Supreme Court Reduces Back Wages for Habitual Absentee Employee: Anjana Mittal vs. ONGC (2019)

Introduction

Date of the Judgment: July 30, 2019

Citation: 2019 INSC 747

Judges: Uday Umesh Lalit, J. and Vineet Saran, J.

Can an employer be compelled to pay full back wages to an employee who was terminated for excessive absenteeism, even if that absence was previously sanctioned as leave? The Supreme Court of India recently addressed this question in a case involving Oil and Natural Gas Corporation Limited (ONGC) and one of its employees, Anjana Mittal. This case delves into the complex interplay between employee rights, employer expectations, and the concept of ‘no work, no pay’. The court examined whether the employee’s long and frequent absences justified a reduction in back wages, despite the termination being deemed illegal.

Case Background

Anjana Mittal was initially appointed as a temporary Assistant Grade-III employee at ONGC in 1983. She worked in this position until 1986, taking permissible leaves. However, between 1987 and 1993, she was absent for 1968 days. This absence was later sanctioned as medical leave. Despite this, she was promoted to temporary Assistant Grade-II on January 6, 1990.

On December 1, 1992, ONGC constituted a Medical Board which determined that the medical certificates submitted by Mittal did not justify the extensive leave she had taken. Consequently, on May 26, 1994, ONGC issued a show-cause notice to Mittal, asking why action should not be taken against her under Regulation 24 of the Terms and Conditions of Appointment and Service Regulation, 1975, which deals with the termination of temporary employees.

Mittal responded to the notice on June 1, 1994, but ONGC found her reply unsatisfactory. On July 1, 1994, ONGC terminated her services, effective December 1, 1993. Mittal challenged this termination order.

Timeline

Course of Proceedings

Mittal initially filed a Writ Petition No. 6742 of 2001 before the Allahabad High Court, which was later transferred to the Uttarakhand High Court at Nainital. The High Court dismissed her petition on August 26, 2004, upholding the termination order. Mittal then filed a Special Appeal No. 55 of 2004 before the Division Bench of the High Court, which was dismissed on June 29, 2006, on the grounds that the case was an industrial dispute and Mittal was a “workman.”

Subsequently, on October 22, 2008, Mittal referred the dispute to the Central Government Industrial Tribunal-cum-Labour Court. The Labour Court, in its order dated August 7, 2018, held that the termination was illegal and void. It ordered ONGC to reinstate Mittal with full back wages and consequential benefits, stating she could not be treated as a temporary employee due to her eleven years of service.

ONGC challenged this order by filing Writ Petition No. 3015 of 2017 before the High Court of Uttarakhand. The High Court partly allowed the petition, agreeing that the termination was illegal but reducing the back wages to 30%, while maintaining other consequential benefits. Both Mittal and ONGC filed special leave petitions before the Supreme Court.

Legal Framework

The case revolves around Regulation 24 of the Terms and Conditions of Appointment and Service Regulation, 1975, which pertains to the termination of services of a temporary employee. The core issue is whether this regulation was correctly applied to Mittal, given her length of service and promotion.

The 1975 Regulations state that temporary employees can have their services terminated. The respondent-Corporation argued that since the appellant was a temporary employee, her services were rightly terminated under the said regulation.

Arguments

Appellant’s Arguments (Anjana Mittal):

• Mittal’s counsel argued that she had worked for more than eleven years and could not be treated as a temporary employee, especially since she was promoted in 1990. Therefore, Regulation 24 of the 1975 Regulations should not apply.

• The counsel contended that the period of absence from 1987 to 1993, though lengthy, was sanctioned as medical leave and could not be the basis for termination. The promotion during this period further supported this argument.

• It was argued that the termination order was unjustified and the Labour Court had correctly set it aside, granting full back wages and consequential benefits. The reduction of back wages by the High Court was unwarranted.

Respondent’s Arguments (ONGC):

• ONGC’s counsel argued that Mittal’s absence of 1968 days between 1987 and 1993 justified her termination. Since she was a temporary employee, Regulation 24 applied.

• It was emphasized that Mittal’s initial and promotion letters clearly stated her position as temporary. The Medical Board’s finding that she had taken excessive leave based on her medical certificates was also highlighted.

• ONGC contended that reinstatement was not appropriate for an employee who had been absent for a substantial period. At best, if the termination order was not sustained, she could be awarded a lump sum in lieu of back wages and compensation instead of reinstatement.

