Termination of service, if amounts to Retrenchment

Whether termination of services on the expiry of the contract period would amount to retrenchment within the meaning of Section 2(oo) of the Industrial Disputes Act, 1948

The Apex Court while considering a question whether termination of services on the expiry of the contract period would amount to retrenchment within the meaning of Section 2(oo) of the Industrial Disputes Act, 1948 (IDA) observed that the contract of employment and the terms and conditions contained therein are crucial in the application of Sections 25G and H of IDA.

In the instant case the Respondent had worked only for 54 days in two fixed periods and on expiry of the second term his service stood automatically terminated in accordance to the terms of the contract of appointment. The Court held that the mere fact that the appointment orders used the expression “daily wages” does not make the appointment “Casual” because it is the substance that matters, not the form. The contract of appointment consciously entered into by the employer and the employee would, over and above the specific terms of the written agreement, indicates that the employment was short-lived and the same was liable to termination, on the fixed period mentioned in the contract of appointment and thus the present was not the case of retrenchment.

To conclude it can be summed up as under:

• One cannot claims the benefit of Sections 25F, G and H of IDA unless have continuously worked for 240 days.
• If termination results due to non-renewal of the contract on its expiry, when the term also falls short of the above period, the same would not constitute retrenchment. [Sections 2(bb)].
Bhavnagar Municipal Corporation v. Salimbhai Umarbhai Mansuri – SC judgment dated 16.07.2013