Supreme Court clarifies definition of ‘Workman’ under Industrial Disputes Act: Lenin Kumar Ray vs. Express Publications (2024)

Date of the Judgment: 21 October 2024

Citation: 2024 INSC 802

Judges: Pankaj Mithal, J., R. Mahadevan, J.

Can an employee who supervises the work of junior employees be considered a ‘workman’ under the Industrial Disputes Act, 1947? The Supreme Court of India recently addressed this question in a case concerning the termination of an Assistant Engineer. The core issue revolved around whether the employee’s duties were primarily supervisory or if they fell under the definition of a ‘workman’ as defined in Section 2(s) of the Industrial Disputes Act, 1947. The court ultimately held that the employee, due to his supervisory role and salary, did not qualify as a ‘workman’. The judgment was delivered by a two-judge bench comprising Justice Pankaj Mithal and Justice R. Mahadevan, with the majority opinion authored by Justice R. Mahadevan.

Case Background

The case involves a dispute between Lenin Kumar Ray (the employee) and M/s. Express Publications (Madurai) Ltd. (the management), a newspaper company. The employee was initially appointed as a Junior Engineer (Electronics and Communication) on June 7, 1997, and later promoted to Assistant Engineer (E&C) on May 1, 2000. His services were terminated on October 8, 2003, with a payment of one month’s salary in lieu of notice. The employee challenged this termination, claiming he was a ‘workman’ under the Industrial Disputes Act, 1947. The Labour Court ruled in favor of the employee, ordering reinstatement and compensation. However, the High Court partly overturned this decision, leading to the appeals before the Supreme Court.

Timeline

Course of Proceedings

The employee initially approached the Labour authorities after his termination. Following a failed conciliation, the matter was referred to the Labour Court, Bhubaneswar, which ruled in favor of the employee on September 22, 2010, ordering reinstatement with compensation. The management then filed a writ petition before the High Court of Orissa at Cuttack, which partly allowed the petition on April 4, 2022. The High Court upheld the Labour Court’s finding that the employee was a ‘workman’ but set aside the order of reinstatement and compensation. Both parties, feeling aggrieved by the High Court’s order, filed appeals before the Supreme Court.

Legal Framework

The core legal provision in this case is Section 2(s) of the Industrial Disputes Act, 1947, which defines “workman.” The section states:

“2(s) “Workman” means any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work for hire or reward, whether the terms of employment be express or implied, and for the purposes of any proceeding under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person—
(i) who is subject to the Air Force Act, 1950 (45 of 1950), or the Army Act, 1950 (46 of 1950) or the Navy Act, 1957 (62 of 1957); or
(ii) who is employed in the police service or as an officer or other employee of a prison; or
(iii) who is employed mainly in a managerial or administrative capacity; or
(iv) who, being employed in a supervisory capacity, draws wages exceeding [ten thousand rupees] per mensem or exercises, either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature.”

The key aspect of this definition is that while it includes those doing supervisory work, it excludes those in a supervisory capacity earning over ₹10,000 per month (or ₹1,600 before the 2010 amendment) or those with managerial functions. The court also considered the terms of the employee’s appointment letter and the company’s rules regarding termination of service.

Arguments

Employee’s Arguments:

• The employee argued that he was a ‘workman’ under Section 2(s) of the Industrial Disputes Act, 1947, as his duties were not primarily managerial.
• He contended that his termination was illegal as it was done without any reason or opportunity to be heard, violating the principles of natural justice.
• The employee relied on the principle that in industrial law, any doubt should be resolved in favor of the weaker section, i.e., the labour.
• He argued that the Labour Court’s decision to reinstate him was correct and should not have been overturned by the High Court.
• He cited precedents that the nature of work, not the designation, determines if an employee is a ‘workman’.
• He also argued that having a junior does not make an employee a supervisor or manager.
• The employee further contended that wrongful termination should result in reinstatement with full back wages.

Management’s Arguments:

• The management argued that the employee was employed in a supervisory capacity and, therefore, did not qualify as a ‘workman’ under Section 2(s) of the Industrial Disputes Act, 1947.
• They contended that the employee’s salary exceeded the statutory limit of ₹1,600 per month, which was the limit before the 2010 amendment to the Act.
• The management argued that the High Court erroneously applied the amended provision of Section 2(s) of the Industrial Disputes Act, 1947, which came into force on 15.09.2010, instead of the provision as it stood on the date of termination of the employee i.e., 08.10.2003.
• They stated that the employee was terminated as per the terms of his appointment letter, which allowed for termination with one month’s notice or salary in lieu of notice.
• The management pointed out that the employee accepted and encashed the cheque for one month’s salary in lieu of notice, thereby accepting the termination.

Submissions Table:

Issues Framed by the Supreme Court

The Supreme Court considered the following key issues:

1. Whether the employee falls within the definition of “workman” as per Section 2(s) of the Industrial Disputes Act, 1947.
2. Whether the termination of the employee was in accordance with the law.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

Cases:

Legal Provisions:

• Section 2(s) of the Industrial Disputes Act, 1947: Definition of ‘workman’.

