National Commission on Labour (1967)||
24.32 The right to 'hire and fire' has been urged before us by employers as a remedy for improving industrial discipline. The right to 'hire' belongs to them, but the other right has, in recent years, been circumscribed. The employers contend is that they should not be forced to take back a dismissed worker; they should have the option to pay compensation instead. Workers, on the other hand, have urged that in a labour surplus economy, they should not be placed in a position where their right to work can be bought off by the employer through compensation, howsoever hand-some. They also apprehend that the privilege claimed will be used by the employer to get rid of active union workers.
24.33 At the level of the undertaking, the legal framework as laid down under the Industrial Employment (Standing Orders) Act, 1946 (Annexure II) and the Industrial Disputes Act, 1947 provides for (i) a procedure to be fol-lowed in investigating cases which lead to disciplinary action; and (ii) a substantive restraint which protects the union officials. The present controversy covers both the aspects. It is not necessary to discuss punishments upto suspension for a specified period and the procedure relating to them. In most of the establishments there are set and accepted procedures for this purpose. They have not been seriously challenged in the evidence nor are the traditions built around them. It is only when punishment for an alleged misconduct leads to discharge/ dismissal that difficulties have arisen. We, therefore, limit our discussion to the connected issues.
24.34 The procedure followed in discharge/ dismissal cases is: (i) the workman concerned is given an opportunity to explain the charges against him; (ii) the order given to him elaborately states the charges against him; (iii) the worker is given an opportunity to explain his conduct in an enquiry to be conducted by the employer; (iv) the enquiry officer is an appointee of the employer; he can be either an experienced subordinate in the establishment or an outsider; (v) the punishment order is finally approved by the employer/manager who, before making his decision, takes into consideration the gravity of the misconduct and the worker's previous record; and (vi) if the charges are proved to be correct, the workman need not be paid wages during the suspension period.
24.35 Section 33 of the Industrial Disputes Act, 1947 in regard to matters connected with disputes requires maintenance of status quo by the employer and restrains him from discharging or punishing a worker by dismissal or otherwise, during pendency of conciliation or adjudication proceedings in an industrial dispute, save with the permission of the authority Holding such proceedings. In matters unconnected with the dispute, the employers' freedom to act is nut curtailed, except that he is required to pay one month's wages to a workman before discharge or dismissal and seek the approval of his action by the concerned authority. While Section 2(k) of the Industrial Disputes Act gives jurisdiction to labour courts and tribunals over such disputes, the controversy whether an individual dispute was an industrial dispute was set at rest by the incorporation of Section 2-A in the Industrial Disputes Act, which clearly includes individual disputes over discharge, dismissal or retrenchment within the meaning of the term 'industrial dispute' even if the case of the individual retrenched is not taken up by other workmen or a union.
24.36 Considerable volume of case law has been built around these provisions. To safeguard the interests of workmen against victimisation, the tribunals have gone into the reasons for discharge even when the procedure laid down under the Standing Orders was followed. Tribunals normally do not sit in appeal over management's decision, but where want of bonafides, victimisation or unfair labour practices, a basic error of facts or violation of a principle of natural justice, or a completely baseless or perverse finding on the material available, is established, tribunals have intervened to order reinstatement or award monetary compensation in lieu of reinstatement. Employers, for the sake of discipline, have insisted on compensation and workers on reinstatement.
24.37 According to a recent Supreme Court ruling, the tribunal does not have jurisdiction to substitute its own judgment for that of management. This decision has led to the Bill amending the Industrial Disputes Act, to remove the limitations on the tribunal's jurisdiction in such cases. The Bill, already passed by the Rajya Sabha, provides that labour courts/tribunals should have the power to set aside the order of discharge or dismissal and
direct reinstatement of the workmen or give such other relief including milder punishment in lieu of discharge or dismissal as considered proper by it.
