labour law update february 2012

7/29/2019 Labour Law Update February 2012

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Chadha&Co. LabourLawUpdate

February2012

Summary of Important Judgments

Employees' Provident Funds and Miscellaneous Provisions Act, 1952

1. a) Manpower suppliers will be considered as the principal employer for provident fundpurposes.

b) HRA, overtime, bonus, commission, washing allowances will not attract EmployeesProvident Fund contributions.(2012 LLR 22)

2. Special allowance, dearness allowance, conveyance and other allowances paid to all employeeswould be treated as basic wages. (2012 LLR 42)

Industrial Disputes Act, 1947

3. A shift supervisor is not a workman. (2012 LLR 30)4. Probationers are not entitled to demand reason for their termination. (2012 LLR 46)5. No reinstatement to an employee who loses managements confidence. (2012 LLR 8)6. A workman cannot be forced to work with a different employer without his consent.

(2012 LLR 76)

7. Assaulting of superior at a workplace is gross indiscipline to justify dismissal. (2012 LLR 53)8. Habitual absence of the workman amounts to grave misconduct. (2012 LLR 70)9. Compensation in lieu of reinstatement is appropriate when casual labourers on daily wages have

merely worked for more than 240 days before termination. (2012 LLR 1)

Payment of Wages Act, 1936

10. Deductions can be challenged before Authority under Payment of Wages Act only when wagesare less than prescribed ceiling. (2012 LLR 48)


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LabourLawUpdate,February2012 Page2of7

Provident Fund

1. Case Name - Group 4 SecuritasGuarding Ltd. & Another vs. EmployeesProvident Fund Appellate Tribunal &Ors. [2012 LLR 22]

Forum - Delhi High Court

Judgement

(a) Responsibility for payment ofProvident Fund Contributions -Group 4 Securitas Guarding Ltd.(GSGL) was providing securitypersonnel to M/s Havels (I) Ltd. as acontractor. GSGL was providingservices to various firms and allsecurity guards were under theultimate control of GSGL. Thesecurity guards received theirappointment letter and wages fromGSGL. The Provident FundDepartment had also been receivingcontributions from GSGL treating itas the employer of the security

guards. M/s Havels (I) Ltd. had nocontrol over the security guards. Itwas held that the services beingprovided by GSGL are not as acontractor but on a principal toprincipal basis and M/s Havels (I)Ltd. cannot be termed as theprincipal employer. The High Courtobserved that the relationshipbetween such a contractor and theestablishment where the man-power

is supplied by him would be ofprincipal to principal and not that ofemployer-contractor. Thus, GSGLwas held liable to pay Provident Fundcontributions.

(b) Allowances forming part of basicwages - Regional Provident FundCommissioner, Faridabad initiatedproceedings under Section 7A of theEmployees' Provident Funds and

Miscellaneous Provisions Act, 1952,against GSGL for not depositingProvident Fund contribution on

HRA, conveyance allowance andwashing allowance. GSGL challengedthe order of the Provident FundCommissioner by filling appeal.However, the Appellate Tribunaldismissed the appeal.

The order of Tribunal was challengedby GSGL and M/s Whirlpool ofIndia Ltd before the Delhi HighCourt. The Delhi High Court

observed that Section 2 (b) of theEmployees' Provident Funds andMiscellaneous Provisions Act, 1952defined basic wages and HRA,overtime allowance, bonus,commission or any other similarallowances are not covered in thedefinition of basic wages.

The Delhi High Court held that theview taken by the Provident FundCommissioner and the Tribunal wasbased on wrong interpretation of theprovisions of law. The High Courtfurther held that the house rentallowance, conveyance allowance andwashing allowance are not included inthe definition of basic wages andthus no Provident Fund contributionis to be made towards suchallowances.

2. Case Name Surya Roshini Limitedvs. Employees Provident Fund andAnother [2012 LLR 42]

Forum Madhya Pradesh HighCourt

Judgement - Assistant ProvidentFund Commissioner passed an orderunder Section 7A of the Employees'Provident Funds and MiscellaneousProvisions Act, 1952 holding special


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LabourLawUpdate February2012 Page3of7

allowances, dearness allowance,conveyance allowance and otherallowances as part and parcel of basicwages and directed the petitioner todeposit the assessed amount. TheAppellate Tribunal dismissed theappeal filed by the Petitioner againstthe order of the Provident FundCommissioner. The order of Tribunalwas challenged by the Petitionerbefore the Madhya Pradesh HighCourt.

