NEW DELHI: Whenever a labour court or an industrial tribunal orders reinstatement of a workman, payment of back wages is neither automatic nor consequential, the Supreme Court has held.
"There is also a misconception that whenever reinstatement is directed, `continuity of service' and `consequential benefits' should follow as a matter of course. The disastrous effect of granting several promotions to a person who has not worked for 10 to 15 years and who does not have the benefit of necessary experience for discharging the higher duties and functions of promotional posts is seldom visualised while granting consequential benefits automatically," said a Bench consisting of Justices B.P. Singh and R.V. Raveendran.
Apply judicial mind
"Whenever courts or tribunals direct reinstatement, they should apply their judicial mind to the facts and circumstances to decide whether `continuity of service' and/or `consequential benefits' should also be directed." Writing the judgment, Mr. Justice Raveendran said: "Any income received by the employee during the relevant period on account of alternative employment or business is a factor to be taken note of while awarding back wages. Therefore, it is necessary for the employee to plead that he was not gainfully employed from the date of termination [of his service]"
The Bench said: "When the punishment is reduced by a court as being excessive, there can be a direction either for reinstatement or for a nominal lump sum compensation. And if reinstatement is directed, it can be effective either prospectively from the date of such substitution of punishment [in which event, there is no continuity of service] or retrospectively, from the date on which termination [from service] was imposed."
The Bench said, "In cases where misconduct is held proved and reinstatement itself is a consequential benefit arising from imposition of a lesser punishment, award of back wages for the period the employee has not worked may amount to rewarding the delinquent employee and punishing the employer for taking action for misconduct. That should be avoided. In such cases, even where continuity of service is directed, it should be only for purposes of pensionary/retirement benefits, and not for increments, promotions, etc."