The Supreme Court of India has recently adjudicated cases emphasizing that employees who abandon their services, particularly by joining another organization during the pendency of an inquiry, are not entitled to relief. In one notable judgment, the Court upheld the termination of an employee who remained absent without informing the employer and subsequently took up employment elsewhere. The Court observed that such behavior constitutes abandonment of service, justifying the employer’s decision to terminate employment under service regulations. This conduct was deemed inexcusable, rendering interference by lower courts inappropriate.
Similarly, in the case of N.K. Taneja v. Maharaj Singh, the Supreme Court allowed an appeal against an order that had reinstated a university reader. The Court noted that the respondent had failed to report for duty and was moving abroad, indicating abandonment of services. The Bench remarked that even if there was a procedural lapse in terminating the services on the grounds of abandonment, the matter should have been remitted to the university authorities for appropriate action as per law, possibly after holding a disciplinary inquiry.
Charitable institutions that focus on helping orphaned children, such as orphanages or shelters, are generally not considered "industry" under the Industrial Disputes Act, 1947 (ID Act). The Delhi High Court's 2025 ruling aligns with previous judicial interpretations, particularly following the Supreme Court's landmark decision in Bangalore Water Supply & Sewerage Board v. A. Rajappa (1978).
According to the Bangalore Water Supply case, an entity qualifies as an "industry" if it engages in a systematic activity, organized by cooperation between employers and employees, for the production or distribution of goods or services to satisfy human wants or wishes. However, exceptions exist, such as:
Charitable Institutions – If an institution’s primary objective is philanthropy, not profit, and it does not function in a commercial manner, it may not be considered an industry.
Sovereign Functions – Activities related to sovereign functions of the state (such as police, judiciary, or defense) are not "industry."
Educational & Religious Institutions – If an organization is engaged in education, research, or religious work without commercial intent, it may not be classified as an industry.
If the primary objective of the institution is charity, and it does not operate like a business, it will not be an industry under the ID Act.
Employees of such institutions may not be covered by labor laws applicable to industries, meaning they may not have the right to raise industrial disputes under the ID Act.
However, if such institutions engage in commercial activities (like running a paid school or hospital), then that part of the institution may still be classified as an industry.
Under various labor laws, including:
Industrial Employment (Standing Orders) Act, 1946
Industrial Disputes Act, 1947
Company-specific Standing Orders & Service Rules
Certain acts are considered "misconduct" warranting disciplinary action.
1. Theft of Property – Gross Misconduct
Theft, fraud, or dishonesty in connection with the employer’s business or property is a well-established ground for termination.
Employers can dismiss employees without notice after conducting a proper domestic inquiry.
The Supreme Court & High Courts have repeatedly upheld termination for theft as justified.
2. Disrupting Work by Calling Union Members – Grave Misconduct
Unauthorized disruptions such as instigating strikes, gheraos, or preventing willing employees from working are considered serious offenses.
While employees have the right to form unions and protest legally, causing disruptions without following due process (such as giving proper strike notice) can be penalized.
Courts have upheld dismissals for acts that harm industrial peace.
Both acts—stealing property and disrupting work—are serious misconducts.
Employers have the right to take strict action, including suspension or dismissal, after a proper domestic inquiry.
Unions cannot shield employees engaging in theft or illegal disruptions.
Delhi High Court has ruled that a special incentive paid temporarily to employees for bearing additional expenses during the pandemic does not qualify as 'wages' under the Employees' State Insurance (ESI) Act, 1948.
Definition of 'Wages' Under ESI Act – Section 2(22) of the ESI Act defines 'wages' as remuneration paid to an employee under the terms of employment. However, it excludes certain allowances and payments made as a special case.
Temporary Nature of the Incentive – The court noted that the incentive was not a part of regular remuneration but was granted only due to extraordinary pandemic circumstances.
No Employer-Employee Agreement on Regular Payment – The incentive was neither promised nor agreed upon as part of employment terms but was a one-time or temporary payment.
No ESI Contribution Liability – Since the incentive did not fall under 'wages,' employers were not required to make ESI contributions on it.
Employers who had paid such special incentives during COVID-19 may not be liable for retrospective ESI contributions.
Employees who received such payments might not be able to claim ESI benefits on the basis of these additional amounts.
Future Implications – The ruling clarifies the scope of ‘wages’ under the ESI Act and can be referenced in similar cases involving special allowances.
The principle of "first come, last go," commonly known as the "last-in, first-out" (LIFO) rule, is a standard guideline in retrenchment processes aimed at ensuring fairness by terminating the most recently hired employees first. However, this principle is not absolute and may not be applicable in situations where employees are not similarly situated.
