Re-Employment Of Retrenched Workmen

The Industrial Disputes Act, 1947 (“Act”) provides certain benefits to retrenched workmen. As per section 25H of the Act, a workman retrenched from employment should be given the first preference in cases of fresh employment by the same employer. Section 25H of the Act states that “where any workmen are retrenched, and the employer proposes to take into his employ any persons, he shall, in such manner as may be prescribed, give an opportunity to the retrenched workmen who are citizens of India to offer themselves for re-employment, and such retrenched workmen who offer themselves for re-employment shall have preference over other persons.

In terms of the aforesaid provision, in order to avail the benefits enshrined therein, it is necessary for the retrenched workman to be a citizen of India and to offer himself for reemployment at the time when the former employer provides an opportunity for reemployment. Needless to say, the workman must have been retrenched and not dismissed, discharged, or superannuated. 

The procedure for intimating retrenched workmen in cases of new vacancies is prescribed in Rule 78 of the Industrial Disputes (Central) Rules, 1957. The same makes it obligatory on part of the employer to intimate a retrenched workman with regard to any vacancy that may arise in the establishment.

Recently, The Supreme Court in the case of Management of the Barara Cooperative Marketing-cum-Processing Society Ltd. vs. Workman Pratap Singh [Civil Appeal No. 7 of 2019] has elucidated the application of Section 25H of the Industrial Disputes Act, 1947. In the aforesaid case, the workman (Respondent) had started working as a peon with a co-operative marketing society (Appellant) on 01.07.1973. The co-operative marketing society terminated the services of the workman on 01.07.1985. The workman challenged the termination in the Labour Court and the Labour Court held the termination to be bad in law while awarding compensation of Rs.12,500/- in lieu of reinstatement of service of the workman. Both the parties challenged the order of the Labour Court through separate writ petitions before the Punjab & Haryana High Court. Both the writ petitions were dismissed by the High Court and the workman subsequently accepted the initial compensation awarded by the Labour Court in lieu of reinstatement of service.

Subsequently, the workman came to know that the co-operative marketing society had regularised the service of two peons. Since his termination was held to be bad in law, the said workman, by interpreting the regularisation of services of two peons as filling up of vacancies by the co-operative marketing society, filed a representation before the cooperative marketing society claiming entitlement to preferential re-employment under section 25H of the Act.  However, the co-operative marketing society rejected the representation of the workman. Thereafter, at the instance of the workman, an industrial reference was made by the State to the Labour Court to decide the applicability of the aforesaid provision in the present case. The Labour Court held that the workman was not entitled to preferential re-employment as per the facts of the case. Aggrieved by the order of the Labour Court, the workman filed a Writ Petition before the Punjab & Haryana High Court. The High Court ordered for re-employment of the workman. An appeal was preferred by the co-operative marketing society before the Division Bench of the High Court which upheld the decision of the Single Judge. Finally, a special leave petition was preferred by the co-operative marketing society before the Hon’ble Supreme Court of India.

The Hon’ble Supreme Court held that Section 25H of the Act would only be applicable in cases of filling up new vacancies and not otherwise. The relevant extract of the judgment passed by the Hon’ble Supreme Court is as under:

17. The object behind enacting Section 25(H) of the ID Act is to give preference to retrenched employee over other persons by offering them reemployment in the services when the employer takes a decision to fill up the new vacancies.”

The Hon’ble Supreme Court further observed that as per the facts of the case, the workman could not claim benefit under section 25H of the Industrial Disputes Act, 1947, as he had already accepted compensation in lieu of reinstatement and therefore this was not a case of retrenchment as contemplated in section 25H of the Act. The Hon’ble Supreme Court further held that it was a case of regularisation of the services of workmen who were already working with the co-operative marketing society and therefore, it was not a case of fresh vacancy to be filled. The Court observed:

“22. In our view, the regularization of an employee already in service does not give any right to the retrenched employee so as to enable him to invoke Section 25 (H) of the ID Act for claiming re-employment in the services. The reason is that by such act the employer does not offer any fresh employment to any person to fill any vacancy in their set up but they simply regularize the services of an employee already in service. Such an act does not amount to filling any vacancy.

23. In our view, there lies a distinction between the expression ‘employment’ and ‘regularization of the service”. The expression ‘employment’ signifies fresh employment to fill the vacancies whereas the expression ‘regularization of the service’ signifies that the employee, who is already in service, his services are regularized as per service regulations.”

The Hon’ble Supreme Court has thus distinguished between regularisation of services of workmen who are already working with an establishment from the act of filling up fresh vacancies. It is distinctly clear from the aforesaid judgment that the benefit of preferential re-employment can be claimed by a retrenched workman only in case of filling up of a fresh vacancy and not otherwise.

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