The High Court held that when

special allowances, dearnessallowance, conveyance allowancesand other allowances are paiduniversally to all the employees, theywould be treated as part and parcel ofbasic wages and Provident Fundwould have to be paid in respect ofsuch allowances under theEmployees' Provident Funds andMiscellaneous Provisions Act, 1952.

Industrial Disputes Act, 1947

3. Case Name P.B. Sivasankaran vs.The Presiding Officer, First AdditionalLabour Court, Chennai and Another[2012 LLR 30]

Forum - Madras High Court

Judgement The petitioner wasappointed as the Trainee Supervisorand his services were terminated

without conducting enquiry. Thepetitioner raised an industrial disputebefore the Labour Court claiming tobe a workman under the definitionprovided in Section 2 (e) of theIndustrial Disputes Act, 1947. TheLabour Court after recordingevidence observed that the petitionerwas working as shift supervisor,having power to take action againstthe workers who default in their

work. He was further responsible forrecommending confirmation ofworkmen, granting leave to workmen,preparing log reports and dailyreports and issuing memos toworkers. The Labour Court held thatthe nature of duties of the petitioner,being in the supervisory nature, takehim out of the purview of thedefinition of workman underSection 2 (e) of the IndustrialDisputes Act, 1947. On a WritPetition filed by the petitioner tochallenge the order of the Labour

Court, the Madras High Court heldthat the Labour Court has rightlyconcluded that the petitioner is not aworkman.

4. Case Name Sarbjit Singh vs.Presiding Officer, Labour Court, Amritsarand Others [2012 LLR 46]

Forum Punjab & Haryana HighCourt

Judgement The services of thepetitioner were terminated during hisprobation period while doing servicesas a conductor in Punjab Roadways.The petitioner contended before theLabour Court that the terminationwas done without any enquiry andconsequently was invalid andviolative of Section 25-F of theIndustrial Disputes Act, 1947. TheLabour Court held that the

probationers are not entitled todemand reasons for their terminationand thus their services can beterminated any time by the employerduring their probation period. TheP&H High Court upheld the decisionof the Labour Court.


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5. Case Name The DivisionalController, KSRTC vs. M.G. Vittal Rao[2012 LLR 8]

Forum Supreme Court

Judgement The respondentemployee while working as helper inthe appellant-corporation wassubjected to disciplinary proceedingsmainly on the allegation of theft. Therespondent employee was thereafterimposed with the punishment ofdismissal. The Labour Court found

the enquiry fair and proper and therespondent employee was held notentitled to any relief. The SupremeCourt upheld the order of the LabourCourt and held that once theemployer has lost the confidence inthe employee and the bona fideloss ofconfidence is affirmed, the order ofpunishment must be considered to beimmune from challenge, for thereason that discharging the office of

trust and confidence requiresabsolute integrity, and in case of lossof confidence, reinstatement cannotbe directed.

6. Case Name Sunil K.R. Ghosh &Ors. vs. K. Ram Chandran & Ors. [2012LLR 76]

Forum Supreme Court

Judgement In 1997, Philips India

Ltd. (Philips) introduced aVoluntary Retirement Scheme (VRS)for its workmen and majority of theworkmen opted for the same. InSeptember 1998, Philips sold one ofits factories to M/s KitchenAppliances India Ltd. ThereafterPhilips withdrew the said VoluntaryRetirement Scheme. On December22, 1999, Philips issued a noticeinforming its employees that

consequent upon transfer of thefactory, the employment of all theworkmen would be taken over byM/s Kitchen Appliances India Ltd.with immediate effect and theirservices will be treated as continuousand the terms and conditions ofservices will not be in any way lessfavourable than those applicableimmediately prior to the transfer ofownership.

Upon a challenge by the aggrievedworkmen who were forced to work

under M/s Kitchen Appliances IndiaLtd., the Supreme Court held that it issettled law that without consent,workmen cannot be forced to workunder different management. Hence,workmen were entitled to retirement/retrenchment compensation fromPhilips.

7. Case Name Voltas Limited-Allwynunit, Hyderabad vs. Additional Industrial

tribunal-cum-Additional Labour Court,and Another [2012 LLR 53]

Forum Andhra Pradesh HighCourt

Judgement The supervisor of thepetitioner Company had refused togrant attendance to a workman forthe period of his absence from theCompany and thereafter theworkman had abused the supervisor

in filthy language and had caughthold of the supervisors shirt andslapped him on his right cheek. Thepetitioner Company dismissed thesaid workman from service and theworkman challenged his dismissalbefore the Labour Court. The LabourCourt directed the petitionerCompany to reinstate the workmaninto service with continuity ofservice, all other attendant benefits


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and 50% back wages. The petitionerCompany thereafter filed a WritPetition before the Andhra PradeshHigh Court. The Andhra PradeshHigh Court held the act of assaultinga superior to be gross indiscipline andupheld the dismissal of the saidworkman. The Court observed thatany lenient view would encourageindiscipline in the industrialestablishment and the Labour Courterred in interfering with thepunishment of dismissal of theworkman as imposed by the

petitioner Company.

