In 1947, with the end of the British regime, India was constituted as a sovereign, socialist, secular, democratic republic. Through the formative years of independent India, societal consciousness developed in relation to the nature of the country’s economic fabric.2 Socioeconomic welfare thus came to hold paramount importance for the Indian legislature and accordingly, several laws were enacted in the period around Indian independence.3 A chief factor in the labour-related legislative reforms was the realisation that the British rulers had intervened in labour matters merely to protect their individual or collective commercial interests.4 The reforms sought to safeguard workers’ interests, especially in the inflationary aftermath of the Second World War. A climate of unemployment, and also the burgeoning trade union movement in India5 propelled state intervention in favour of the labourers.6 Against this backdrop, the Industrial Disputes Act 1947 (the ID Act) was enacted to provide for investigation and settlement of industrial disputes.7 Under the ID Act, ‘workmen’ are empowered to use its mechanisms effectively against the oppressive tactics of employers. They can take a host of labour issues ranging from payment of minimum wages and social security benefits to unfair labour practices such as arbitrary dismissal, discharge, retrenchment, etc. to the industrial tribunals and labour courts set up under the ID Act. The ID Act thus forms the primary legislation in India that seeks to preserve harmonious industrial relations between employers and employees.

The ID Act and most other labour statutes in India do not apply uniformly to all establishments or levels of employees. Typically, applicability of each statute has to be assessed at two levels – its applicability to an establishment as a whole and its applicability to all employees or a specific section of employees. The first level of assessment needs to be through the definitional clauses of each statute. All labour law statutes contain separate definitions of an ‘establishment’, a ‘factory’, an ‘industry’, an ‘employer’, a ‘mine’, a ‘plant’, etc. To qualify under the statute, these definitions typically require the establishment to carry on some systematic activity, have a certain strength of workforce, be a shop or a specific type of establishment, etc. In respect of the second assessment, various central and state laws categorise employees into different groups based on their wages, their job roles in the organisation, their duration of service, etc. The applicability of labour legislation to a specific employee depends on the category of the employee. For example, the ID Act is applicable only to ‘workman’-level employees and thus, whether or not an employee is a workman under the ID Act becomes a very important determination.

The ID Act defines a ‘workman’ as

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 [. . .] but does not include, inter alia, any such person who is employed mainly in a ‘managerial or administrative capacity’; or who, being employed in a ‘supervisory capacity’, and draws wages exceeding 10,000 Indian rupees per month.

Furthermore, Section 2(k) of the ID Act requires that industrial disputes are limited to those disputes or differences between employers and workmen, between workmen and workmen, or between employers and employers that are connected with the employment or non-employment or the terms of employment or with the conditions of labour of any person. Typically, Section 2(k) requires the involvement of workmen or members of the union to raise an industrial dispute. However, under Section 2A, the ID Act provides leeway to an individual workman to raise an industrial dispute, provided that her or his dispute connects with or arises out of a discharge, dismissal, retrenchment or termination. Several courts have settled that an individual dispute does not require the espousal or backing of other workmen or any union, provided that its subject matter pertains to the specific types of dispute under Section 2A.

While the ID Act focuses on regulating industrial relations, several other labour law statutes also provide for dispute resolution mechanisms or the appointment of authorities to adjudicate claims under the statute concerned.8 For example, the Minimum Wages Act 1948 provides that the appropriate government may appoint an officer at the level of Regional Labour Commissioner or Assistant Labour Commissioner to decide claims arising out of deductions from wages or delay in payment of wages. Similarly, the Employees’ Provident Fund and Miscellaneous Provisions Act 1952 (the EPF Act) provides for the appointment of authorised officers such as the Central Provident Fund Commissioner, Regional Provident Fund Commissioner, etc. to decide disputes related to the application of the EPF Act, determination of the amounts due from an employer, etc. Besides the appointment of these officers, the EPF Act also provides for the constitution of the Employees’ Provident Funds Appellate Tribunal as an appellate forum. Despite the existence of similar adjudicatory bodies under other labour statutes, a significant amount of labour litigation is actively pursued before the industrial tribunals and labour courts setup under the ID Act. This is because labour issues predominantly relate to issues such as undue discharge or dismissal, non-observance of exit procedures, employee entitlements to retrenchment compensation, oppositions to disciplinary actions taken against misconduct or sexual harassment, disputes over whether an employee is a workman or not, whether the individual is an ‘employee’ or not, and non-payment of social security benefits.

