Disciplinary action, domestic enquiry and unfair labour practices

1. Misconduct

“Misconduct” is not defined in the Code. It is a matter for standing orders: item 9 of the First Schedule requires them to provide for suspension or dismissal for misconduct and the acts or omissions which constitute misconduct (old Schedule to the Industrial Employment (Standing Orders) Act, 1946). Model standing orders typically list wilful insubordination, theft or fraud, wilful damage to property, habitual absence or late attendance, riotous or disorderly behaviour, taking bribes, and striking illegally.

An employer can punish only for misconduct specified in the standing orders, and conduct outside the workplace is misconduct only if it has a rational connection with the employment: Glaxo Laboratories v. Presiding Officer, Labour Court, Meerut, 1983 INSC 141, (1984) 1 SCC 1. Certified standing orders bind both sides, and an employer who acts against them commits an offence (section 86(11)).

2. Suspension pending enquiry

Section 38 of the Code: where a worker is suspended pending investigation or inquiry into misconduct, the investigation and inquiry are to be completed ordinarily within ninety days. The worker gets a subsistence allowance of 50 per cent of wages for the first ninety days and 75 per cent thereafter, if the delay is not attributable to him (old section 10A of the Standing Orders Act).

3. Domestic enquiry and natural justice

A domestic enquiry is the employer's internal inquiry before punishment for misconduct. The standing orders and the rules of natural justice require, in substance:

• a charge-sheet stating the specific misconduct and the facts relied on, with a reasonable time to reply;
• an enquiry officer who is not biased and not a witness;
• notice of the hearing and the right to be present, to see documents relied on, to cross-examine the employer's witnesses and to lead evidence;
• assistance by a co-worker or union representative where the standing orders allow it;
• a reasoned report based on evidence led at the enquiry. Where the enquiry officer is not the disciplinary authority, the worker must get a copy of the report and a chance to answer it before punishment: Managing Director, ECIL v. B. Karunakar, 1993 INSC 316, (1993) 4 SCC 727; and
• a punishment order by the competent authority considering the past record.

Strict rules of evidence do not apply, but findings must rest on some evidence. Discharge or dismissal “in utter disregard of the principles of natural justice in the conduct of domestic enquiry or with undue haste” is itself an unfair labour practice (Second Schedule, Part I, item 5(f)).

Defective or no enquiry. The employer may justify the dismissal by leading evidence before the Tribunal, but must ask for that opportunity in its pleadings or at the appropriate stage: Delhi Cloth and General Mills Co. v. Ludh Budh Singh, 1972 INSC 10, (1972) 1 SCC 595; Shankar Chakravarti v. Britannia Biscuit Co., 1979 INSC 107, (1979) 3 SCC 371 (the Tribunal is not bound to invite the employer to do so).

4. The Tribunal's power: section 50 (old section 11A)

Section 50(1): where a dispute about discharge, dismissal or termination is before the Tribunal (on application under section 53(6)) or the National Industrial Tribunal, and it is satisfied that the order was not justified, it may set it aside and direct reinstatement on such terms as it thinks fit, or give other relief, including a lesser punishment. Section 50(2) allows interim relief during the dispute; under the proviso the Tribunal relies only on materials on record and takes no fresh evidence. (In old section 11A the corresponding proviso governed the main power itself.)

The leading case. Section 11A was inserted in 1971 to undo the limited review the courts had allowed: before it, a Tribunal could interfere with an enquiry finding only for want of good faith, victimisation, unfair labour practice, breach of natural justice or a perverse finding, and could not touch the punishment. In Workmen of Firestone Tyre and Rubber Co. v. Management, 1973 INSC 39, (1973) 1 SCC 813, AIR 1973 SC 1227, the Court held:

• Under section 11A the Tribunal may reappraise the evidence recorded at the enquiry and decide for itself whether misconduct is proved; it is no longer confined to checking for perversity.
• Even where misconduct is proved, it may hold that the punishment is unjustified and substitute a lesser one. This is the core change.
• The employer's right to lead evidence before the Tribunal where there was no enquiry or a defective one survives the section.
• The section is prospective and does not apply to disputes referred before it came into force.