Issues Framed by the Supreme Court

The Supreme Court considered the following issues:

1. Whether the termination of the appellant under Regulation 24 of the 1975 Regulations was justified, considering her length of service.
2. Whether the High Court was correct in reducing the back wages from 100% to 30%.

Treatment of the Issue by the Court

Authorities

The Court considered the following legal points and authorities:

Legal Point: Termination of a Temporary Employee

• The Court considered the application of Regulation 24 of the Terms and Conditions of Appointment and Service Regulation, 1975, which pertains to the termination of services of a temporary employee.

Legal Point: Back Wages

• The Court considered the principle of “no work, no pay” and its applicability in cases of reinstatement.

Judgment

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

How each authority was viewed by the Court?

• The Court held that the termination of the appellant in terms of Regulation 24 of the 1975 Regulations, treating the appellant as a temporary employee, was not justified in law.
• The Court considered the principle of “no work, no pay” while deciding on the quantum of back wages.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by a combination of factors. While the court acknowledged that the termination was illegal because the employee could not be treated as temporary after eleven years of service, it also considered her extensive absenteeism. The court balanced the need to protect employee rights with the practical implications of paying full back wages to an employee who had been absent for a significant portion of her employment.

Fact:Law Ratio

The court’s reasoning was a blend of factual considerations, such as the employee’s long absences and the delay in approaching the correct forum, and legal considerations, including the applicability of Regulation 24 and the principle of “no work, no pay.”

The court considered the argument that the employee was a habitual absentee, which weighed heavily in its decision to reduce the back wages. The court also noted the delay in approaching the correct forum (Labour Court), which further justified the reduction in back wages. The court also considered that the period of absence was regularized by the Management by converting the same as period of leave, and as such the same could not be the ground for termination.

The court also took into account that the employee would be retiring in May 2020.

The court’s decision was a compromise, balancing the need to correct an illegal termination with the reality of the employee’s poor attendance record.

The Supreme Court observed, “Even if it is taken that the appellant was not temporary but deemed to be permanent, yet an employee who remained absent from duty for such long periods, averaging to over 281 days in a year, continuously for seven years, would not be entitled to any substantial back wages.”

The Court further stated, “Though, we are not interfering with the setting aside of the termination order, but in the facts and circumstances of this case, in our considered view, the ends of justice would be met if the appellant is paid 10% back wages, along with the benefit of reinstatement and all other consequential benefits.”

The Court also clarified, “It is, however, made clear, that considering the conduct of the appellant, the respondent-Corporation would not be obliged to take work from her, and in lieu thereof she may be paid her salary from this date till the date of her superannuation.”

Key Takeaways

• Employee Status: An employee with over eleven years of service and a promotion cannot be treated as a temporary employee for termination purposes.

• Back Wages: Habitual absenteeism can lead to a significant reduction in back wages, even if the termination is deemed illegal. The principle of “no work, no pay” can be applied even when the termination is set aside.

• Reinstatement: Reinstatement does not necessarily mean the employer is obligated to take work from the employee. The employer may pay salary in lieu of work.

• Timely Action: Employees should approach the correct forum in a timely manner. Delay can impact the quantum of relief granted.

This judgment sets a precedent that balances employee rights with employer concerns about consistent attendance. It highlights that while illegal terminations will be corrected, employees with a history of excessive absenteeism may not be entitled to full back wages upon reinstatement.

Directions

The Supreme Court directed that:

• The appellant is to be paid 10% back wages.
• The appellant is to be treated as reinstated with all consequential benefits.
• The respondent-Corporation is not obligated to take work from the appellant; instead, they may pay her salary until her superannuation date in May 2020.

Development of Law

The ratio decidendi of this case is that while an employee cannot be terminated illegally, their conduct, particularly habitual absenteeism, will be a significant factor in determining the quantum of back wages upon reinstatement. This case clarifies that the principle of “no work, no pay” can be applied even if the termination is held to be illegal. This judgment also clarifies that reinstatement does not necessarily mean that the employer is obligated to take work from the employee.

Conclusion

The Supreme Court’s judgment in Anjana Mittal vs. Oil and Natural Gas Corporation Limited provides a nuanced approach to cases involving illegal termination and employee absenteeism. While the court upheld the illegality of the termination, it significantly reduced the back wages to 10% due to the employee’s habitual absence. This decision underscores the importance of consistent attendance and timely action in labor disputes. The Court also clarified that reinstatement does not necessarily mean that the employer is obligated to take work from the employee.