Supreme Court defines ‘continuous service’ under IDA

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The Supreme Court recently held that an employee who abandons work voluntarily cannot be defined as an employee who is in “continuous service”, which is a requirement for the applicability of section 25F of the Industrial Dispute Act, 1947 (IDA).

In Manju Saxena v Union of India & Anr, Manju Saxena was working at HSBC bank as a “senior confidential secretary to the senior manager”, a post that became redundant after the officer she supported left the bank. The bank subsequently offered Saxena four alternate posts that were of the same pay scale as her previous post, and did not require her to obtain extra educational qualifications. However, Saxena rejected all of the alternate posts offered to her and the bank terminated her employment by paying six months’ compensation in lieu of the notice provided under the employment contract instead of compensation for retrenchment.

Saxena then raised a dispute before a conciliation officer under IDA and sought an enhancement of compensation, but did not seek reinstatement. The Central Government Industrial Tribunal, Delhi (CGIT) ordered her reinstatement in service with full back wages. The order was challenged by the bank by filing a writ petition before Delhi High Court, which remanded the matter to CGIT for fresh consideration as to whether Saxena fell under the ambit of “workman” under IDA.

CGIT passed an award and held that Saxena was a workman under IDA and ordered reinstatement with continuity of services, full back wages and all consequential benefits. The writ petition filed by the bank before the high court was allowed and the order of CGIT was set aside on the ground that Saxena had voluntarily abandoned work.

On appeal, the Supreme Court dismissed the appeal filed by Saxena and held that the bank was justified in terminating her services. Once it was established that an employee had voluntarily abandoned her service, she could not have been in “continuous service” under section 25F of IDA. It was further held that the amount already received by Saxena may be treated as the final settlement of her claims.

The dispute digest is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.