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Question Bank
Question
What is the statutory purpose and legal character of Certified Standing Orders under the Industrial Employment (Standing Orders) Act, 1946?
Solution
The Industrial Employment (Standing Orders) Act, 1946 was enacted to bring uniformity, clarity, and fairness to the conditions of employment in industrial establishments. Its primary purpose is to transition the relationship between the employer and the workman from a mere unilateral contract to one that confers a defined status upon the workman. The Act mandates employers to formally define conditions of service in writing. These draft Standing Orders are then scrutinized and certified by a Certifying Officer, who, especially after the 1956 amendment, also adjudicates on their fairness and reasonableness. Once certified, these Standing Orders become statutorily binding on both the employer and the employees, superseding the purely contractual nature of the relationship and aiming to ensure industrial harmony and protect workmen from arbitrary conditions.
Question
Explain the legal validity of a Certified Standing Order clause that provides for the "automatic termination" of a permanent employee's service for overstaying leave.
Solution
A clause in the Certified Standing Orders that provides for the automatic termination of a permanent employee for overstaying leave is generally considered bad in law and invalid. The conferment of a permanent status guarantees security of tenure, and such a termination clause is viewed as arbitrary, amounting to a 'hire and fire' rule. Crucially, the principles of natural justice must be read into any such provision. This means the employer must provide the employee with an opportunity of hearing before termination. The employer is required to objectively consider the circumstances, such as the reason for overstaying, the submission of a medical certificate, or any request for an extension. Failure to provide this opportunity renders the termination wholly unjust, arbitrary, and unfair, and violative of constitutional principles.
Question
How is the term "Retrenchment" defined under the Industrial Disputes Act, and what are its key exceptions?
Solution
Under Section 2(oo) of the Industrial Disputes Act, 1947, the term Retrenchment is defined in a very wide and conclusive manner. It means the termination by the employer of the service of a workman for any reason whatsoever. This broad definition covers every form of termination that is not explicitly excluded. The key exceptions to this definition are:
Termination as punishment inflicted by way of disciplinary action.
Voluntary retirement of the workman.
Retirement on reaching the age of superannuation if the contract stipulates it.
Termination of service as a result of the non-renewal of a fixed-term contract of employment upon its expiry (Clause (bb)).
Termination on the ground of continued ill-health.
Question
Discuss the constitutional limitations on terminating the services of a permanent employee, even if the contract of employment or standing orders permit it.
Solution
The services of a permanent employee cannot be terminated abruptly or arbitrarily, even if the contract of employment or the Certified Standing Orders contain a clause permitting termination by a simple notice or pay in lieu thereof. The Supreme Court has consistently held that such clauses are violative of Articles 14 and 16 of the Constitution of India. A rule that allows the management to terminate a permanent employee's service by merely giving notice is considered arbitrary, capable of vicious discrimination, and constitutes an unfair 'hire and fire' practice. The security of tenure enjoyed by a permanent employee is a valuable right protected under constitutional principles, and any termination must be backed by a valid, fair, and just cause, adhering to the principles of natural justice.
Question
What is the significance of Clause (bb) in the definition of Retrenchment under the Industrial Disputes Act, and when does it apply?
Solution
Clause (bb) was inserted into Section 2(oo) of the Industrial Disputes Act to create a specific exception to the broad definition of retrenchment. It applies only in two specific scenarios involving a fixed-term contract of employment:
When the contract is not renewed upon its expiry.
When the contract is terminated before its expiry, but in pursuance of a stipulation contained within the contract itself that allows for such premature termination.
The key requirement for invoking Clause (bb) is the existence of a pre-determined, fixed-term contract. This clause does not apply to permanent employees who do not have a fixed-term contract. If a termination falls under this clause, it is not considered retrenchment, and the employer is relieved from the obligation of complying with statutory requirements like Section 25F of the Act.
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