All questions
Year in review
The past year saw the adjudication of quite a few labour disputes in the courts, leading to significant legal developments. A summary of some of the major judgments passed by Indian courts in this field can be seen below.
i P v. A and others (the High Court of Bombay)5
The Bombay High Court has laid down the guidelines for handling judicial proceedings instituted under the POSH Act and the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Rules, 2013 to protect the identities of the parties involved. This is the first time any High Court has laid out guidelines to protect the identities of the parties in judicial proceedings under the POSH Act. Some of the key guidelines are as follows:
- the names of the parties should not be mentioned in the orders and judgments. The orders and judgments are to read ‘A v. B‘, or ‘P v. D‘;
- in the body of orders and judgments, the parties are to be addressed as plaintiff and defendants and not by their name;
- the orders and judgments should not mention any personally identifiable information, such as emails, mobile or telephone numbers and addresses. Similarly, witnesses’ names and addresses are not to be mentioned in the orders and judgments;
- orders and judgments on merits should not be uploaded on the internet but should be delivered in private; and
- no order should be pronounced in open court, only in judges’ chambers or on camera.
ii Caparo Engineering India Ltd v. Ummed Singh Lodhi and ors (Supreme Court of India)6
This judgment deals with the illegal transfer of workmen. In this case, a number of workmen who were working in a factory were transferred to a different factory of the same employer around 900 kilometres away. The workmen raised an industrial dispute, and the matter was referred to the jurisdictional labour court, which held that the transfer was illegal and violated the ID Act.
Section 9A of the ID Act states that a notice of change must be given to workmen prior to effecting any change in the conditions of services, which are listed in the Schedule to the ID Act. An entry in the Schedule states that notice must be given for any increase or reduction in the number of persons employed in any occupation, process, department or shift, excluding any such change due to circumstances over which the employer does not have control.
In the present case, the Supreme Court found that the nature of work at the new factory was different, as the goods being manufactured were different. Additionally, the Supreme Court also found that the impugned transfer led to the workmen being moved to the post of ‘supervisor’, which disentitled them to the benefits of the ID Act after the transfer.
As such, the Supreme Court found that in this case, the transfer of workmen without any notice of change violated the provisions of the ID Act and, consequently, was illegal, arbitrary, mala fide and amounted to victimisation.
iii G4S Secure Solutions India Pvt Ltd v. Sanjeev Pawar and ors (Delhi High Court)7
In this case, the court ruled that reinstatement of employment is not an automatic remedy in all cases of illegal termination, and that a suitable compensation can also be a valid remedy. The facts of this case are that four workmen were engaged as security guards in an establishment. The establishment claimed that these workmen were habitually drunk and repeatedly engaged in physical altercations with other staff, and a police case was filed against these workmen for assault. On the basis of this police report, the management of the establishment issued a ‘show cause notice’ to the workmen, and as a result of this notice and replies filed by the workmen, their services were terminated.
This termination was challenged by the workmen in the Labour Court, which found the termination to be illegal, and awarded reinstatement along with full back wages to the workmen. When the employers challenged this decision before the High Court, the High Court relied on a previous Supreme Court judgment and opined that the relief of a lump sum compensation be granted to the workmen, and no order for reinstatement be given.
iv Mahip Kumar Rawat v. Ashwini Kumar Rai and ors (Madhya Pradesh High Court)8
In this case, the High Court of Madhya Pradesh ruled that back wages are to be calculated based on the wages that the employee would have drawn had their employment contract not been terminated.
The Madhya Pradesh High Court directed the employer to reinstate the appellant and pay him 50 per cent back wages. However, the employer calculated the back wages based on the workman’s wages prior to his termination (in 1999) and not on the wages payable between his termination and reinstatement.
The High Court, in this judgment, stated that the concept of back wages is based on compensation to the workman for the period of unemployment due to illegal termination. As such, the back wages would have to be calculated based on the period of unemployment.
The High Court directed the respondent to recalculate and pay back wages to the workman based on the wages that would have been drawn by him during the period of unemployment.
Outlook and conclusions
In 2019, the Indian government introduced four Labour Codes (the Code on Wages, the Industrial Relations Code, the Code on Social Security, and the Occupational Safety, Health and Working Conditions Code) with a view to consolidating and amending the 29 major labour laws currently enacted in the country. The Codes are meant to facilitate a more streamlined procedure for compliance by employers and employees, and resolve conflicting definitions and provisions that currently exist due to the large number of laws covering overlapping topics. The Codes have been passed by both Houses of the Parliament and have also received the assent of the President.
These Codes have recently been notified. The central government and state governments are in the process of framing relevant rules under these Codes for their implementation. Most states and union territories have framed draft rules under these codes; however, these are yet to come into force.
Lastly, with the rise in hybrid work structures and work from home arrangements implemented in the aftermath of the pandemic, employers are seeing a significant rise in dual employment cases, wherein employees are on the payroll of multiple employers at the same time. There is no specific law in India that prohibits dual employment or moonlighting, except that such restrictions are prescribed in some regulations governing factories. Generally, restrictions on dual employment are implemented by way of contractual provisions in employment agreements and policies, wherein employees are prohibited from taking up employment with any other entity while in active service of the current employer. Moreover, employment agreements also typically contain non-compete provisions – such restrictive covenants during the term of employment have also been upheld by courts in India.
Many employers in India have terminated employees’ employment contracts upon finding that these employees were simultaneously employed with the company’s competitor. Instances such as this underscore the importance of having clear and robust mechanisms in place to prevent dual employment scenarios, which give rise to business risks such as conflict of interest scenarios and risks of breach of confidential or proprietary information.
