Gujarat High Court glorifies section 25F of ID Act as providing relief against drastic action of retrenchment on account of which workman and his family are thrown into a life full of uncertainties and upholds labour court’s order for reinstatement.
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In this blog, Karma Management focuses on the important aspects of section 25F of the Industrial Disputes Act, 1947 and its judgment on upholding the verdict given by the labour court in the case of Jamnagar Municipal Corporation vs Avdesh Kishorbhai Solanki, 2022 Latest Caselaw 6615.
Karma Global has recently joined hands as collaborators with the leading lawyer’s firm, S. D. & Co. specializing in “Employment Laws” and advising Corporate Sectors on the finer nuances of ID issues and solutions with practical advice, interpretations, and successful closures for its esteemed clients on any matter connected with industrial disputes act and trade unionism as well as litigations.
Background of the case :
This petition under Article 227 of the Constitution of India is filed for quashing and setting aside the award dated 02.01.2018 passed by the Labour Court, Jamnagar in Reference (LCJ) No.62 of 2016. By the aforesaid impugned award, the Labour Court directed reinstatement to the original post with continuity in service and back wages to the extent of 20%.
The main contention of the learned Advocate for the petitioner-Jamnagar Municipal Corporation is that the original engagement of the respondent-workman was for a temporary period, on an ad hoc basis, and on a contract basis.
He drew the attention of this Court to Exh.18, which is the order of appointment on the contract basis of the respondent- workman.
He also drew the attention of this Court to the contents of the document to submit that for the particular purpose of maintaining street lights in the city of Jamnagar, an appointment is made on an ad hoc basis. It is submitted that thereafter, the entire process of street light was changed with development in technology, and LED technology was adopted by the Corporation, as a result of which the petitioner-Corporation had to float tender for this special job of work and work order came to be issued in the year 2015 for the purpose of installing of LED lights.
In view thereof, now the work of installation, maintenance, and operation of street lights being outsourced under the work order by tender process, the requirement of the workman for that purpose was no more necessary.
Hence, the decision was taken to lastly enter into the contract with the respondent-workman for a period between 06.12.2015 to 31.05.2016, which the respondent-workman voluntarily and readily entered into and therefore, as per the condition of such contract, when the lapse of the period after 31.05.2016, the relation between the petitioner and the workman came to an end.
Learned Advocate for the petitioner- Jamnagar Municipal Corporation submitted that in view of the fact that the respondents had entered into the contract with the Corporation, their case would be covered under Section 2(oo)(bb) and therefore, Section 25(F) will not be attracted. In absence of attraction of Section 25(F), there cannot be an order of reinstatement.
Contrary to the above, the Labour Courts’ submission was that: since 2010, the respondents have been continuously working as linemen for the purpose of street lights in Jamnagar city and till 2016, the respondents have rendered services as such and therefore, have completed more than 240 days and therefore, are in continuous service for almost six years. It is submitted that the Labour Court has treated the case to be in breach of Section 25(G) and (H) and hence, justified in ordering reinstatement.
The Court took reference to the case of Gujarat Agro Industries Corporation Ltd. (supra), which has clearly held as under:-
Further, the fact that consecutive orders repeatedly appointing the claimant for a short duration is passed from time to time, go to show that such arrangement is a conscious decision and attempt of the respondent to give artificial breaks in the service of the claimant so as to circumvent or frustrate the statutory provisions, more particularly section 25F of the Act and to misuse, rather abuse, the provisions under clause (bb) of section 2(oo) of the Act with a view to depriving the claimant of his legal rights conferred by various provisions under different Labour Laws.
Under the circumstances, the corporation is not justified in taking shelter under clause (bb) of section 2(oo) of the Act. In the background of the above facts, the contention based on the ground of clause (bb) of section 2(oo) cannot be entertained and accepted.
The justification of the Court is as follows :
It is pertinent that Section 25F of the Act is the beneficial provision that is introduced with the object to provide some relief to the workman who is visited with drastic action of retrenchment on account of which the workman and his entire family are thrown into a life full of uncertainties, difficulties and dark future.
In connection with the said beneficial provision, an exception is carved out by virtue of clause (bb) of Section 2(oo). Certain types of termination of service, which would, ordinarily, be tantamount to retrenchment [but for the said clause (bb) of Section 2(oo) of the Act], are taken out of Section 25F of the Act. The said clause (bb) provides an exception in respect of the terms and conditions prescribed by section 25F. Therefore, the said clause (bb) of Section 2(oo) of the Act must be construed strictly. This is necessary so as to curb abuse by unscrupulous employers. Otherwise, the said provision can prove to be a handle or weapon in the hands of the employer to resort to a policy of hire and fire and indiscriminate violation of Section 25F of the Act as well as to circumvent various provisions under different Labour Laws and deprive the workmen the benefits which would flow from continuous service.
