Bom HC | Classic case of unfair labour practice: Workmen not given permanency on being engaged in a rotational pattern || Pool of Temporaries, Termination, Perennial Work & more

Bombay High Court: S.C. Gupte, J., addressed a group of petitions that challenged four sets of identical awards passed by Labour Courts under the Industrial Disputes Act, 1947.

What led to Industrial Disputes and Complaints of Unfair Labour Practice?

Workmen’s case was that though the work in the factory was of perennial nature, it was performed through temporaries from a pool of workers by a rotational system, seeing it that throughout the relevant period none could complete 240 days of continuous service and thus keeping them away from secure permanent jobs.

700 workmen approached the Industrial Court with complaints of unfair labour practice invoking items 5, 6 and 10 of Schedule IV of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971.

A group of 300 workmen chose to initiate conciliation proceedings under the Industrial Disputes Act, 1947 upon failure of which, the State Government referred the matters to Labour Courts for adjudication.

Issues for Consideration:

Precise issues, which arise for the consideration of this Court are as follows:

(I) Whether the termination of services of temporary workmen in the present case could be termed as termination as a result of non-renewal of the contract of employment on its expiry or under a stipulation in that behalf contained in the contract and thus, amounting to an exception to the definition of ‘retrenchment’ contained in Clause (oo) of Section 2 of the ID Act? Or whether the rotational arrangement, such as the one in the present case, where there are continuous temporary engagements of the same workmen over long periods of time (adopted as a strategy to deny benefits of permanency to the concerned workmen), does not amount to an engagement on a fixed period contract so as to form an exception under sub-clause (bb) of Clause (oo) of Section 2 of the ID Act?

(II) Whether,

(a) Sundays and holidays during the period of service could be counted within 240 days as per the applicable Standing Orders so as to make up aggregate service of 240 days in a year within the meaning of the Standing Orders and

(b) such 240 days should be reckoned as forming part of the calendar year of 12 months immediately preceding the dates of termination?

(III) Should a Labour Court dealing with terminations of workmen in a reference under the ID Act refuse to consider their claim of permanency?

The two factual aspects here are as follows:

  • Whether for inquiry Court can simply focus on the last termination of each of these workmen and disregard their earlier engagements and terminations?
  • Rotational Pattern said to have been adopted for engagement of these workmen – whether such pattern exists, for if it does, the legal question as to whether the terminations, including the last, come within the definition of retrenchment under Section 2(oo) and not within the excepting clause, namely, clause (bb) thereof

Analysis, Law and Decision

Clause (bb) as referred above applies to two situations:

  • where the termination is a result of non-renewal of the contract of employment between the employer and the concerned workman upon its expiry; and
  • where such termination is the result of a contractual stipulation contained in the contract of employment.

In the present case, the company’s is with regard to the contract made for a specific period and its non-renewal upon expiry.

The respondent company employed a rotational scheme for more than 13 years.

A pool of temporaries is maintained and anywhere between four to eight thousand temporaries from out of this pool are employed in rotation, some of them on 8 to 14 times, each time for a duration not exceeding seven months.

The classical idea behind retrenchment has been surplusage. A fixed period contract, on the other hand, implies either that for some particular work or project or due to a spurt in the demand and the resultant need for increased activity, there is a special need for a certain employee or number of employees and accordingly, need for a contract of employment for the particular work or project, or for the particular fixed period.

Court notes in the present case to be perennial work, work which is no different from what is performed by the permanent workmen of the company, for which temporaries were engaged. The said engagement was found to be over 13 years.

Bench found that the employment of the workmen in the present case was neither for any particular work or project nor was brought to an end after a fixed period due to wanting of work upon expiry of the period of contract.

The engagements were brought to an end purportedly at the expiry of the stipulated period of contract only to see that they get an artificial break (during which others from the waiting list were employed) only to be re-employed and this went on – again and again.

High Court in view of the above discussion stated that the above pattern appeared to have been designed with a view to avoiding any legitimate claim of permanency of tenure on the part of workmen concerned. 

Deprivation of Status and Privileges of Permanent Employees

Clear recipe of an unfair labour practice, notorious in the industry, of employing ‘badlis’, casuals or temporaries and continuing them as such for years, with the object of depriving them of the status and privileges of permanent employees.

Nature of Engagement of Workmen

Whether on a fixed tenure contract or colourable engagement on a fixed term, the real engagement being on a long term basis by adopting a rotational pattern, so as to avoid any claim of permanency.

Bench in view of the evidence recorded, held that the conclusions of the Labour Court, simply rendered as tag-lines, that there was no rotational pattern, or that it could not be said that service of anyone temporary workman was terminated and in his place and category another was employed offended the Wednesbury Principles and could not stand the scrutiny under Articles 226 or 227 of the Constitution of India.

Whether the workmen were illegally retrenched; whether, by reason of their employment (i.e. the last employment) being for a fixed tenure, their retrenchment formed an exception to the main part of Section 2(oo) of the ID Act, by falling within clause (bb) thereof.

High Court expressed that it cannot be gainsaid that both parties, being fully aware of the terms of reference and its scope, made their cases in extenso on the aspects of past engagements of the concerned workman in a rotational pattern and artificial breaks given to them so as to avoid completion of 240 days of continuous service and these were very much part of the trial before the Labour Court. It was thus clearly within the remit of the reference court to decide the issue.

Adding to its observations Court held that neither on principle nor on authority, these workmen were liable to be made permanent under Standing Order 4C by reason of completion of 240 days of continuous service in twelve preceding calendar months within the meaning of Standing Order 4C, therefore, issue no. (II) was decided against the petitioners.

Issues (I) and (III) were decided in favour of the petitioners, in light of which the impugned labour court awards were to be quashed and set aside.

Further, the Bench added that considering that the terminations challenged took place in the year 1997/98, more than twenty long years back, it would not be in the interest of justice to remit the references to the Labour Courts for consideration of monetary relief in lieu of reinstatement.

Therefore, the Court proposed to consider monetary relief in lieu of the reinstatement based on the material produced before the Court.

Bench relied upon the case of  Bajaj Auto Ltd. v. Bhojane Gopinath D, (2004) 9 SCC 488 as a model for determining compensation.[Sunil Pralhad Khomane v. Bajaj Auto Ltd., 2021 SCC OnLine Bom 129, decided on 01-02-2021]

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