claim for damages by the aggrieved party. Even in such a case against the discharge of a manager as per the terms of the contract of employment {Central Inland Water Transport Corporation v. Brojonath Ganguly [1986 SCR(2) 278]}, the Supreme Court held that such an unconscionable clause in the circumstances of the case was against public policy under section 23 of the Indian Contract Act, 1872.
Similarly, the excluded employees have their remedy under their service regulations framed under Article 311 of the Constitution of India.
I appreciate your presumption about the application of the principles of natural justice in every action including dismissal or discharge detrimental to the interests of any person employed. In such litigations, the judiciary would certainly set aside the action of the employer as illegal if there is a violation of the principles of natural justice by the employer while passing the impugned orders.
Our learned friend KK!HR has correctly answered about the nature of the remedy in such cases. For your information, I remember reading a judgment rendered by the honorable Supreme Court of India long back, lambasting the employer who refused constantly to reinstate a dismissed employee on the alleged criminal charge of murdering his colleague within the zone of employment. The employee was later acquitted by the trial court on the benefit of doubt, but the Court concluded that it cannot compel an unwilling employer to reinstate an unwanted employee and finally awarded a hefty sum of compensation to the ex-employee with costs.
From India, Salem
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If you analyze the entire scheme of the Industrial Disputes Act, 1947 together with the amendments carried out to its sections 2(s) defining the term 'workman' and section 2-A enabling an individual workman to raise an industrial dispute himself against his discharge, dismissal, retrenchment or non-employment at the behest of his employer, I think such a right is available to only an employed person who fully satisfies the definition clause in its entirety.
If we scan the definition of the term 'workman' which I do hope you would be doing side by side while reading this post, we will understand that the definition can be divided into three parts for the sake of our objective and flawless comprehension, viz.,
- the first part which asserts who a workman is by inclusion with reference to the nature of work for which he is hired without any mention about the amount of wages/salary received for the work,
- the second part which specifically states who is not a workman by exemption with reference to the predominant capacity of his employment namely supervisory with a salary beyond a certain amount and managerial or administrative irrespective of the quantum of salary paid for the job, and
- the third part specifies who is not a workman by a clear-cut exclusion based on the specific nature of his service.
If we understand the implications of these exemptions and the exclusions, we can conclude only a workman can seek a remedy under the provisions of the IDA against his non-employment of whatever nature as a result of his employer's action.
Your next question about the remedy to the other persons is, in fact, a valid one and the answer lies certainly only somewhere outside the IDA, 1947. In the case of the exempted category, the remedy lies under the Indian Contract Act, 1872, for employment is basically a contract only and any breach of the terms and conditions of the contract would lead to a civil suit and claim for damages by the aggrieved party. Even in such a case against the discharge of a manager as per the terms of the contract of employment {Central Inland Water Transport Corporation v. Brojonath Ganguly [1986 SCR(2) 278]}, the Supreme Court held that such an unconscionable clause in the circumstances of the case was against public policy under section 23 of the Indian Contract Act, 1872.
Similarly, the excluded employees have their remedy under their service regulations framed under Article 311 of the Constitution of India.
I appreciate your presumption about the application of the principles of natural justice in every action including dismissal or discharge detrimental to the interests of any person employed. In such litigations, the judiciary would certainly set aside the action of the employer as illegal if there is a violation of the principles of natural justice by the employer while passing the impugned orders.
Our learned friend KK!HR has correctly answered about the nature of the remedy in such cases. For your information, I remember reading a judgment rendered by the honorable Supreme Court of India long back, lambasting the employer who refused constantly to reinstate a dismissed employee on the alleged criminal charge of murdering his colleague within the zone of employment. The employee was later acquitted by the trial court on the benefit of doubt, but the Court concluded that it cannot compel an unwilling employer to reinstate an unwanted employee and finally awarded a hefty sum of compensation to the ex-employee with costs.
From India, Salem
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Termination-emp loyment_563.pdf
Termination letter.doc