Employers to pay full back wages in cases of wrongful termination – The Supreme Court of India
The Supreme Court (“SC”) in the case Jayantibhai Raojibhai Patel v. Municipal Council, Narkhed & Ors. held that in the event of wrongful termination from service, the employer is liable to pay back wages for the period when the employee was terminated till the time, he/she was reinstated (“Termination Period”).
In this the case Jayantibhai Patel (“Appellant”) was served a show-cause notice in 1994, alleging that he misappropriated funds of the employer. An inquiry officer was tasked to look into the matter and he concluded that no misappropriation took place (“Inquiry 1”). Upon the completion of Inquiry 1, the respondent appointed a second inquiry officer despite the Appellant’s opposition (“Inquiry 2”). Inquiry 2 found the Appellant found guilty of misappropriation and his employment was accordingly terminated.
The Appellant filed a writ in Bombay High Court challenging his removal from service. The Bombay High Court observed that the respondents had no reason to initiate Inquiry 2. The Bombay High Court also noted the objection raised by Appellant for the initiation of Inquiry 2. Accordingly, the Bombay High Court ruled that the termination of the Appellant was wrongful. As the Appellant had reached the age of superannuation, the Bombay High Court ruled that the Appellant is entitled to all retirement benefits. However, the Bombay High Court ruled that the Appellant is not entitled to any back wages during the Termination Period.
Following the judgement of the Bombay Hight Court, the Appellant approached the SC. After referring to a number of previously decided cases, the SC decided that since the case is related to wrongful termination from service, the employer shall pay the back wages for the Termination Period.
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The SC reiterated the position of law on payment of back wages in cases of wrongful termination from service. The employees need to understand that if they have been wrongfully terminated and if it is proved in a court of law then, as specified in this SC judgment, the employer will be liable to pay the back wages to the employee for the Termination Period.
Disclaimer: This post has been prepared for informational purposes only. The information/or observations contained in this post does not constitute legal advice and should not be acted upon in any specific situation without seeking proper legal advice from a practicing attorney.