Retrenchment Without Section 25F: Continuous Service, Resignation and Relief
A spinning mill at Guntur employs 260 workmen on its rolls. R., engaged as a helper in 2016, was told on 12 March 2024 that his services were not required and that he need not report from the next day. He was given no notice and no retrenchment compensation, and no intimation was sent to the appropriate Government. The mill pleads that R. was a temporary hand engaged against a seasonal contract that lapsed; that he had in any case tendered a resignation dated 4 March 2024 bearing his thumb impression, which the Personnel Officer says was signed in his presence; and that he abandoned service. R. says he was made to sign blank papers to collect his provident fund. The union produced the mill's muster rolls for 2019 to 2023 showing attendance of 268, 291, 277, 284 and 262 days. The mill produced only the 2023 register and says the earlier registers were weeded out under its record-retention policy. R. raised the dispute in January 2027 and the Government referred it in April 2027. Before the Industrial Tribunal the mill also relies on Section 2(oo)(bb) of the Industrial Disputes Act.
1. Is R.'s termination retrenchment within Section 2(oo)? Can the mill bring the case within the exception in Section 2(oo)(bb), and what is the effect of non-compliance with Section 25F?
Read the worked answer
The definition and the exception. Section 2(oo) defines retrenchment as the termination by the employer of a workman's service for any reason other than punishment by disciplinary action, with four excluded categories. Clause (bb) excludes termination as a result of non-renewal of a contract of employment on its expiry, or termination under a stipulation in that behalf. The exception is narrow, and the employer who invokes it must prove it.
Application. The termination on 12 March 2024 was an oral direction not to report, not an order recording the expiry of any term. No seasonal contract is produced; a seasonal engagement is inconsistent with five years of year-round attendance of 262 to 291 days. The plea of abandonment contradicts the plea of resignation and the plea of a lapsed contract; mutually destructive defences cannot together be true. The case therefore falls within the main part of Section 2(oo).
Section 25F. No one month's notice or pay in lieu, no retrenchment compensation of fifteen days' average pay for each completed year of continuous service, and no notice to the appropriate Government. Compliance is mandatory and a condition precedent; non-compliance renders the retrenchment void ab initio, not merely irregular.
Chapter V-B. With 260 workmen the establishment is covered by Chapter V-B, so prior permission of the appropriate Government under Section 25N was required; its absence is an independent illegality. Section 25G, last come first go, was also disregarded, no seniority list having been prepared.
2. Does R.'s continuous service under Section 25B stand established? How should the Tribunal deal with the mill's non-production of the earlier muster rolls and with the resignation letter?
Read the worked answer
Section 25B. Continuous service means 240 days of actual work in a period of twelve consecutive months, the computation excluding weekly holidays and paid leave but including days of lay-off and leave with wages. R.'s attendance in the 2023 register alone, 262 days, satisfies the requirement for the year preceding termination, and the earlier years are far above the threshold on the union's figures.
Burden and adverse inference. The initial burden of showing 240 days is on the workman, but once he points to the employer's own records and shows they exist, the burden shifts; the employer cannot defeat the claim by withholding them. Muster rolls are public records required to be maintained, and their destruction after the dispute arose cannot be accepted. The Tribunal should draw an adverse inference under Section 114(g) of the Evidence Act, now Section 119 of the Bharatiya Sakshya Adhiniyam, and proceed on the union's figures, which the single produced register corroborates.
The resignation. A resignation must be voluntary and must be accepted. An undated or unproved thumb impression on a document produced only after the dispute, with no acceptance letter, no relieving order and no final settlement, proves nothing; the employer asserting resignation must prove it. The record shows instead that the workman was told not to report from 13 March, which is an act of the employer, not of the workman.
Finding. Continuous service is established, the resignation is not proved, and the abandonment plea fails.
3. What relief should the Tribunal grant, keeping in view the three-year delay in raising the dispute?
Read the worked answer
Reinstatement is the normal rule. Where retrenchment is void for breach of Section 25F, the workman is ordinarily entitled to reinstatement with continuity of service, because the employment relationship was never lawfully severed. Compensation in lieu is a departure justified by special circumstances, such as the closure of the undertaking, the workman's superannuation or an unreasonably long delay making reinstatement oppressive. Here the mill is working, and R. was a helper with five years' service; nothing makes reinstatement impracticable.
Delay. The Industrial Disputes Act prescribes no limitation, so the delay of nearly three years does not bar the reference, but it is a relevant circumstance in moulding relief. It may cut down back wages; it does not extinguish the right to reinstatement, particularly where the employer's own illegality created the need for the litigation.
Back wages. These are not automatic. The workman must plead and prove that he was not gainfully employed; once he does so, the burden of showing otherwise shifts to the employer (Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya). Given the delay and the absence of any plea of unemployment, the appropriate order is reinstatement with continuity of service and half the back wages from 13 March 2024, along with the retrenchment compensation computed at fifteen days' average pay for each completed year of service.
Costs. Costs should follow the event; the mill's suppression of records and its mutually inconsistent pleas justify an order of costs in R.'s favour.