The High Court further observed thatafter introduction of Section 11 A ofthe Industrial Disputes Act, 1947,certain amount of discretion is vestedwith the Labour Court in interferingwith the dismissal or discharge of aworkman. However, suchinterference should only be exercisedon the existence of certain factors like

when the punishment isdisproportionate to the gravity ofmisconduct so as to disturbconscience of the court, or theexistence of any mitigatingcircumstances which require thereduction of punishment, or that thepast conduct of the workman isunblemished, which may persuadethe Labour Court to reduce thepunishment.

8. Case Name Divisional Controller,Karnataka State Road TransportCorporation, Chikmagalur vs. M.Devaraju [2012 LLR 70]

Forum Karnataka High Court

Judgement Delinquent conductorwas found guilty of absence for 2years and 5 months. The conductor

was thereafter on an enquiry,dismissed by the petitioner company.The Labour Court set aside thepunishment of dismissal, holding thatit was disproportionate to the gravityof misconduct and directedreinstatement of the conductor. Onan appeal, the High Court observedthat habitual absence of a workmanamounts to grave misconduct andgross violation of discipline andquashed the award of the LabourCourt which had grantedreinstatement to the conductor.

9. Case Name Bharat Sanchar NigamLtd. vs. Man Singh [2012 LLR 1]

Forum Supreme Court

Judgement The respondents-workmen worked with the appellantas casual labourers on daily wagesduring the year 1984-85. Due to non-

availability of work, their serviceswere terminated in the year 1986. Nonotice or retrenchment compensationwas given to them before terminatingtheir services. After about five years,they raised an industrial dispute andthe Labour Court orderedreinstatement of the respondents-workmen on the same post whichthey were holding at the time of theirtermination. The High Courtdismissed the writ petitions filed by

the Appellant department challengingthe award of reinstatement passed bythe Labour Court.

On an appeal, the Supreme Courtobserved that it is well settled lawthat although an order ofretrenchment passed in violation ofSection 25-F of the IndustrialDisputes Act, 1947 may be set asidebut an award of reinstatement should


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not be passed. This Court hasdistinguished between a daily wagerwho does not hold a post and apermanent employee. The SupremeCourt held that in view of the legalposition and the fact that therespondentsworkmen were engagedas daily wagers and they had merelyworked for more than 240 days, therelief of reinstatement cannot be saidto be justified and instead theSupreme Court directed theappellant, Bharat Sanchar Nigam Ltd.to pay Rs.2 lakhs to each of the

respondents in full and finalsettlement of their claim.

Payment of Wages Act, 1936

10. Case Name Singareni Collieriesworks Union, Khammam & Ors. vs.Singareni Colleries Company Limited &Another [2012 LLR 48]

Forum Andhra Pradesh HighCourt

Judgement The Petitioners werebeing paid wages exceeding INR6,500 per month. The Court held thatpursuant to the 2003 amendment ofSection 1(6) of the Payment of WagesAct, 1936, the said Act applies toemployees whose wages are belowINR 6,500 per month. The proviso toSection 9(2) of the Payment of WagesAct, 1936 enables the employer theemployer to make penal deductionwhere ten or more employees go onunjustified strike.

The Court held that as all thepetitioners and the employees of theregistered trade unions are gettingmore than INR 6,500 per month aswages, the respondent company hasno power to exercise under Section9(2) of the Payment of Wages Act,1936. Thus, a claim about penaldeductions of wages of workmen liesonly when the employee is drawing

salary more than INR 6,500 permonth.


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Source

Labour Law Reporter, press clippings

Disclaimer

This update is not a legal service and does not provide legal representation or advice to any recipient. Thisupdate is published by Chadha & Co. for the purposes of providing general information and should not beconstrued as legal advice. Should further information or analysis be required of any subject matter contained inthis publication, please contact Chadha & Co.

About Chadha & Co.

Chadha & Co. is Indias leading boutique law firm with a specialised practice in advising foreign companiesdoing business in India on Indian laws and regulations. The Firm has a strong labour and employment laws

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labour law update february 2012

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