Introduction:

As per the provisions of Section 2(oo) of the Industrial Disputes Act 1947, we understand that retrenchment means termination of service of a worker “for any reason whatsoever”, otherwise than a punishment inflicted by the way of disciplinary action, but it doesn’t include-

  1.  Voluntary retirement chosen by the workman.
  2. Retirement upon reaching the superannuation age, as agreed upon in the employment contract.
  3. Service termination due to the non-renewal or termination of the employment contract upon its expiry.
  4. Termination of service due to persistent ill-health.

Retrenchment, according to the definition given above, is the process of removing a worker or employee from their position with the company. This is a concrete and permanent termination from employment, not something that is ephemeral or fleeting. Additionally, a worker’s termination from the workforce cannot be the result of disciplinary action taken against them for wrongdoing. Retrenchment is defined as not being the termination of employment owing to any kind of retirement. 

The provisions pertaining to retrenched employees’ re-employment:

Section 25H The Industrial Dispute Act addresses the re-employment of retrenched workers. It stipulates that when an employer intends to hire new personnel after retrenchment, they must follow prescribed procedures. Section 25(H) of the Industrial Disputes Act, 1947, mandates prescribed procedures for resolving industrial disputes, including conciliation, arbitration, and adjudication by labor courts or tribunals. These procedures aim to facilitate peaceful resolution of disputes through negotiation, mediation, and legal adjudication, thereby maintaining industrial harmony and promoting social justice.  This involves offering retrenched workers, who are Indian citizens, the opportunity to reapply for employment. These retrenched workers who express interest in reemployment are to be given priority over other applicants.

This section stipulates that when there’s new hiring in the establishment, the employer must offer an opportunity to individuals previously employed but subsequently retrenched. The only exception is that the individual must be an Indian national. Essentially, this means employers are to prioritize retrenched workers over newcomers when filling positions through new recruitment processes in the establishment. This provision gives former retrenched workers an advantage due to their past contributions to the establishment’s operations. It appears equitable and logical as those who have previously served to sustain the establishment should receive preference over new hires.

Re-employment of retrenched employees under Shops and Establishment Act:

In India, given its vast size and diversity, each state has its own set of regulations governing employment in shops and various commercial establishments within its borders. However, when considering the applicability of this provision of the Industrial Disputes Act (IDA) alongside the Shops and Establishments Act, how much validity can it maintain?

An attempt has been made to comprehend the circumstances and draw a conclusion from the judgements and decisions cited below.

The Nawanshahr Central Co-operative Bank Ltd. v. Presiding Officer

In this case, a worker was initially employed on an ad hoc basis for three months. However, his tenure was extended twice, each time for one month, before ultimately being terminated on July 19, 1977. During this period, another individual was hired for the same position without considering the previously terminated worker. Subsequently, the worker filed a suit, which was referred to the labor court. The Labor Court reinstated the worker’s employment, with the judge affirming that the provisions of Section 25H of the Industrial Disputes Act (IDA) apply to workers regardless of whether the establishment is registered under the Shops and Establishments Act or any other regulation. The worker is entitled to preferential treatment due to his five-month service and contribution to the establishment.

Ram Sumer vs Presiding Officer 

In this case, a writ petition was filed in the Punjab-Haryana High Court challenging the ruling made by the Industrial Tribunal-cum-Labour Court in Faridabad. The tribunal refused to reinstate the employee who had been illegally retrenched, arguing that since the business was registered under the Shops and Establishments Act, the provisions of that Act would apply instead and the laid off worker would be awarded compensation equal to two months’ salary. The worker was deemed eligible to pursue a remedy under Section 33-C(2) after the court invalidated the tribunal’s judgment and granted the petitioner’s request to be reinstated in his position and paid in full. The petitioner also requested payment for any unpaid wages from the time of his termination of employment until the date of this ruling.

National Engineering Industries Ltd. v. Shri Kishan Bhageria 

The Supreme Court ruled that the two statutes, which explicitly target protecting workers from all forms of unfair practices and wrongdoing, cannot be deemed to operate in different domains. The two statutes address workers’ rights to redress and damages in the event of harm or discharge; yet, there is no repugnancy or inconsistency between them; rather, they are complementary and do not contradict one another in their essence.

Krishna Distt. Co-operative Marketing Society Limited v. N.V. Puranachandra Rao 

In this case, the Andhra Pradesh Shops and Establishments Act, 1966, and the rights granted to laborers under Chapter V of the IDA 1947 were discussed. The Court held that the parties’ rights and obligations are governed by the provisions of Chapter V-A of the Central Act and that these rights and obligations may be decided upon and enforced in proceedings before the authorities under Sections 41(1) and 41(3) of the State Act if the employees are “workmen,” the management is a “industry” as defined by the Central Act, and the action taken by the management amounts to “retrenchment.” 

Vishnu Das v. State of U.P, 

The Allahabad High Court ruled that the provisions of the U. P. Act and the Central Act (which acts) demonstrate that the State Legislature and Parliament intended for the two acts to coexist and continue to be complementary and supplementary without one taking the place of the other. The court further held that the two acts were allowed to operate concurrently with regard to industrial disputes covered by both acts, and that the State Government retained the discretion to refer industrial disputes for adjudication under the State Act or the Central Act, as per its good will. Consequently, it is evident that a worker may file an application pursuant to Section 33-C or Section 6-H (2) of the State Act.

Safire Theatre v. Commissioner for Workmen’s Compensation 

In this case, The Madras High Court’s Full Bench ruled that the Shops and Establishment Act’s provisions are neither incompatible with those found in Section 2-A of the Industrial Disputes Act, nor are they rendered useless by virtue of Article 254 of the Indian Constitution. The Full Bench further declared that both of the acts’ remedies are available. 

Conclusion:

It is possible to draw the conclusion that, after reading and analyzing the aforementioned case laws in relation to the provisions of the two acts, they complement and reinforce one another, strengthen worker rights, and were both passed with the express intent of benefiting laborers in mind. Thus, it is accurate to declare that all employees in India are covered by the requirements of the Industrial Disputes Act, 1947 even those employed by establishments that are registered under and subject to state Shops and Establishments Acts. Ultimately, it can be said that upon the employee’s retrenchment (termination from service), he or she is entitled to a preference when fresh hires are made at the same organization. 

Appendix

Section 2 (oo), The Industrial Dispute Act, 1947

 Section 25H of The Industrial Dispute Act, 1947

 Writ Petition No. 29282 of 2003

 (1998) III LLJ (1151) P H

 (1988)I LLJ (163) (SC)

 (1987) II LLJ 365

 (1974) Lab IC 1287

 (1977) II LLJ 312