Recent Decisions on Labour

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Recent Decisions on Labour IR issues

• By
• K. Srinivas, Manager (Legal)
• M. Sivaraman, Dy. Manager (Legal)
• Venu Samudrala, Prob.Asst. Exe.(Legal)

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WELCOME !
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• OVER-VIEW
• Revision of Pay Allowances
• Sexual Harassment of Women
• Acceptance of VRS
• Strikes
• Proof for Regularization / Re-instatement
• Termination of Probationers
• False Declaration by Employees
• Regularization of Contract Labour
• Subsistence Allowance
• Bonds

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• Revision of Pay Allowances
• AK Bindal and Another v. Union of India and ors.
  AIR 2003 SC 2189
• Non revision of Pay Allowances in PSUs is not
  violative of fundamental right to live with human
  dignity.
• Employees of PSUs being not Government servants
  they have no right to claim Government financial
  assistance to PSUs for revision of Pay and
  allowances.
• Kapila Hingorani v. State of Bihar 2003 LLR 628
  (SC)
• Starvation deaths of employees of PSUs over non
  payment of Salary for several years.
• No defence in law for the Govt. to say that PSUs
  are distinct corporate legal entity and hence
  Govt. not liable.
• Where Govt. invests public money in PSUs it
  cannot be blind to the violation of Human Rights
  of the employees of PSUs.
• State Govt. held liable to release salary and
  there is no legal basis to direct Central Govt.
  for the same.

Inference Corporate veil can be lifted if human
rights of employees of PSUs are violated
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• Sexual Harassment of Women
• Medha Kotwal Lele and ors. v. Union of India and
  ors.
• SC order dated 27/04/2004
• Clarification issued to directives contained in
  Vishaka Case.
• Report of complaints committee will be treated as
  findings of a disciplinary
• enquiry.
• Inference
• Report of complaint committee will be no more a
  preliminary enquiry findings.
• On proved guilty by complaint committee report
  employer can straightaway initiate disciplinary
  action against delinquent.
• Vishaka directives incorporating sexual
  harassment as misconduct will now be governed by
  the clarifications issued.

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• Acceptance of VRS
• Bank of India v. OP Swarnakar 2003 (2) SCC 721
• VRS is contractual in nature and principles of
  contract law will apply.
• Scheme is only an invitation to offer.
  Application of employees will be the offer.
  Before its acceptance by employer, employee is
  free to withdraw option.
• Employees who have accepted benefits / payments
  under the scheme cannot thereafter withdraw their
  application or legally challenge the same.
• Inference
• Above ratio consistently applied will PNB v.
  Virendra Kumar Goel 2004 LLR 267 (SC) and Punjab
  and Sind Bank v. S. Ranveer Singh Bawa 2004 LLR
  481 (SC).
• Withdrawal of option under VRS is possible until
  its acceptance not withstanding clauses
  prohibiting withdrawal.
• Acceptance of offer by employer is material and
  communication of order even if slightly delayed
  will not vitiate.

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• STRIKES
• TK Rangarajan v. Government of Tamil Nadu ors.
  2003 LLR 863 (SC)
• Employees have no fundamental rights to go on
  strike.
• There is no statutory provision empowering
  Government employees to go on
• strike.
• There is no fundamental, legal or equitable right
  to go on strike.
• Inference
• Decision generated widespread resentment and
  furore from employees, trade unions etc.
• Dicta in the decision has been widely worded on
  issues not canvassed before the court.
• Decision has not been specific to the case of
  Government employees as it sought to make wide
  and sweeping conclusions.
• Possibly this decision will bind only Government
  employees since legal right exists for workman
  under Sec.22 of I.D. Act, 1947.
• Then BJP Govt. accepted trade unions view and
  committed itself to file a review application
  before SC.