As to the general tenor of employment litigation in India, courts prefer to maximise employees’ interests in labour disputes while simultaneously balancing employers’ interests. Courts and tribunals generally seek to secure for the employees a degree of basic sustenance or livelihood, protect employees against exploitation from employers and equalise the relative bargaining capacities of the employers and the employees. In this context, courts may appear inclined towards protecting employees’ interests. This tendency of protectionism arises from the socioeconomic context of several labour law enactments, and also the disparity in the relative bargaining capacities of employers and employees. For example, in cases relating to procedural impropriety during dismissal, unfair termination, etc., it is often noticed that industrial tribunals or labour courts do not hesitate to take an employee-friendly view. In several cases, tribunals or courts have ordered reinstatement with full or part back pay for the employee’s period of unemployment.


As indicated in the previous section, the ID Act and other statutes provide for the constitution of labour courts or industrial tribunals. These fora are dedicated to conciliation and adjudication of labour disputes, and are distinct from the traditional civil courts that handle matters under the Code of Civil Procedure 1908 (CPC). Of the labour law adjudicatory bodies, the conciliation officers, boards of conciliation, industrial tribunals and labour courts are those before which labour disputes are frequently raised. The ID Act confers powers upon these adjudicatory bodies similar to those of the civil courts under the CPC in relation to (1) summoning witnesses for examination; (2) compelling production of evidence; (3) enforcing the attendance and examination of persons; (4) discovery and inspection; (5) granting adjournments; and (6) reception of evidence taken on affidavit.

Prior to filing a suit or raising a dispute under various labour laws, the two most important assessments are whether the employee concerned in the matter is a workman under the ID Act and whether the dispute is in the nature of an industrial dispute or an individual dispute. The number of workmen involved, as well as the nature of the dispute, chiefly determines an employee’s ability to raise the dispute before an industrial tribunal or labour court. Thus, labour dispute procedures vary depending on this assessment. As stated earlier, an individual workman may separately raise an individual dispute as an industrial dispute. However, for the dispute to be valid, it must pertain to the discharge, dismissal, retrenchment or termination of the individual workman. If no relation is found, courts generally require the sponsorship of the individual’s fellow workmen or union members before admitting matters unconnected in this respect.9

i Resolution procedures in respect of workman-level employees

The ID Act requires the parties to an industrial dispute to apply to the appropriate government to refer the matter for adjudication. If the appropriate government is satisfied that an industrial dispute has occurred or is apprehended, it may refer the dispute to a board of conciliation (the Board); to a court of inquiry; to a labour court, provided the dispute relates to a matter specified in Schedule II to the ID Act; or to an industrial tribunal, provided the dispute relates to a matter specified in Schedule II or Schedule III to the ID Act.

When the dispute is before the conciliation officers,10 each party to the dispute can lay out her or his demands or requirements separately before the conciliation officer and also jointly along with the opposite parties. Using this mechanism, the parties or their representatives in the unions can seek to collectively bargain and resolve the differences between them. In fact, it is the duty of the conciliation officer to investigate or resolve the matter amicably, and induce the parties to come to a fair settlement. Where the conciliation proceeding succeeds, the conciliation officer is required to submit notice of this to the government concerned, along with her or his report11 and a memorandum of settlement. Where the conciliation fails, she or he is required to submit to the government a detailed report on the steps undertaken by her or him to resolve the dispute, and her or his opinion on why the settlement could not be achieved.

Where the conciliation fails and a report is submitted, the government concerned is required to satisfy itself of a need to make the order of reference to either a labour court or an industrial tribunal. Where an industrial dispute is referred to either of these fora, the forum is required to expeditiously complete its proceedings within the time prescribed in the order of reference12 and submit its award to the government. The government is required to publish the report from the forum within 30 days of its receipt. Published awards of labour courts or industrial tribunals will be deemed final and binding on the parties to the dispute. Despite the finality of the award, a writ can be filed before the High Court under Article 226 if the award suffers from patent perversity or grossly flouts basic principles of natural justice (PNJ).

ii Resolution procedures in respect of non-workman level employees

The above-listed dispute resolution procedures under the ID Act would be inapplicable to non-workman level employees. Their terms of employment would be guided by the relevant state-specific shops and commercial establishments acts13 (the S&E Acts), provided the non-workmen qualify as employees under the S&E Acts. Further, the S&E Acts typically require employers to have a reasonable cause for terminating an employee’s employment and to give at least one to two months’ notice prior to termination (based on the tenure of the employee’s service) or to make payments in lieu of the notice period.

