The year 2003 witnessed an accelerated pace of economic reforms and the consequent increase in the pressure for reforms in labour laws for greater flexibility in managing the workforce. The central issues for both the employers and the employees were, the individual rights pertaining to security of employment and protection against arbitrary terminations, social security protection under various laws and whether the collective right of workers is represented by the trade unions.

It is a well-known fact that greatest opposition from employers is towards expansion of the collective right of workers as a class. The legal security of employment granted by labour laws is a powerful factor strengthening the labour against the managements. Though the security is available to only a small percentage of the total labour force in the organised sector, it is vital for the growth of trade union movement in India. Expansion of regulatory rights of employers at the workplace, transfer of work from the legally protected organised sector to the unregulated unorganised sector and the changing nature of work itself without visible employment relationship have put the trade unions on the defensive in India.

The Supreme Court of India and the High Courts of different states have pronounced some important judgements in 2003 having far-reaching influence on the future of labour movement and labour rights.

Rights of Workers

In an extra-ordinary judgement delivered in an equally extra-ordinary case of the Tamil Nadu government terminating the services of about 1.2 million of its employees for joining a strike, the Supreme Court held that government employees have no fundamental, legal or statutory right to go on strike. There is no moral or equitable justification for resorting to strike, the apex court said (T K Rangarajan vs. Govt. of Tamil Nadu, 2003 6 SCC 581). In an earlier case in ex-Capt. Harish Uppal vs. Union of India and Another (2003 2 SCC 45), the Supreme Court had similarly denied the right to strike to lawyers for a just or unjust cause. Similarly in the present case, the Supreme Court relied on the fact that in a society where largescale unemployment prevails and the salary/wage costs take up the largest share of the total government revenue,  the court said, government employees have a duty to be more conscious of their responsibilities rather than their rights. They are part and parcel of the governing body and owe a duty to the society. The service rules applicable to government employees in Tamil Nadu specifically prohibits strike or similar activities and, therefore, the court declared the strike illegal and directed the employees to tender an unconditional apology and an undertaking that they will not resort to such measures in the future. The court directed the state government to reinstate all employees who were not involved in any offence under the  Tamil Nadu Essential Services Maintenance Act, 2002 (TESMA) and the Tamil Nadu Ordinance No.3 of 2003. About 6,000 employees, who were charge-sheeted for their active involvement in the strike were allowed to make representations before three retired High Court judges specially appointed to look into their grievances.

The judgement evoked strong reactions from the working class and jubilated the employers. There were contradictory claims by the trade unions and the Tamil Nadu government on the number of employees involved in the strike as well as the number of workers chargesheeted and denied reinstatement. There was no clear-cut direction in the judgement regarding payment of wages during the strike period or break in service. The workers and the unions were disappointed because the demands for which they went on strike did not include any fresh benefits but mainly restoration of the existing benefits withdrawn by the government. Also the leaders of workers were arrested before the strike began in order to break the strike after mutual negotiations failed to yield any result. The court also did not look into the constitutional validity of TESMA and the larger issue of India being bound by the International Labour Organisation’s four-point declaration of the fundamental principles of rights at work adopted in 1998 which includes recognition of collective bargaining rights and the right to strike of all workers except those in the armed forces and the police. The judgement was criticised by none other than Attorney General of India Soli Sorabjee as an erroneous interpretation.

Dismissal and Discipline

The Supreme Court has always been critical of violent behaviour by workers who showed their protest at the workplace. This view has been reiterated in the case of Indian Railway Construction Company Limited vs. Ajay Kumar. (2003 4 SCC 579) The case involved the dismissal of an employee, without any inquiry, for allegedly assaulting a senior officer and ransacking his office. The management argued that as per the rules of the organisation, the inquiry could be dispensed with for special reasons in special circumstances. The employee being a trade union leader pleaded victimisation by the management. The Supreme Court observed that the misconduct attributed to the employee resulted in loss of confidence and hence dismissal without inquiry was not illegal. The court said that an employee had to act with a sense of discipline and decorum and exhibition of muscle power to secure a right is improper. At the same time, the employer has the duty of looking into and, as far as practicable, obviating the genuine grievances of the employees. Lack of cordial working environment will be destructive of the common interests of both the employer and the employee. While the Supreme Court upheld the dismissal of the employee, it also directed payment of compensation of Rs 15 lakh to the employee to balance the grievances against the management.

Contract Labour

With the increasing use of contract labour in organising production, availability of employment benefits to these workers and their regularisation have become highly contentious issues. Three important judgements need specific mention to clarify the existing legal status of contract labour.