In a 2024 judgment, the Madhya Pradesh High Court addressed the application of retrenchment procedures under the Industrial Disputes Act. The court emphasized the necessity for employers to adhere to procedural safeguards, including the provision of notice, compensation, and the right to reemployment. Significantly, the court highlighted that the "last come, first go" principle must be followed to prevent arbitrary and selective retrenchment practices. However, the court also noted that deviations from this principle could be justified if there are valid reasons, such as differences in the nature of duties, skills, or qualifications among employees. This underscores that when employees are not similarly situated—due to variations in roles, performance, or other distinguishing factors—the strict application of the LIFO rule may not be appropriate.
Furthermore, the Supreme Court of India has recognized that principles like LIFO are subject to exceptions, particularly when employees have acquiesced to certain conditions over time or when there are significant differences in their situations. In the case of S.S. Balu v. State of Kerala, the Court observed that delay and laches could be valid grounds to deny relief, even to similarly situated employees, indicating that equitable principles can override standard rules when circumstances warrant.
Therefore, while the "first come, last go" principle serves as a general guideline for retrenchment, its applicability depends on the specific context and the similarity of situations among employees. Employers must consider factors such as job roles, performance, qualifications, and other relevant criteria before deciding on the order of retrenchment, ensuring that any deviations from the standard principle are justified and not arbitrary.
This aligns with the well-established legal position in India that a change of contractor does not automatically result in the transfer of employment obligations.
In a 2025 judgment, the Madhya Pradesh High Court ruled that a workman's affidavit claiming over 240 days of service in the preceding 12 months is insufficient evidence by itself. The court emphasized that the burden of proof initially lies with the workman to demonstrate continuous service, typically requiring additional evidence such as salary receipts or appointment records. If the workman provides such evidence, the burden then shifts to the employer to refute the claim. Failure by the employer to present counter-evidence can lead to adverse inferences against them.
The Delhi High Court's 2025 ruling suggests that an employer-employee relationship cannot be presumed in the absence of an appointment letter and evidence of day-to-day work. This means that for a worker to claim benefits as an employee (such as wages, PF, ESI, or wrongful termination claims), they must prove:
Formal Appointment – A written appointment letter or contract specifying employment terms.
Regular Work – Proof of reporting to work daily, assigned tasks, and employer control over their activities.
The court's judgment was delivered in the case of G.V. Prasad & Anr. v. The State & Anr. [Crl. P. No. 200662 of 2024; decided on October 22, 2024]. The petitioners, who were the occupier and manager of a rice mill, faced charges under both statutes following the electrocution death of an employee. They contended that facing prosecution under both the IPC and the Factories Act for the same incident amounted to double jeopardy.
Justice Mohammad Nawaz, presiding over the case, observed that prosecuting the petitioners under both statutes was not legally permissible, as the Factories Act specifically addresses workplace safety issues. The court referred to its previous decision in Ananthakumar v. State of Karnataka (2019), which set a precedent against simultaneous prosecutions under the IPC and the Factories Act for the same incident. The court emphasized that Section 92 of the Factories Act provides comprehensive penalties, including imprisonment and fines, rendering parallel prosecution under the IPC for the same incident a violation of legal principles.
This approach follows precedents set by the Supreme Court of India, emphasizing that an employer can justify termination before the Tribunal by leading independent evidence, even if no prior domestic inquiry was conducted or if the inquiry was found to be defective. The Gujarat High Court’s ruling in 2025 likely reinforces this principle.
This aligns with Section 4(6) of the Payment of Gratuity Act, 1972, which permits the forfeiture of gratuity if an employee's termination is due to:
Wilful omission or negligence causing damage or loss to the employer.
An act of moral turpitude or misorderly conduct committed in the course of employment.
Since embezzlement is both a financial loss to the employer and an act of moral turpitude, the forfeiture is legally justified.
Maternity Leave Entitlement: Even contractual employees have the right to avail maternity leave under the Maternity Benefit Act.
Payment During Leave: If departmental rules or policies explicitly deny honorarium (salary/wages) during maternity leave, then payment can be withheld.
Supremacy of Departmental Policies: While the Act ensures leave benefits, financial benefits can be subject to the rules framed by the respective department or employer.
This judgment by the Jharkhand High Court (2025) emphasizes that in cases of prolonged delays in resolving industrial disputes, granting equitable compensation is a more appropriate relief than regularization, especially when:
Workmen have reached superannuation (retirement age).
Disengagement (termination/separation) occurred long ago.
This ruling aligns with the principle that relief should be practical and just, rather than merely theoretical. Courts often refrain from ordering reinstatement when a significant time has passed, and instead, opt for monetary compensation to balance the rights of workmen with the operational realities of employers.