Unfair Dismissal or Wrongful Termination of an Employee

Unfair dismissal or wrongful termination of an employee is construed as one and same. unfair dismissal is an act of removing or terminating an employee without assigning valid reason or on valid grounds. It is treated as unfair on the part of employer if an employee is removed or terminated without giving him valid reasons for such major act, despite his compliance and discipline and not giving opportunity of being heard which is also against to the principles of natural justice.

There is separate branch of law which is called as labour and industrial which deals with employment issues. Labour laws are set of laws enacted specifically to deal with employment issues in order to protect workmen from unfair activities by the employer. There are various provisions in labour laws, envisaging situations and circumstances under which employee should not be removed by employer from the employment. below mentioned are the certain circumstances under which the employer should not terminate his employer from the employment.

Dismissal or termination of employee without paying

Right to live and work is the fundamental right of every citizen. Earning for living is the primary object of everyone. Though livelihood of person to person may vary but every person work for earning for supporting his/her life. It is the right of an employee to get paid by his employer for the work extracted by his/her employer and it is the duty of every employer to pay wages/salaries to his/her employees for the work done. Though there are labour laws like The Payment of wages Act, 1936 having provisions for regular payment of wages/salaries to employees without failure, it is needless to refer them as, it is basic duty of an employer to pay employees for the work done. Therefore it is unfair on the part of employer to dismiss or terminate an employee without paying him for the work done, unless employee wilful negligence caused serious loss or damage to his/her employer.

What Supreme Court held on payment of Back Wages in case of wrongful termination

Read Judgement Below

The Supreme Court reaffirmed the law that payment of full back wages for the period for which no service has been rendered would be the normal rule in case of wrongful termination of service.

The appellant, in this case, was appointed as a Headmaster in 1986 of a Nagar Parishad High School. In 1994, a showcase notice was issued to him levelling allegations of misappropriation of funds to the tune of Rs 5,000. An inquiry officer was appointed to look into the matter whose report concluded no misappropriation and found the appellant not guilty of misconduct.

Subsequently, a second inquiry officer was appointed to probe the matter though his appointment was objected to by the appellant. The second inquiry officer found the appellant guilty of misappropriation of funds and the appellant was terminated from service in July 1996.

The appeal filed by the appellant before the Regional Director, Municipal Administration, Nagpur Division under Section 79 (6) of the Municipal Councils, Nagar Panchayats and Industrial Townships Act 1965 was dismissed

The appellant then filed a Writ petition before the Bombay High Court challenging his removal.

The High Court held the removal to be illegal and added that the action of the Municipal Council to proceed with the second inquiry was vitiated given that no reasons were recorded to buttress the non-acceptance of the first inquiry report. Even the objection to second inquiry committee raised by the appellant was taken note of by the High Court.

It, therefore, quashed the order of termination of services. However, since the appellant had attained the age of superannuation by then, the High Court ordered retiral benefits to be paid to the appellant but held that no back wages could be paid for the period for which he did not render any services.

The question before the Supreme Court was whether back wages could be allowed for the period for which the appellant was not in service.

The Court adverted to the principles laid down in a catena of judgments on this issue.

In Hindustan Tin Works case, a three-judge Bench of the Supreme Court had held that if the employer terminates the service illegally and the termination is motivated, the termination may amount to unfair labour practice. In such circumstances, reinstatement being the normal rule, it should be followed with full back wages.

Similar rulings were rendered in Surendra Kumar Verma v. Central Government Industrial Tribunal-cum-Labour Court and Deepali Gundu Surwase v Kranti Junior Adhyapak Mahavidyalaya.

Having due regard to the principles enunciated in Deepali Surwase, the Supreme Court held that the High Court was not justified in denying the back-wages to the appellant altogether.

Considering the lapse of time, the Court held that reopening the proceedings would not be expedient in the interest of justice particularly when the appellant had, in the meantime, attained the age of superannuation in 2005. Further, relegating the appellant to a protracted course of action by restoring the proceedings before the disciplinary authority would also not be fair and proper after a lapse of nearly fourteen years since his retirement.

Hence, the Supreme Court ordered that a lump sum amount quantified at Rs. 5 lakh be paid in full and final settlement of his claim for back wages for the period between the date of the order of removal and the date on which he attained the age of superannuation. This payment shall be in addition to the retiral benefits to which he is entitled in terms of the order of the High Court.