Supreme Court Holds Termination of Daily-Wage Workmen Illegal: “Employer Cannot Use Recruitment Ban to Deny Regularization; Sections 6E & 6N of U.P. Industrial Disputes Act Violated”—Orders Reinstatement with Back Wages and Regularization Process

Court’s Decision

The Supreme Court allowed the appeals filed by the workmen, holding that their termination was illegal and violated Sections 6E and 6N of the U.P. Industrial Disputes Act, 1947. The Court set aside the High Court’s order that only granted re-engagement on daily wages and provided the following reliefs:

1. Reinstatement: The workmen must be reinstated to their previous roles or equivalent posts within four weeks.
2. Continuity in Service: The workmen shall be treated as continuously employed from the date of their termination.
3. Back Wages: They are entitled to 50% back wages from the date of termination until reinstatement.
4. Regularization Process: The employer must initiate a process for regularization within six months, ensuring that workmen who have been engaged in perennial duties are not indefinitely kept on daily wages.

The Supreme Court dismissed the appeals filed by the employer, rejecting their claims that the workmen were not direct employees and ruling that their termination was unlawful.

Facts of the Case

• The workmen had been engaged as Gardeners (Malis) in the Horticulture Department of Ghaziabad Nagar Nigam since 1998-1999.
• They were continuously employed for municipal duties such as planting trees, maintaining parks, and beautifying public spaces.
• The employer never issued formal appointment letters, denied them minimum wages, weekly offs, national holidays, and other statutory benefits.
• In 2004, the workmen raised an industrial dispute, demanding regularization of their services.
• In July 2005, their services were terminated orally, without any notice, written orders, or retrenchment compensation.
• The workmen claimed that the termination was retaliatory, as it occurred during ongoing conciliation proceedings.
• The matter was referred to the Labour Court, Ghaziabad, which issued two conflicting awards:
  1. Order dated 03.06.2011: Held that the termination was illegal and directed reinstatement with 30% back wages.
  2. Order dated 11.10.2011: Denied relief to some workers, holding that they were engaged through a contractor and had no right to claim reinstatement.
• Both the workmen and the employer challenged these decisions before the Allahabad High Court, which partly modified the relief, directing re-engagement of the workmen on daily wages.
• Dissatisfied with this outcome, both parties appealed to the Supreme Court.

Issues Before the Court

1. Was the termination of workmen in violation of Sections 6E and 6N of the U.P. Industrial Disputes Act, 1947?
2. Did the workmen have a direct employer-employee relationship with Ghaziabad Nagar Nigam?
3. Were the workmen entitled to regularization under the law?
4. Did the High Court err in granting only partial relief by limiting the workmen to daily-wage engagement?
5. Was the employer justified in citing a “ban on fresh recruitment” as a defense?

Petitioner’s (Workmen’s) Arguments

1. Continuous Service & Comparable Duties
   • The workmen performed horticultural duties for over a decade, making their work perennial and not temporary.
   • Their responsibilities were identical to those of permanent Gardeners, yet they were denied fair wages and employment benefits.
2. Direct Employer-Employee Relationship
   • The employer directly paid their wages, and no evidence was provided to prove that they were engaged through a contractor.
   • Muster rolls and other records showed direct control and supervision by the employer.
3. Illegal Termination
   • The termination occurred during conciliation proceedings, violating Section 6E of the U.P. Industrial Disputes Act, 1947, which prohibits changes in service conditions without prior approval.
4. Entitlement to Reinstatement & Regularization
   • The workmen relied on the doctrine of “equal pay for equal work” to claim regularization and benefits.
   • The High Court’s direction for mere daily-wage engagement was unjust and perpetuated uncertainty.

Respondent’s (Employer’s) Arguments

1. Compliance with Constitutional Requirements
   • A ban on fresh recruitment existed in Municipal Corporations.
   • The workmen were never selected through a proper process, making their claims of regularization invalid.
2. No Direct Employer-Employee Relationship
   • The work was allegedly contracted out, and the workmen were not direct employees.
   • The employer claimed that any wage slips or muster rolls were inconclusive.
3. Inapplicability of Regularization
   • Relying on Secretary, State of Karnataka v. Umadevi [(2006) 4 SCC 1], the employer argued that daily-wage workers have no right to claim regularization.
4. Lack of 240 Days’ Service Proof
   • The workmen had not produced conclusive evidence that they worked 240 days in a calendar year, a requirement for certain legal protections.
5. Challenge to the High Court’s Order
   • The employer challenged the High Court’s order granting minimum pay and consideration for regularization, arguing that it violated the ban on recruitment.

Analysis of the Law

1. Violation of Sections 6E & 6N of the U.P. Industrial Disputes Act, 1947
   • Section 6E prohibits employers from altering service conditions during conciliation proceedings.
   • Section 6N mandates notice, retrenchment compensation, and due process before terminating workers.
   • The employer failed to comply with these requirements.
2. Employer-Employee Relationship Established
   • The employer did not produce any evidence of outsourcing through a contractor.
   • Wages were paid directly by the Nagar Nigam.
3. Equal Pay for Equal Work
   • Since the workmen performed the same tasks as permanent employees, the employer could not justify lower wages and denial of benefits.
4. High Court’s Partial Relief Was Insufficient
   • By limiting workmen to daily-wage engagement, the High Court failed to recognize their legal entitlements.

Precedent Analysis

1. Umadevi (2006) 4 SCC 1
   • Umadevi distinguishes between illegal appointments and irregular appointments.
   • It does not apply where long-standing employment exists in essential services.
2. Jaggo v. Union of India (2024 SCC OnLine SC 3826)
   • The Supreme Court criticized temporary employment misuse in government institutions.
   • It held that denying benefits to long-term temporary employees is unfair.

Court’s Reasoning

1. Termination was illegal: The employer violated Sections 6E & 6N, as no prior approval was obtained.
2. Direct employment was proven: The employer failed to prove a contractor-based engagement.
3. Ban on recruitment was not a valid excuse: The work was ongoing and essential.
4. Daily-wage re-engagement was inadequate: The workmen deserved continuity in service and regularization consideration.

Conclusion

1. Reinstatement: Workmen to be reinstated within four weeks.
2. Continuity in Service: Their employment status to be restored from the date of termination.
3. Back Wages: 50% of back wages to be paid.
4. Regularization Process: Employer to consider regularization within six months.

Implications

• Strengthens labor protections for daily-wage workers.
• Limits the misuse of Umadevi by public sector employers.
• Ensures municipal hiring follows labor laws.

This ruling reinforces that daily-wage workers cannot be indefinitely exploited under the pretense of temporary employment.

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