In Mishra Dhatunigam Ltd. vs. M Venkataiah (2003 7 SCC 488) and National Thermal Power Corporation Ltd. vs. Karripothuraju (2003 7 SCC 384), the Supreme Court made it clear that when there was a statutory obligation on the employer to run a canteen under the Factories Act, 1948 the workers of the canteen would be considered as workers of the principal employer for all practical purposes even if it was run by a contractor. The workers would get all consequent employment benefits even if they are employed by the contractor. The court further explained the judicial opinion as pronounced in the Steel Authority of India case (2001 7 SCC 1) to clarify that whenever there is a bogus or sham contractual arrangement or the contract is a camouflage in order to hide the real situation, contract workers will be treated at par with regular employees of the principal employer. The test of employer-employee relationship was further explained in a recent judgement - Ramsingh vs. Union Territory, Chandigarh (2004 1 SCC 126). The Supreme Court held that the employer-employee relationship exists where the employer retains control over the means of production and the work was managed by a contractor.

Retrenchment

Under Section 2 of the Industrial Disputes Act, 1947, termination of employment for whatever reason except the specifically excluded categories of terminations is treated as retrenchment entitling a worker to notice/notice pay and compensation. When the number of workers employed exceeds 100, prior permission of the appropriate government also has to be obtained. A recent judgement by the Supreme Court in the case of S M Nilanjkar vs. Telecom District Manager (2003 4 SCC 27) has laid down that even a daily wager employed on a temporary government project or scheme is entitled to retrenchment benefits as described above unless the worker has been apprised or made aware of the temporary contractual nature of employment at the commencement of work and the employment actually came to an end with the termination of the project or scheme. If the employer fails to apprise the employee, then by merely describing the worker as a daily wager or casual worker, the employer cannot escape obligations under the Industrial Disputes Act and such termination would amount to retrenchment.

Though temporary daily wagers can become entitled to retrenchment compensation on fulfilling the necessary eligibility conditions under the Industrial Disputes Act, they cannot be equated with regular employees holding similar posts for granting similar pay-scales on the grounds of “equal pay for equal work”. This will be the case because in spite of similarities in their functions, if their responsibilities differ then they will be entitled to minimum wages but not parity of wage with the permanent employees. This has been laid down by the Supreme Court in the case of the State of Orissa vs. Balaram Sahu (2003 1 SCC 250).

Social Security Benefits

During 2003, the Supreme Court has given some important judgements pertaining to social security benefits, particularly gratuity, under the Payment of Gratuity Act, 1972.

In the case of H G Gowda vs. Karnataka Agro-Industries Corporation Ltd. (2003 3 SCC 40), it has clearly laid down that payment of gratuity is not discretionary but the mandatory duty of an employer and any delay in payment will attract payment of interest if the delay is not due to the fault of the employee. In another judgement delivered by the Madras High Court in the Good Samaritan Rural Development Project vs. T V Ramaiah & Ors. (2003 LLR 151), the court held that the  Payment of Gratuity Act is applicable not only to commercial establishments but also to charitable organisations like hospitals, working without profit motive.

In another judgement by the same High Court in the Madras Fertilizers Ltd. vs. the Controlling Authority (2003 LLR 244), the court directed that a contractor holding license under the Contract Labour (R & A) Act cannot escape liability for payment of gratuity to  contract workers. In case of failure, the principal employer will be liable to pay gratuity and subsequently deduct the amount from the dues of the contractor.

In Ahmedabad Private Primary Teachers Association vs. the Administrative Officer & Ors. (2004 LLR 97), the Supreme Court held that a teacher, not performing any skilled, semi-skilled or unskilled, manual or supervisory technical work, will not be an ‘employee’ under Section 2(e) of the Payment of Gratuity Act, and therefore, not entitled to gratuity under the Act. However, if there are separate statues, rules and regulations granting gratuity benefits to teachers in educational institutions in any states, their entitlement to gratuity will not be adversely affected by this decision.

On construing eligibility to compensation under the Employees State Insurance Act, 1948 (ESI Act), the Supreme Court held that a person who is working in a company covered by the ESI Act is an “insured person” under Section 2(14) of the Act, even if the registration of the employee was not completed and contribution by the employer was not paid at the time of  the death of the employee. Compensation to the dependents of the deceased, who died due to injury arising out of and during the course of employment, should be paid. (E K Haji Mohammad Meera Sahib and Sons vs. Regional Director, ESIC 2003 LLR 308 Madras HC).

But when the employer-employee relationship cannot be established, an employer will not be liable to pay compensation to the dependents of the deceased worker was the judgement delivered by the Karnataka High Court in T S Prabhu & Others vs. Smt. Bhavany Poojary & Ors. (2003 LLR 162).

During the year 2003, the judicial pronouncements by the apex court as well as state High Courts have preferred to interpret the labour laws pertaining to the collective rights in a conservative manner rather than expanding the boundaries of the letter of the law. Where as its interpretation pertaining to social security benefits or individual worker’s rights upon termination show more liberal and compassionate attitude towards labour.