Industrial Dispute Act- Supreme Court on Re-Employment of Retrenched Employee

January 04, 2019

In this recent case, the Supreme Court has elaborately discussed the provision underlying Section 25(H) of the Industrial Dispute Act which explains the law pertaining to re-employment of retrenched employee.

Case name: Management of the Barara Cooperative Marketing­ cum- Processing Society Ltd. v. Workman Pratap Singh

The present appeal assailed order passed by the High Court of Punjab, whereby the High Court reinstated the respondent employee into service with back wages.

The issue that fell for consideration before the Supreme Court was whether the respondent is entitled to claim re-­employment in the appellant’s services in terms of Section 25 (H) of the Industrial Dispute Act?

Here it would be relevant to mention that Section 25(H) of the ID Act provides that where any workman is retrenched and if the employer proposes to employ any person then he shall give opportunity to his retrenched workmen to offer themselves for re-employment.

Also read Retrenchment: Meaning and Legal Provisions

In the instant case however, the respondent who worked as a peon was terminated from services by the Appellant and later the respondent also accepted compensation awarded by Labour Court in lieu of termination. Later on it came to respondent’s knowledge that the appellant had regularized the services of two peons and hence the respondent claimed that even he became entitled to re-­employment in the appellant’s services in terms of Section 25 (H) of the Industrial Disputes Act, 1947 i.e. re-employment of retrenched employee.

Bench’s Verdict

  • The Supreme Court while referring to the facts of the case and the underlying statutory provision under Section 25(H) of ID Act held that no case was made out by the respondent (workman) seeking re- employment in the appellant’s services on the basis of Section 25 (H) of the ID Act and that Section 25(H) of the ID Act had no application to the case at hand.
  • The Apex Court held that Section 25(H) of the ID Act applies to the cases where employer has proposed to take into their employment any persons to fill up the vacancies. It is at that time, the employer is required to give an opportunity to the “retrenched workman” and offer him re-­employment and if such retrenched workman offers himself for re-­employment, he shall have preference over other persons, who have applied for employment against the vacancy advertised.
  • The Court further noted that the object behind enacting Section 25(H) of the ID Act is to give preference to retrenched employee over other persons by offering them re­employment in the services when the employer takes a decision to fill up the new vacancies.
  • That Section 25(H) of the ID Act is required to be implemented as per the procedure prescribed in Rule 78 of the Industrial Disputes (Central) Rules, 1957 which, in clear terms, provides that Section 25(H) of the ID Act is applicable only when the employer decides to fill up the vacancies in their set up by recruiting persons.
  • That in order to attract the provisions of Section 25(H) of the ID Act, it must be proved by the workman that firstly, he was the “retrenched employee” and secondly, his ex­employer has decided to fill up the vacancies in their set up and, therefore, he is entitled to claim preference over those persons, who have applied against such vacancies for a job while seeking re-­employment in the services.

Thus, the Supreme Court Bench in the case has held that the regularization of an employee already in service does not give any right to retrenched employee so as to enable him to invoke Section 25 (H) of the ID Act for claiming re- employment in the services.

Distinction between employment and regularization – While noting the distinction between the expression ‘employment’ and ‘regularization of the service”, the Supreme court observed that expression ‘employment’ signifies a fresh employment to fill the vacancies whereas the expression ‘regularization of the service’ signifies that the employee, who is already in service, his services are regularized as per service regulations.

In view of the aforesaid observations, the Supreme Court allowed the appeal and set aside High Court’s order.

The entire case can be accessed here.