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• The court acknowledged the principle in K.C.P. Employees Association v. K.C.P. Ltd (1978) 2 SCC 42* that the benefit of doubt should go to the weaker section (labour), but found it inapplicable to the facts of this case.
• The court acknowledged the principle in Southern Ispat Ltd v. State of Kerala, (2004) 4 SCC 68* that concurrent findings of facts should not be interfered with, but found it inapplicable to the facts of this case.
• The court agreed with the principle in Shard Kumar v. NCT of Delhi, (2002) 4 SCC 490* and S.K.Maini v. Carona Sahu Co. Ltd, (1994) 3 SCC 510* that the nature of work is the determining factor for ‘workman’ status and that the designation is not important, but held that the employee’s work was supervisory.
• The court agreed with the principle in Ananda Bazar Patrika (P) Ltd v. Workmen, (1970) 3 SCC 248* that having a junior does not make an employee a supervisor, but held that the employee’s work was supervisory.
• The court acknowledged the principle in Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya, (2013) 10 SCC 324* and Jasmer Singh v. State of Haryana, (2015) 4 SCC 458* that reinstatement with back wages is normal in wrongful termination and that full back wages is applicable in case of void termination, but found it inapplicable to the facts of this case.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the factual findings regarding the nature of the employee’s duties and his salary at the time of termination. The Court emphasized that the employee was supervising the work of junior engineers, which indicated a supervisory role. Additionally, the Court noted that the employee’s salary exceeded the statutory limit of ₹1,600 per month, which was the relevant limit before the 2010 amendment to Section 2(s) of the Industrial Disputes Act, 1947. The Court also considered that the employee had accepted and encashed the cheque for one month’s salary in lieu of notice, indicating that the termination was in accordance with the terms of the appointment letter.

Sentiment Analysis of Reasons Given by the Supreme Court:

Fact:Law Ratio:

Logical Reasoning:

The Court’s reasoning was based on the plain reading of the definition of ‘workman’ in Section 2(s) of the Industrial Disputes Act, 1947, and the factual evidence presented. The Court rejected the employee’s argument that his termination was illegal, pointing to the terms of his appointment letter and his acceptance of the termination by encashing the cheque for one month’s salary in lieu of notice. The court also did not find any procedural violation on the part of the management in terminating the services of the employee.

The court considered alternative interpretations of the definition of ‘workman’ but rejected them because the evidence showed that the employee’s primary duties were supervisory and his salary was above the statutory limit. The court emphasized that the nature of the work performed by the employee, rather than his designation, was the key factor in determining whether he was a ‘workman’.

The decision was reached by a two-judge bench, and there were no dissenting opinions. The Court’s reasoning was primarily based on the facts of the case and the interpretation of Section 2(s) of the Industrial Disputes Act, 1947. The court’s decision was clear and accessible, with a focus on the factual and legal aspects of the case.

Reasons for the Decision:

• The employee’s duties were primarily supervisory.
• The employee’s salary exceeded the statutory limit of ₹1,600 per month at the time of termination.
• The termination was in accordance with the terms of the appointment letter.
• The employee accepted the termination by encashing the cheque for one month’s salary in lieu of notice.

“In the present case, there is no specific document adduced relating to the actual work and functions performed by the employee. In the absence of any concrete material to demonstrate the nature of duties discharged by the employee, the employment orders issued by the management will have to be taken into consideration and as per the same, the employee was appointed as Junior Engineer and was promoted as Assistant Engineer, on the administrative side.”

“Even according to the employee, the nature of duties and functions discharged by him was of supervisory. As such, applying the pre-amended provision of section 2(s), since the employee was terminated from service on 08.10.2003 and was drawing salary of more than Rs.1,600/-, he does not come within the definition of “workman”.”

“It is an admitted fact that without any objection, the employee accepted the said cheque and encashed the same. Hence, there is no violation of procedure on the part of the management in terminating the services of the employee.”

Key Takeaways

• The definition of ‘workman’ under Section 2(s) of the Industrial Disputes Act, 1947, is strictly interpreted based on the nature of duties and salary at the time of termination.
• Employees in supervisory roles with salaries above the statutory limit are not considered ‘workmen’ under the Act.
• Termination of service as per the terms of the appointment letter is legally valid, provided the employee accepts the termination by encashing the cheque for one month’s salary in lieu of notice.
• The court will not interfere with termination if the terms of employment are followed.

Directions

No specific directions were given by the Supreme Court in this case.

Development of Law

The ratio decidendi of this case is that for an employee to be considered a ‘workman’ under Section 2(s) of the Industrial Disputes Act, 1947, their duties must not be primarily supervisory and their salary must be within the statutory limit at the time of termination. The Supreme Court reaffirmed the importance of the nature of duties over designation in determining ‘workman’ status. The judgment clarifies that if an employee’s duties are supervisory and their salary exceeds the statutory limit, they are not covered under the Act, even if they supervise only a few junior employees. This case upholds the previous position of law, clarifying the definition of ‘workman’ and its application in cases of termination.

Conclusion

In conclusion, the Supreme Court allowed the appeal filed by the management and dismissed the appeal filed by the employee. The court held that the employee was not a ‘workman’ under Section 2(s) of the Industrial Disputes Act, 1947, due to his supervisory role and salary exceeding the statutory limit. The court also upheld the termination of the employee’s services as it was done in accordance with the terms of his appointment letter. This judgment clarifies the scope of the definition of ‘workman’ and provides guidance on the validity of termination procedures.