Thus, under the S&E Acts, employees can file with the inspectors appointed under the Acts complaints against their employers for depriving them of their statutory entitlements or for violating the provisions of the S&E Acts. The disputes of such employees that escalate to the civil or higher courts commonly relate to non-observance of the exit procedures prescribed under these pieces of legislation. Generally, the procedures under the CPC would apply to employees taking this route of dispute resolution. Similarly, employees such as supervisors, managers and other senior-level employees can have recourse to the civil courts to address their employment-related disputes; typically, disputes of these employees would involve breach-of-contract claims based on contractual rights and obligations or conditions of service.


By and large, industrial tribunals and labour courts in India adjudicate on a plethora of employment-related disputes, ranging from issues such as redundancies, disciplinary action because of misconduct or allegations of sexual harassment, procedural impropriety in conducting disciplinary enquiries, non-payment of exit payments and performance-based terminations to regularisation claims in the context of contract labour. In all these cases, courts stringently require employers to duly observe statutory procedures before taking any penalising action or discharging the employee from her or his position. Further, Indian courts do not recognise ‘at-will’ terminations, and typically require that termination of employment should be for a ‘reasonable cause’ (which is to be mentioned in the termination notice). For example, unilateral terminations or redundancies due to genuine business reasons would be considered as terminations based on a reasonable cause. Similarly, terminations based on poor performance would be a reasonable cause. However, even terminations based on a reasonable cause should be attended by statute-prescribed procedures or judicially evolved principles for termination. We have briefly set out below the procedures over which disputes are frequently seen before the adjudicatory bodies.

i Redundancies

In the event of a retrenchment (including a redundancy), the ID Act requires employers to notify the government authorities and the workmen intended to be retrenched; follow the ‘last in first out’ (LIFO)14 rule; and publish a seniority list of the workmen, etc. Further, upon termination, employers are required to make certain statutory payouts, such as accrued but unpaid wages (until the termination date), notice pay (if applicable), retrenchment compensation,15 wages in lieu of accrued but untaken privilege leave, any contractual dues and gratuities (if payable). Thus, disputes in this respect typically arise when employers fail to follow the mandatory processes or make the requisite payments.

ii Poor performance and misconduct terminations

Terminations based on poor performance are referred to as ‘termination simpliciter’, while those based on misconduct are termed ‘stigmatic terminations’; these two types of termination are treated differently by courts. Although there is no statutory process for terminating employment on the ground of poor performance, courts generally require employers to provide the underperforming employee with a ‘reasonable opportunity’ to improve. This typically includes providing them with targets or goals to achieve, offering assistance or the support needed to improve their performance, monitoring their performance, etc. for a specified period. Despite this, if her or his performance does not improve, then companies may proceed with termination. Even here, employers are required to ensure that the termination letter is not stigmatic in nature, severance payments are made, etc. This is because courts view poor performance not as a ‘fault’ of the employee, but as a mismatch between the skills or competence of the employee and the expectations of the employer.

In cases of misconduct, issues mostly relate to the quantum of punishment or the failure to adequately hear the parties. Courts require that the punishment is proportionate to the offence. Further, if an employee is to be dismissed, courts require that before any action is taken, she or he is given a fair hearing to respond to the charges levelled against her or him, in accordance with PNJ. The fair-hearing requirement includes issuing a charge sheet, appointing an enquiry officer and conducting an enquiry.

In both these cases, if courts find that due process was not followed, they may order reinstatement of the employee with or without back pay.


There have been no significant legislative developments in India (either under the ID Act or S&E Acts) that impact on the way in which the judiciary resolves employment disputes. In recent months, courts have even been consistent and have reiterated several judicial principles to balance the employers’ and employees’ interests where necessary.

i Management of Regional Chief Engineer, PHED, Ranchi v. Their Workmen16 and Bhubaneswar Municipal Corporation v. Bharat Ch Sahoo17

In both these cases, the validity of orders of reinstatement with full back pay were questioned (before the Division Benches of the Jharkhand High Court and Orissa High Court). The respondents’ cases were that they were retrenched by the appellants without following the due procedures prescribed under the ID Act. As the retrenchment procedures of notifying the government authorities, following LIFO, selecting the workmen to be retrenched from a duration-based seniority list and paying retrenchment compensation were not observed by the appellants, the labour courts as well as the Single Benches of the High Court held that the retrenchments were void ab initio, and ordered reinstatement with full back pay.

In the case before the Jharkhand High Court, although the appellants had re-employed the workmen, they challenged the finding that the workmen were entitled to full back pay for the intervening period, when they were out of service. Rejecting this challenge, the Division Bench scrutinised the orders of the labour court and upheld the grant of full back pay to the workmen. Similarly, as the employer had dispensed with the services of the workmen in a manner contrary to the requirements under the ID Act, the Orissa High Court upheld the order of reinstatement of full back pay. The High Court further held that the retrenchment procedures under the ID Act are mandatory and a condition precedent before dismissing employees who have served the management for more than 240 days.

