Employee In Supervisory Capacity, Drawing Wages Exceeding 10k Per Month Not 'Workman' Under Industrial Disputes Act: Supreme Court

The Supreme Court recently held that an employee did not come within the definition of "workman" under Section 2(s) of the Industrial Disputes Act, 1947 (as amended on 2010) because he was employed in a supervisory capacity and drew wages exceeding Rs. 1,600 (now Rs.10,000/- per month as per 2010 amendment). The Court applied the pre-amended provision since the employee's service was terminated in 2003, before the amendment.

Brief facts

As per brief facts, an employee of the M/s Express, a newspaper establishment publishing newspaper in English viz New Indian Express, was initially appointed as Junior Engineer and his post was subsequently confirmed in 1998.

Thereafter, he was promoted to the post of Assistant Engineer and was regularised in the said post with effect from 2001. However, he was relieved from service on October 8, 2003 by paying a sum of Rs. 6,995.65 towards one month's salary in lieu of notice. Thereafter, he approached the Labour Authorities which referred the matter for conciliation. But after the conciliation failed, the matter came before the Labour Court which on September 22, 2010, passed an award for reinstating the employee in service along with compensation of Rs. 75,000/- in lieu of back wages. 

Two civil appeals were filed against an order dated April 4, 2022, passed by the High Court of Orissa, in which the High Court partly allowed the writ petition filed by M/s Express challenging the award passed by the Labour Court.

The High Court set aside the Labour Court's award to the extent that the employee is to be reinstated and paid compensation of Rs. 75,000/-in lieu of back wages. At the same time, the High Court upheld the Labour Court's finding that the employee falls under the definition of "workman" under Section 2(s) of the Industrial Disputes Act, 1947.

Aggrieved by this, both parties preferred the instant appeals before the Supreme Court.

Arguments of parties

According to the employee, he comes within the meaning of “workman” as given in section 2(s) of the Industrial Disputes Act and the management without following the legal procedure, relieved him from service abruptly and hence, the same is illegal termination.

It was argued that whether or not an employee is a “workman” under section 2(s) of the I.D. Act is required to be determined with reference to his principal nature of duties and functions; and the designation of an employee is not of much importance and what is important is the nature of duties being performed by the employee.

Section 2(s) 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]13 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.."

As per the management's case, the nature of the duties and functions performed by the employee was in the supervisory capacity and he was drawing a salary of above Rs.1,600/- and therefore, he does not belong to the category of “workmen”.

It was also contended at the time of termination of the employee i.e., October 8, 2003, the statutory requirement for a person to be classified as a “workman” in the Industrial Disputes Act was a salary of not exceeding Rs.1,600/- per month. However, the High Court proceeded to apply Amendment Act 24 of 2010 which came into force with effect from September 15, 2010 wherein, the statutory requirement for a person employed in the supervisory capacity to be qualified as a “workman” was a salary of not exceeding Rs.10,000/- per month, and erroneously upheld the finding of the Labour Court that the employee was a “workman” as defined under section 2(s) of the Industrial Disputes Act. 

To prove their respective claims, the employee and the Senior Manager of the management were examined as W.W.1 and M.W.1; and Exts.W1 to W5 and Exts.A to D were marked before the Labour Court.

What did the Supreme Court say?

The Court first determined whether the employee came within the definition of "workman" as given under Section 2(s) of the Industrial Dispute Act. It briefly stated the law as: "The law is well settled that the determinative factor for “workman” covered under section 2(s) of the I.D. Act, is the principal duties and functions performed by an employee in the establishment and not merely the designation of his post. Further, the onus of proving the nature of employment rests on the person claiming to be a “workman” within the definition of section 2(s) of the I.D. Act."

As per the above provision, a person to be qualified as a “workman” has to do any work of manual, unskilled, skilled, technical, operational, clerical or supervisory in nature.

Going by the law stated above, a bench of Justices Pankaj Mithal and R. Mahadevan found that there is no specific document adduced relating to the actual work and functions performed by the employee. In the absence of the same, the Court referred to the employment orders issued by the management. As per these orders, the employee was appointed as a Junior Engineer and was promoted to Assistant Engineer. 

The Court noted: "It is the evidence of M.W.1 that the employee was supervising the work of two junior Engineers, who were working under him, which was also admitted by the employee in his cross examination, as W.W.1. 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”. Therefore, we hold that the employee is not a “workman” as defined under section 2(s) and is not covered by the provisions of the I.D. Act. In view of the same, the order of the High Court upholding the finding of the Labour Court that the employee was a “workman” within the definition of post-amended section 2(s), is liable to be set aside."

As for the reinstatement, the Court held that there was no violation of procedure on the part of the management in terminating the services of the employee because the appointment letter stated that the employee was required to be paid 1-month salary in lieu of notice, which he was given and he accepted it without objections.

Case Details: The Management, M/s. Express Publications (Madurai) Ltd v. Lenin Kumar Ray, Arising out of SLP (C) 12876 of 2024

Citation : 2024 LiveLaw (SC) 841

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