24.38 Disciplinary procedure for misconduct leading to discharge/dismissal causes dissatisfaction among workers in a country where employment opportunities are inadequate. Attempts by the State to regulate the procedures are considered by employers as undue interference in the exercise of their right to 'hire and lire'. The present regulations in this regard, particularly the denial to the employer of a choice between reinstatement and payment of compensation, do not find favour with the employers as a group. The law, as it stands today, lays down specific procedures in regard to dismissal, so as to ensure that there is no victimisation and that punishment is awarded on the basis of a full enquiry and established facts. Evidence from employers shows that recourse to dismissal as a punishment has been declining. Where such punishment is meted out, courts generally have upheld the employer's decision. Reinstatements have been rare. On the consequence of reinstatement, and this is mostly a subjective assessment, views among- employers are divergent; a small section believes that it does not have any serious repercussions as things settle down in a short time, but a large majority feels that it leads to indiscipline. Workers' representatives, although they accept the claim of employers about the extent of dismissals and their justness in the case of the more progressive elements among employers, have shown dissatisfaction on both counts taking the employer group as a whole. There is a general but grudging acceptance of the existing practice and procedures, although both employers and workers would like to see certain changes introduced to accommodate their respective views. The employers want the law to be changed so as to allow them the right to choose between reinstatement and compensation when mala fides are non-existent. They are exercised over the law, as currently interpreted, particularly in regard to (a) delay and dilatoriness of the proceedings, (b) reference to tribunals even in cases where the domestic enquiry has been in order, and (c) the attitude of tribunals in setting their face against compensation. They have pleaded for a procedure involving minimum third party intervention and have suggested: (i) formulation of more comprehensive model standing A orders classifying major and minor misconducts and specifying punishment to suit each type;
(ii) provision of a milder punishment in lieu of dismissal: (iii) curtailment of tribunals' powers to sit in judgment over management's order; and (iv) payment of compensation rather than reinstatement for wrongful dismissal. Workers, on the other hand, oppose any such choice being granted, as in (iv), as they apprehend that this right will be used to cut at the root of union activity. They have also alleged the arbitrary nature of punishment; punishment for the same misconduct has ranged from four days suspension to dismissal, according to the person involved. Their basic dissatisfaction is, however, about the employer combining in himself the functions of a prosecutor and judge. The claim made by employers that this is not. always so is accepted by unions only to a limited extent and that too in the case of progressive managements. Some of the suggested changes are: (i) standardisation of punishment for different types of misconduct, (ii) inclusion of a workers' representative in the domestic enquiry committee, (iii) having an arbitrator to give decision in a domestic enquiry, (iv) an adequate show-cause opportunity to a workman, (v) presence of a union official to represent the case of a workman in the enquiry proceedings, (vi) supply of the record of proceedings to the aggrieved workman, (vii) payment of a subsistence allowance during the suspension period, (viii) right of appeal to administrative tribunals set up for the purpose, and (ix) fixing a time limit for tribunal proceedings and giving unfettered powers to it to examine the case de novo, modify or cancel a punishment ordered by the employer.
24.39 The general view seems to be in favour of the Bill presently before Parliament. According to it, the labour court/tribunal would be given appellate authority over the findings or a domestic enquiry. It gives to the aggrieved worker the right to appeal against the findings of the inquiry and empowers the court/ tribunal to order reinstatement of a wrongfully dismissed/discharged workman or alter the content of the punishment in favour of the worker. It provides for a decision on the dispute by the labour court/tribunal on the basis of the material on record,
24.40 We, therefore, suggest that the Bill' as it stands should be enacted without delay. To minimise delays in adjudication proceedings and further delays in appeal, adoption of the procedure which obtains in the Small Causes Court and abolition of appeals to higher courts may be provided. To make the procedure more effective, the following provisions should be made.
1 The Industrial Disputes (Amendment) Bill 1966 (Bill No. XVIII of 1966).
(a) In the domestic enquiry, the aggrieved worker should have the right to be represented by an executive of the recognised union or a workman of his choice;
(b) Record of the domestic enquiry should be made in a language understood by the aggrieved employee or his union. A copy of the record should be supplied to him;
(c) The domestic enquiry should be completed within a prescribed period which should be necessarily short;
(d) Appeal against the employer's order of dismissal should be filed within a prescribed period; and
(e) The worker should be entitled to a subsistence allowance during the period of suspension, as per agreement in the tripartite.