Employee in supervisory capacity, drawing wages exceeding 10,000 per month, not ‘workman’ under Industrial Disputes Act: Supreme Court

The Supreme Court recently held that an employee does not fall within the definition of “workman” under section 2(e) of the Industrial Disputes Act, 1947 (amended in 2010) because he was employed as a supervisor and was on wages exceeding Rs. . .10,000/- per month.

Short facts

Briefly, an employee of M/s Express, a newspaper publishing an English language newspaper i.e. New Indian Express was initially appointed as Junior Engineer and his post was subsequently confirmed in 1998.

Subsequently, he was promoted to the post of Assistant Engineer and was regularized 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 for one month’s salary in lieu of notice. He subsequently approached the Labor Authorities who referred the matter for conciliation. But after conciliation failed, the matter came before the Labor Court, which on September 22, 2010, passed an award for reinstatement of the employee 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 Orissa High Court, in which the High Court partly allowed the writ petition filed by M/s Express challenging the judgment passed by the Labor Court.

The High Court set aside the judgment of the Labor Court to the extent that the employee is to be reinstated and paid a compensation of Rs. 75,000/-in lieu of back wages. At the same time, the High Court upheld the finding of the Labor Court that the employee fell within the definition of “workman” in section 2(s) of the Industrial Disputes Act, 1947.

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

The arguments of the parties

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

It has been argued that whether or not an employee is a “workman” under section 2(s) of the ID Act must be determined with reference to his primary nature of duties and functions; and the designation of an employee is not of much importance and what is important is the nature of the duties performed by the employee.

Section 2(e) provides: “2(e) ‘Worker’ means any person (including an apprentice) employed in any industry to perform any manual, unskilled, skilled, technical, operational, clerical or supervisory work for employment or reward, whether or not the terms of the employment are 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, dismissed or dismissed in connection with, or in consequence of, that dispute, or whose dismissal, dismissal or withdrawal resulted in that dispute, but does not include such person – (i) 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 primarily employed in a managerial or administrative capacity; or (iv) who, being employed as a supervisor, receives salaries exceeding (ten thousand rupees)13 per mensem or exercises, either by the nature of the duties related to the position or because of the duties conferred on him, functions mainly in the nature managerial.”

In the case of management, the nature of the duties and functions performed by the employee was as a supervisor and he was drawing a salary of more than 1,600/- and therefore does not belong to the category of “workers”.

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

To prove their respective claims, the employee and senior management manager were examined as WW1 and MW1; and Ext.W1 to W5 and Exts.A to D were marked before the Labor Court.

What did the Supreme Court say?

The Court first determined whether the employee falls within the definition of “workman” given in section 2(s) of the Industrial Disputes Act. He briefly specified the law as follows: “It is well settled law that the determining factor for “worker” governed by section 2(s) of the ID Act, is the principal duties and functions performed by an employee in the establishment and not merely his job designation. Further, the burden of proving the nature of the employment rests with the person claiming to be an “employee” within the definition of section 2(e) of the ID Act.”

According to the above provision, a person to be qualified as a “worker” must perform any work of a manual, unskilled, skilled, technical, operational, clerical or supervisory nature.

Following the law stated above, a bank of Judges Pankaj Mithal and R. Mahadevan found that there is no specific document submitted regarding the actual work and functions performed by the employee. In their absence, the Court referred to the employment orders issued by the management. According to these orders, the employee was appointed junior engineer and was promoted to assistant engineer.

The Court held: “It is MW1’s evidence that the employee was supervising the work of two junior engineers working under him, which was also admitted by the employee in cross-examination, as WW1. Even according to the employee, the nature of duties. and the functions performed by him were supervisory. As such, applying the pre-amended proviso to section 2 (e), as the employee was terminated from service on 08.10.2003 and received a salary of more than Rs.1,600. does not come within the definition of “worker” We therefore hold that the employee is not a “worker” as defined in section 2 (e) and is not covered by the provisions of the ID Act. the order of the High Court upholding the finding of the Labor Court that the employee was a “worker” within the meaning of the post-amended section 2(e) is liable to be set aside.”

Regarding reinstatement, the Court held that there was no violation of procedure by the management in terminating the employee’s services because the appointment letter stated that the employee was required to pay one month’s salary in lieu of notice, which it was given and accepted without objection.

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

Reference: 2024 LiveLaw (SC) 841

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