Further, both the High Courts relied on the Supreme Court’s ruling in Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya18 to reason that the burden lies with the employer to prove that, during the intervening period, the retrenched workmen were gainfully employed elsewhere and were receiving the same emoluments. It is established law that the employees (and their families) should not have to bear adversities due to the consequences of the employer’s illegal actions. The Supreme Court in that case had observed that ‘the reinstatement of such an employee, which is preceded by a finding of the competent judicial or quasi-judicial body or court that the action taken by the employer is ultra vires the relevant statutory provisions or the principles of natural justice, entitles the employee to claim full back wages. The denial of back wages to an employee who has suffered because of an illegal act of the employer would amount to indirectly punishing the employee concerned and rewarding the employer by relieving him of the obligation to pay back wages, including the emoluments.’ Therefore, it can be concluded that courts do not hesitate to penalise the employers for not following the legal processes when terminating employment. To further champion the cause of the distraught workmen, courts cast the onus on employers to prove that the dismissed workmen were gainfully employed.

ii Allahabad Bank & Others v. Krishna Naryana Tewari19

In this case, the appellant–employer had suspended the respondent while conducting enquiry proceedings against him. During the enquiry, although the respondent pleaded innocence, the enquiry officer expedited the enquiry proceedings without affording him a chance to defend himself. The disciplinary authority of the appellant accepted the findings of the enquiry officer and terminated the employment of the respondent. Aggrieved by this, the respondent preferred an appeal to the High Court to challenge the termination. The High Court held that in the absence of sufficient evidence, the enquiry officer and the disciplinary authority had acted without any application of mind in dismissing the respondent. Hence, the order of removal of service was viewed as unsustainable and perverse. As the respondent had already reached the age of retirement on the date of judgment, the High Court directed the employer to release the service benefits due to the respondent from the date of termination, as well as the retiral benefits. The appellant–employer challenged this order before the Supreme Court on the ground that the High Court could not direct release of benefits, but could only remand the matter back to the enquiry officer.

The Supreme Court upheld the High Court’s view that the enquiry was vitiated because of violation of PNJ. It was noted that High Courts and the Supreme Court are justified in interfering with the enquiry officer’s report if any procedural impropriety is noticed, especially so when the supervening circumstances are harsh and unfair. In relation to the direction of release of service and retiral benefits, if the High Court’s order was to be upheld in entirety, the employer would have had to pay service benefits for about seven years (that is, the duration between the termination of employment and retirement). Appreciating that payment of service benefits in full for this duration would not do justice to the appellant–employer, the Supreme Court reduced the payment to only 50 per cent of the salary benefits for the said period. This, the Court considered, was necessary to balance the interests of the employee with the employer.

iii L S Sibu v. Air India Ltd 2016 (2) KHC 569

The Kerala High Court recently had occasion to address the characteristics of PNJ in the context of a sexual harassment enquiry. Under the sexual harassment law in India, employers are required to establish an internal committee (IC) to redress claims of sexual harassment in the workplace. The question in the case concerned the validity of the IC’s enquiry report on the ground of non-compliance with PNJ. The petitioner claimed that the IC’s refusal to let him cross-examine the complainant, and also to controvert the fact-finding in the enquiry report vitiated the report on the basis of procedural impropriety. While addressing this claim, the High Court highlighted that the manner of securing PNJ in sexual harassment cases is a delicate question. Further, it noted that the PNJ obtain elasticity depending on the context in which they are referred to. As the rules on PNJ are not codified, they cannot be termed inflexible, and thus, they can be achieved in any mode as long as the procedure is fair. So long as the accused is made aware of the accusations and evidence levelled against him, and he is given a fair opportunity to contradict them, PNJ would be satisfied. In sexual harassment proceedings, it is important to recognise a complainant’s fear of personally deposing before the defendant. Thus, to facilitate an atmosphere of free expression for the complainant, the IC can adopt other measures to obtain facts to formulate its report (such as through written statements and objections). Thus, the Court set aside the IC’s enquiry report and directed that the petitioner be given the fullest opportunity to file his objections.

This case is reflective of the courts’ insistence on ensuring that the due processes are observed before forming reports that may negatively affect the interests of employees. At the same time, it showcases that as long as PNJ are adhered to, the mode or manner of affording fair opportunity should not be an issue. Thus, employers must ensure that, at any cost, none of the parties to a dispute are deprived of a chance of a fair hearing.


