In a recent ruling of Arya Ship Breaking Corporation & Another Vs Sumer Ramnarayan Yadav & Another, the Bombay High Court reviewed and modified an award passed by the Tenth Labour Court, Mumbai, which had directed a ship-breaking partnership firm (the petitioner) to pay back wages to a former employee (Respondent No.1) who had claimed unlawful termination. The case sheds light on how courts approach compensation in cases involving illegal termination, particularly when the employee has not remained completely unemployed during the disputed period.
Background of the Case:
The petitioner, a partnership firm engaged in the business of ship breaking, was involved in a dispute with its former employee, Respondent No.1, a driver who claimed to have worked with the petitioner for 11 years. Respondent No.1 alleged that he was terminated on 8 February 2012 after he raised demands for a salary increment and benefits such as bonus and provident fund. Despite sending several notices to the petitioner, his requests went unanswered. Following failed conciliation efforts, the matter was referred to the Labour Court in June 2016.
The Labour Court ultimately ruled that the termination of Respondent No.1’s employment on 8 February 2012 was illegal. However, instead of ordering reinstatement, the court awarded 50% back wages for the period from 8 December 2012 to 31 March 2018, which amounted to a substantial sum. Aggrieved by this decision, the petitioner approached the Bombay High Court, challenging the award.
Key Issues in Dispute:
The primary issue in the case revolved around the Labour Court's decision to award back wages despite admissions from Respondent No.1 that he had worked intermittently as a "Badli worker" during the period in question. A "Badli worker" is typically a temporary or substitute worker engaged for short periods to fill in for regular employees. In his cross-examination, Respondent No.1 admitted to having worked with other employers, including Venus Society and Urvashi Society, during the disputed period, thus suggesting that he had not been completely unemployed.
Moreover, Respondent No.1 had secured regular employment from 1 April 2018 at a higher salary of Rs. 19,500 per month, further complicating the claim for back wages. Despite this, the Labour Court awarded 50% of the back wages, reasoning that the termination had been illegal and that the employee had been unfairly deprived of his due entitlements.
The Petitioner's Argument:
The petitioner’s counsel argued that the award of back wages was unjustified given the admissions made by Respondent No.1. These included his acknowledgment of working as a Badli worker between 2012 and 2018 and securing full-time employment from April 2018. The petitioner also emphasized that Respondent No.1 had not sought reinstatement but had instead focused on compensation.
In addition, the petitioner contended that the delay in filing the statement of claim—over six years after the alleged termination—should have impacted the Labour Court’s decision, as the passage of time could have affected the validity of the back wages claim.
Respondent's Defense:
On the other hand, Respondent No.1’s counsel argued that the termination was unlawful, and the award of back wages was a natural consequence of this unlawful dismissal. She further contended that while Respondent No.1 may have worked intermittently as a Badli worker, this did not constitute continuous or gainful employment. Therefore, the Labour Court’s decision to award 50% back wages was justified.
Court’s Analysis and Judgment:
The Bombay High Court, after reviewing the case, noted that while the Labour Court was correct in finding the termination to be unlawful, the decision to award 50% back wages was based on some misapprehensions regarding Respondent No.1’s intermittent work as a Badli worker. The court highlighted that Respondent No.1 had admitted in his testimony that he worked in a temporary capacity and had only been partially employed during the relevant period.
Considering these admissions, the High Court observed that awarding full back wages would not be appropriate. However, it acknowledged that Respondent No.1 had been deprived of his legal entitlements due to the unlawful termination, which justified some form of compensation. Given that Respondent No.1 had secured better employment by 2018 and was no longer seeking reinstatement, the court found that a lump sum compensation would be more appropriate than continuing with the back wages.
Modifying the Award:
The High Court thus modified the Labour Court’s award, directing the petitioner to pay a lump sum compensation of Rs. 2,00,000 to Respondent No.1 within six weeks. This compensation was seen as an adequate remedy, taking into account the unlawful termination, Respondent No.1’s intermittent employment, and the fact that he had secured a better-paying job since 2018. The court also clarified that Respondent No.1 would not be entitled to any further amounts beyond the lump sum compensation.
Conclusion:
The judgment reflects a nuanced approach to cases involving unlawful termination, balancing the rights of the employee with the realities of their interim employment. While the Labour Court’s initial award of back wages was grounded in the finding of an illegal termination, the High Court recognized the admissions by the employee regarding his temporary engagements during the disputed period. By modifying the award to a lump sum compensation, the court ensured that justice was served in a fair and equitable manner for both parties.
This case highlights the importance of considering all aspects of an employee’s employment history, including any alternative employment or temporary engagements, when determining compensation following an unlawful termination. The judgment underscores the need for a balanced and pragmatic approach to addressing the consequences of wrongful dismissal in the workplace.
