The Industrial Disputes Act, 1947 (“Act”) is legislation which provides for certain safeguards for workmen, including cases of retrenchment. However, very recently, the Hon’ble Supreme Court has laid down the effect of Section 25F of the Act in cases of abandonment of services by the workman.
As per section 2(oo) of the Act, “retrenchment means termination of the services of a workman by the employer for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action but does not include: -
1. voluntary retirement of the workman; or
2. retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf; or
(bb) termination of the service of the workman as a result of the non-renewal of the contract of employment between the employer and the workman concerned; on its expiry or of such contract being terminated under a stipulation in that behalf contained therein…”
The Act lays down certain provisions and procedures to be followed by employers in case of retrenchment of workmen. The provisions were incorporated in the Act with the objective of giving reasonable opportunity and time to workmen to seek alternate opportunities in the event of retrenchment. They aim to safeguard the workmen's financial interest such that the employers are required to provide reasonable compensation to workmen for sustenance during such times.
Section 25F of the Act provides for conditions that the employer is required to fulfill before retrenchment of workmen. The said provision provides that no workman who has been in continuous service for not less than one year under an employer shall be retrenched by the employer unless: -
1. the workman has been given one month notice in writing indicating the reasons for retrenchment and the period of notice has expired; or the workman has been paid in lieu of such notice, wages for the period of the notice;
2. the workman has been paid at the time of retrenchment, compensation which shall be equivalent to fifteen days' average pay for every completed year of continuous service or any part thereof in excess of six months; and
3. notice in the prescribed manner is served on the appropriate Government Section 25B of the Act defines continuous service as “uninterrupted service, including service which may be interrupted on account of sickness or authorised leave or an accident or as strike which is not illegal, or a lock-out or a cessation of work which is not due to any fault on the part of the workman...”
The Hon’ble Supreme Court of India in the case of Manju Saxena vs. Union of India [Civil Appeal Nos. 11766 – 11767 of 2018] has held that “Once it is established that the Appellant had voluntarily abandoned her service, she could not have been in “continuous service” as defined under S.2(oo) the I.D. Act, 1947. S. 25F of the I.D. Act, 1947 lays down the conditions that are required to be fulfilled by an employer while terminating the services of an employee, who has been in “continuous service” of the employer. Hence, S. 25F of the I.D. Act would cease to apply to her”. Since the Appellant had voluntarily decided to abandon the service, the Court held that the workman would not be considered to be in continuous service for the purpose of Section 25F of the Act.
The facts of the aforesaid case were that the workman i.e. Manju Saxena (Appellant) was working with HSBC Bank in the capacity of a lady confidential secretary and was later promoted to the position of a senior confidential secretary. The post of senior confidential secretary became redundant and the Appellant was offered multiple positions of the same level with the same pay scale i.e. business development officer, customer service officer, clearing officer, and banking services officer. The Appellant refused to take up any of the positions offered by the bank. Subsequent thereto, the bank terminated her services after paying her 6 months’ compensation in lieu of notice as per the contract of employment and compensation equivalent to 15 days’ salary for every completed year of service. The Appellant initiated proceedings against the bank seeking a higher severance package.
The Hon’ble Supreme Court in the aforesaid case has discussed the concept of abandonment from service. The Court observed that the concept of ‘abandonment’ had been discussed at length in a Judgment delivered by a three-Judge Bench of the Hon’ble Supreme Court in the case of Buckingham & Carnatic Co. Ltd. vs. Venkatiah & Ors. (1964) 4 SCR 265 wherein it was held that “abandonment of service can be inferred from the existing facts and circumstances which prove that the employee intended to abandon service”.
The Court observed that “In the case before us, the intentions of the Appellant can be inferred from her refusal to accept any of the 4 alternative positions offered by the R2 Bank. It is an admitted position that the alternative positions were on the same pay scale, and did not involve any special training or technical know-how.”
In the aforesaid case, the bank had paid the Appellant a sum of Rs. 8,17,071/- which included 6 months’ pay in lieu of notice under section 25F(a) of the Act and an additional amount calculated on the basis of 15 days’ salary multiplied by the number of years of service, in compliance with section 25F(b) of the Act. However, no notice was sent to the appropriate government or authority notified, in compliance with section 25F(c) of the Act.
The Court held that since the Appellant had voluntarily abandoned her services, she would not be covered by section 25F of the Act. Therefore, the Appellant was not entitled to any further compensation as claimed by her. In view of the above, it can be safely concluded that in case where the workman has abandoned the service despite being given reasonable opportunity to continue along with the benefits of the previous service, Section 25F of the Industrial Disputes Act, 1947 will not apply.
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