Litigation of any type in India is typically a drawn-out, expensive process, owing to several factors such as procedural lags, existing backlogs and non-appearance of parties. Traditionally, most labour litigation pertained to the disputes of unions and the labour masses. This was because of the general understanding (or, rather, misconception) that the term ‘workman’ under the ID Act related to employees in blue-collar jobs. Given the increased awareness among the educated classes, especially in the information technology (IT) sector, with respect to their rights under the ID Act and the S&E Acts, individual labour disputes have been on the rise. The Forum of Information Technology Employees and the Karnataka State IT Union have very recently taken the initiative to form IT trade unions in the Indian states of Tamil Nadu and Karnataka. This emerging IT trade unionism movement should further catalyse the pursuit of labour disputes by white-collar employees. Further, the involvement of unions is likely to strengthen the collective bargaining powers of IT employees against unfair retrenchment. While no immediate legislative changes may follow in the field of dispute resolution, one would not be wrong in expecting to see more challenges to unfair redundancies in the IT sector if employers do not adhere to due process under labour statutes.

1 Ajay Raghavan is a partner, Swarnima is a counsel and Amulya Chinmaye is an associate at Trilegal.

2 Report of the National Commission on Labour, Ministry of Labour and Employment and Rehabilitation, Government of India, 1969.

3 Constituted as a federal republic, India has legislative branches at both central government and state government level. Further, under the Constitution of India, ‘labour’ is classified as a subject on which both the central and state governments are empowered to legislate. Most state legislatures have either enacted amendments to central legislation on this particular subject, or created their own rules for implementation. Further, several state governments have also enacted independent statutes resulting in diverse state legislation on labour matters.

4 See footnote 2.

5 Kennedy, Van D, The Sources and Evolution of Indian Labour Relations Policy, Indian Journal of Industrial Relations, at pp. 15–40, Vol. 1, No. 1 (1965) (available at: www.jstor.org/stable/27760575) (last accessed on 2 January 2018).

6 Several giant trade unions such as the Indian National Trade Union Congress, the Hind Mazdoor Sabha (HMS), the United Trade Union congress (UTUC) were formed in this era. (Nitin Sehgal, Brief History of Trade Union Movement in India, Important India, 21 November 2013, www.importantindia.com/8419/brief-history-of-trade-union-movement-in-india/).

7 Statement of Objects and Reasons, Industrial Disputes Act, 1947.

8 Labour laws in India are branched into more than 200 statutes governing subjects ranging from, conditions of employment to social security, health, safety, welfare, etc.

9 This is because the ID Act was conceptualised to provide a mechanism to settle disputes between employer and employees or a substantial section of the employees. The object of the ID Act is to maintain industrial peace and achieve collective amity by preventing industrial strikes or lock-outs. It is not intended for the ID Act to take the place of an ordinary tribunal of the land for enforcing the contracts between an employer and an individual workman. Thus, the application of the ID Act to an individual dispute is excluded unless it acquires the general characteristics of an industrial dispute (i.e., espousal or backing of the workmen as a body to make common cause with the individual workman) (P.M. Murugappa Mudaliar Rathina Mudaliar & Sons v. Raju Mudaliar (P) and Ors. (1965) I LLJ 489 Kant). Hence, the matter is well settled that if an individual raises a dispute, it can only be for a removal, termination or dismissal. If the workman wants to raise a dispute related to other claims, it can only be done by the union on behalf of the workmen or workman (Prakash and Ors. v. Superintending Engineer (Eel) (2001) 1 Kant LJ 490).

10 The ID Act requires the appropriate government to make an order of reference to the Board. However, practically, either party can directly request in writing that a conciliation officer commence the conciliatory process.

11 To be submitted within 14 days of the commencement of the conciliation proceedings.

12 However, when the industrial dispute referred is in the nature of an individual dispute under the ID Act, the period for submission of the award must not exceed three months.

13 The S&E Acts are the primary legislation governing several aspects of the employer–employee relationship, such as working conditions of employees across the state, termination of employment, work timings, leave entitlement, resolution of disputes and other rights.

14 The LIFO rule, inter alia, requires employers desirous of retrenching workmen, to ordinarily first terminate the workman who was the most recently employed in a particular category in the establishment and is a citizen of India.

15 Upon termination, the ID Act requires employers to pay employees retrenchment compensation (calculable according to the method laid down under the ID Act).

16 2017 LLR 1254.

17 (2017) I LLJ 293 Ori.

18 (2013) 10 SCC 324.

19 (2017) 2 SCC 308.