The power to alter punishment is used with restraint. In Bharat Forge Co. Ltd. v. Uttam Manohar Nakate, 2005 INSC 39, (2005) 2 SCC 489, the Court upheld the dismissal of a worker found sleeping on duty and said the Tribunal should interfere only where the punishment is shockingly disproportionate. The Code also protects workers involved in a pending dispute: no punishment for misconduct connected with it without permission, and for unconnected misconduct only after paying a month's wages and applying for approval (section 90(1)–(2); old section 33); protected workers (union office-bearers) cannot be punished at all without permission (section 90(3)).

5. Unfair labour practices

Section 84 (old section 25T): no employer, worker or trade union, registered or not, shall commit any unfair labour practice specified in the Second Schedule (old Fifth Schedule, added in 1982). Section 2(zo) defines the term by reference to that Schedule.

Part I — by employers and their unions (sixteen items). Examples:

• interfering with, restraining or coercing workers in the right to organise, for example by threatening dismissal or closure if they join a union;
• dominating or financing a union, or setting up an employer-sponsored union;
• discriminating against workers for union activity (discharge, changing seniority, refusing promotion, discharging office-bearers);
• discharge or dismissal by way of victimisation, not in good faith, on false or trumped-up charges, in disregard of natural justice, or for minor misconduct with a disproportionate punishment;
• giving regular work to contractors to break a strike; mala fide transfer; insisting on good conduct bonds from workers on a legal strike;
• keeping workers as badlis, casuals or temporaries for years to deny them permanent status;
• recruiting during a legal strike; failure to implement an award or settlement; refusing to bargain in good faith with the recognised union; an illegal lock-out.

Part II — by workers and their unions (eight items). Examples: supporting an illegal strike; picketing that physically bars non-strikers; violence or intimidation; refusal by a recognised union to bargain in good faith; go-slow, squatting after working hours and gherao; demonstrations at the residence of employers or managers; wilful damage to the employer's property.

Victimisation means punishment for a purpose other than the misconduct alleged, such as union activity, or a punishment so out of proportion that it shows bad faith: Bharat Iron Works v. Bhagubhai Balubhai Patel, 1975 INSC 259, (1976) 1 SCC 518. On the casual-workers item, see Maharashtra State Road Transport Corporation v. Casteribe Rajya Parivahan Karmchari Sanghatana, 2009 INSC 1091, (2009) 8 SCC 556, where, under the Maharashtra statute on unfair labour practices, the Court upheld an Industrial Court's direction to give permanent status to workers kept as casuals for years.

Penalty. Fine of Rs 10,000 to Rs 2 lakh; on a repeat after conviction, Rs 50,000 to Rs 5 lakh or imprisonment up to three months, or both (section 86(5)–(6); old section 25U provided imprisonment up to six months). For a first offence under section 86(5), the penalty may be imposed by an officer of the Government after an enquiry under section 85, without a criminal trial.

6. Problem

Suresh, a machine operator with twelve years' clean service, is charged with coming to work twenty minutes late on two days. At the enquiry he is not allowed to cross-examine the timekeeper. He is dismissed. He is the secretary of the union. Advise him.

Issue. Whether the enquiry was fair, whether dismissal is proportionate, and whether there is an unfair labour practice.

Law. Natural justice requires a chance to cross-examine the witnesses relied on. Section 50 lets the Tribunal set aside the dismissal or substitute a lesser punishment (Firestone). Second Schedule, Part I, items 4(f), 5(a), 5(f) and 5(g).

Application. Denial of cross-examination vitiates the enquiry. The employer may still try to prove the lateness before the Tribunal (Ludh Budh Singh), but even if proved, two late arrivals are minor misconduct, and dismissal after twelve clean years is plainly disproportionate. That he is the union secretary supports an inference of victimisation, and dismissal for minor misconduct without regard to past record is itself a listed unfair labour practice. If a dispute was pending when he was dismissed, the employer also needed permission under section 90(3), since a union office-bearer recognised as a protected worker is covered.

Conclusion. Suresh should go to conciliation and then apply to the Tribunal under sections 4(10) and 53(6). The likely result is reinstatement, with a minor penalty at most, and the employer may face a penalty under section 86(5).

How this is examined

As essays: “What is a domestic enquiry? State the principles of natural justice to be followed”, “Discuss the powers of the Tribunal under section 11A with the help of Firestone Tyre” (answer under section 50 with section 11A in brackets), and “Explain unfair labour practices.” Short notes: victimisation, misconduct, subsistence allowance, go-slow and gherao. A dismissal problem like the one above is a common 10-mark question.