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• Proof for Regularization / Re-instatement
• UP Avas Evam Vikas Parishad v. Kanak 2003 LLR 1
  (SC)
• It is the responsibility of the workman to prove
  that he worked for more than 240 days.
• Mere filing affidavit by workman cannot
  substitute evidence on receipt of salary
• appointment order etc.
• Employer cannot be compelled to lead evidence
• BHEL v. State of UP ors. 2003 LLR 817 (SC)
• Once workman leads evidence, onus then shifts to
  employer to produce records etc. to
• prove that he was not engaged so.
• Failure to do so will lead to adverse inference
  and reinstatement / regularisation will be
• directed.
• Workmen of Nilgiri Coop. Mktg. Society v. State
  of TN.
• 2004 LLR 351 (SC)
• Even if workers continued for years together, to
  seek regularisation etc. proof is required to be
  laid by said workers.
• Apart from control and supervision test, an
  integration test is to be applied to determine

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• Termination of Probationers
• Mathew P Thomas v. Kerala State Civil Supply
  Corpn. 2003 LLR 349 (SC)
• F Termination simplicitor of a probationer will
  not be stigmatic.
• Termination of probationer even when he was
  warned of unsatisfactory work will
• not be stigmatic.
• Such termination will not be invalid.
• Inference
• Earlier rulings on foundation and motive for
  discharge of probationer stands diluted.
• Even the show cause notice issued earlier to
  improve performance will not be regarded as
  motive for termination and is not stigmatic.

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• False Declaration by Employees
• Kendriya Vidyalaya Snagathan ors. v. Ram Ratan
  Yadav
• 2003 LLR 433 (SC)
• Suppression of material facts or giving false
  declaration in employment applications will lead
  to termination of service.
• Inference
• Declarations made by applicant in employment
  forms are very material.
• On found guilty of suppression or false
  declaration, it is no defence to state that he
  did not understand the language or the
  implication of the statements required
  thereunder.

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• Regularization of Contract Labour
• Ram Singh v. UT of Chandigarh 2004 LLR 47 (SC)
• Following SAIL decision held that not High Courts
  but only Industrial Courts and Tribunals should
  examine regularisation.
• Multiple pragmatic approach involving and
  integration test will have to be applied and
  mere control test not relevant.
• Workmen of Nilgiri Coop. Mktg. Society v. State
  of TN.
• 2004 LLR 351 (SC)
• Mere long years of working not relevant but to
  establish employer employee relationship,
  workman will have to prove the same.
• High Courts not to interfere.
• Industrial Courts to adopt an integration test.
• Inference
• Genuine contracts will prevent direction for
  regularisation.
• High Courts cannot interfere and it is
  responsibility of contract labour to prove
  existence of direct employer employee
  relationship with PE.
• Labour Courts / Tribunals to apply multiple tests.

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• Subsistence Allowance
• Indra Bhanu Gaur v. Committee, MGT of MM Degree
  College
• 2004 LLR 228 (SC)
• In absence of pleading and establishing prejudice
  by the delinquent caused by non-payment of
  subsistence allowance, proceedings will not be
  vitiated.
• Suspended employee has to request for release of
  subsistence allowance.
• Inference
• Settled position is slightly diluted as suspended
  employee is now supposed to request for the
  allowance.
• In case of non payment, the suspended employee
  has to plead and establish prejudice that
  non-payment had denied him opportunity so as to
  assail the disciplinary proceedings

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• Bonds
• Weiler International Electronics v. PV
  Somasundaram
• 2003 LLR 357 (BOM)
• Injunction restraining former employee not to
  divulge trade secrets will not be issued on mere
  apprehension.
• Bonds and agreements restraining such disclosure
  by former employees even after leaving the
  services will have to be for reasonable period
  and with geographical limits.
• Star India Pvt. Ltd. v. Laxmiraj Sitaram Naik
  2003 LAB. I. C. 1618 (BOM)
• Injunction restraining former employee not to
  join competitor and divulge trade secrets can be
  issued only if the existence of such trade
  secrets is proved and that the former employee
  was imparted with such secrets is established.
• Negative covenants which lead to effecting the
  right to employment and livelihood of former
  employees cannot ordinarily be enforced.
• Inference
• Bonds and negative covenants with employees will
  be invalid if found to be against Sec.27 of
  Contract Act or against public policy or if it
  places unreasonable restrictions.
• Can be enforced if non-disclosure or non-compete
  covenants are for limited period and territorial
  in operation.
• Mere knowledge and expertise or style of working
  gained by an employee through long years of
  working is his own product and not the business
  or trade secret of the employer.

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Before wrap-up we stand to clarify
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THANK YOU