The scheme of the Act and object of the clause (bb) of Section 2(oo) do not permit, but rather abhor its misuse or exploitation for such purpose by employing such novel and ingenious methods.
Actually, such practice of engaging workman by separate but consecutive appointment orders of short duration with a view to opposing workman’s claim about continuity in service by citing separate appointment orders and giving artificial breaks between two phases of appointments is unjust and runs counter to the object of the provision and such practice has been repeatedly deprecated by Courts.
By adopting the such practice, the employer actually engages the workman continuously but with a view to establishing that the person was engaged intermittently and was not engaged continuously, separate orders for a short duration are issued, and/or artificial breaks are given by issuing appointment letters for 3 months or 6 months duration or in some case 1 year tenure and in some cases, appointment orders are issued for tenure f 29 days (then break off one or two days is given) and the same workman is again appointed. \
In such an arrangement, the appointment which, in reality, and in actual effect, is continuous, is artificially interjected by such a facade or smoke screen of separate orders despite the fact that the work, for which the person is engaged, continues and the need for engaging the workman also continues. Such action of engaging the workman in such a manner and then abruptly discontinuing the person, would not fall within the purview of clause (bb) of Section 2(oo), and such practice cannot get the protection of the principle of fixed-term appointment recognized by clause (bb) of Section 2(oo)(bb).
In facts of the present case also and in view of continued appointment and discharge of services by the respondents-workmen, the Court is of the view that the case of the respondents will not be covered under Section 2(oo)(bb).
In view of the aforesaid, no case is made out for interference. The petitions deserve to be and are hereby dismissed. The rule is discharged. No order as to costs.
As said above, Karma Management Global Consulting Solutions Pvt. Ltd. which is a keeper of all laws and regulations on behalf of the clients whose compliance services it handles, is also of the strongest opinion that in our country as well, legislations are made for the benefit of all the stakeholders, be it the employers or the employees and therefore, the same has to adhere within the strongest sense of its functionalities or face action at the hands of the authorities in case of breaches knowingly done.
Karma Management handles a lot of labour issues for all its clients and provides the right interpretation and direction in pursuit of labour problems and labour-related issues.
It represents its clients in labour courts on a timely basis as well as represents all its outsourced employee’s number to over 6000 located at clients’ premises, in a judicious manner by providing a disciplined and well-structured approach as a way of enlightened guidance.
It keeps on advising and telling its clients and all its vendors whose monthly vendor audit is carried out by the expert team of Karma Management, especially in relation to contract labour, that does not enter into sham contracts as it has no validity for obtaining labour license nor does it have any validity in the courts of law.
Sham contracts are not recognized in a court of law and are not valid.
Sham Contracts usually place the employer in an advantageous situation. It shifts the responsibility and cost to employees. It also provides the employers an undue advantage over the legitimate workers and those making the use of bona fide contracting.
Sham contracting is when an employer misrepresents employment as an independent contracting arrangement. An employer will have contravened the Fair Work Act if they represent or say that someone is an independent contractor when in reality they are actually an employee.
All “employees” are entitled to minimum entitlements, such as annual leave, sick leave, long service leave, and payment of superannuation. These entitlements are enshrined in the National Employment Standards, Long Service Leave Act, and relevant superannuation legislation. Numerous relevant Awards also give certain entitlements to workers in different industries.
Someone who is not an “employee”, but rather an “independent contractor”, is not entitled to payment of these entitlements. One example is that of a tradesman such as a plumber. You don’t pay annual leave or superannuation to a sole trader plumber because they are a contractor. If a plumber has a sick day, they don’t get paid, whereas an employee does.
Characteristics of an employee:
Works for only one business
Little or no control over what work they do
Characteristics of a contractor:
Works for multiple businesses/individuals
No set hours
Full control over what work they do
No, leave entitlements
If you are working for a business as an “independent contractor” and are not receiving payments for leave or super etc., but you meet the criteria of an employee (above), then there is a good chance that there is a sham contracting situation in play.
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This blog has been compiled by the internal staff of Karma with the knowledge and expertise that they possess, for its monthly newsletter Issue 03 of September 2022 in case of specific or general information or compliance updates for that matter, kindly reach out to the