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Principle of Natural Justice and Termination of Employment

Termination of services of an employee whether he is a worker, probationer, staff or an executive is of crucial importance to any organization. It is of such momentousness that strong reactions are always evoked. The initial reaction would be that there is a case of victimization. There will always be more sympathizers for the employee than the employer. The courts too, generally tend to take a pro-employee attitude. Under these circumstances it is very significant that:-

{a} each and every action of the employer is fair and without reprehension;

{b} in the best interest of the organization;

{c} due to genuine need;

{d} carried out in a bona fide manner, in good faith, impartially and without putting any stigma on the employee in case of non-misconduct;

{e} adequate compensation should be paid which will include statutory payment, if any; and

{f} the above should be established through documents or materials or other evidences.

Significantly, to top it all, the principle of natural justice is to be scrupulously followed which is the touchstone on which every action of the employer would be tested. At no time this should be overlooked otherwise an employer may end up with reinstating the very employee whose services he has terminated and that too with back wages.

What does the above principle mean? It is the nomenclature given to the general principles of law based on equity, justice and good conscience. In simple terms it means an employer while taking the extreme step of terminating services of his employee should give him adequate chance to defend himself by telling him of what he is accused of and what will happen if the accusation sticks, taking these steps to the logical and honest end. That will also mean that the employee, if he can prove his innocence, will be allowed to continue without any stigma attached to his reputation. There are innumerable case laws here.

Cases

In the case of Meenglas Tea Estate v. The Workmen AIR 1963 S.C. 1719, - the Supreme Court had observed that a person who is required to answer a charge must know not only the accusation but also the testimony by which the accusation is supported. He must be given a fair chance to hear the evidence in support of the charge and put such relevant questions by way of cross-examinations as he desires. Then, he must be given a chance to rebut the evidence led against him. This, therefore, is the barest requirement of an inquiry. If this procedure is not meticulously followed, the punishment imposed, if challenged, could be quashed by the courts. The Apex Court in another case of Union of India v. T.R. Varma 1958 S.C.R. 499, had observed that rules of natural justice require that a party should have the opportunity of adducing all relevant evidence on which he relies, the evidence of the opponent should be taken in his presence, he should be given the opportunity of cross examining the witness examined by that party, and no material should be relied upon against him without his being given an opportunity of explaining them.

Process

Pertinently the principles of natural justice have to be complied by an employer in letter and spirit before the services of an employee can be terminated. The following essential steps, therefore, become very important so that employer's actions may not be successfully challenged by the aggrieved party in a court of law.

  1. A preliminary investigation is to be made by the employer to  find out whether further action is needed;
  2. issue charge sheet to the employee informing clearly the charges levelled against him and calling him to submit his   explanation;
  3. due consideration of the explanation. (It is important that the element of good faith and impartiality should be present};
  4. if the explanation is found unsatisfactory, the employee has to be given a notice of holding of an inquiry into the charges against him;
  5. holding un-prejudiced domestic inquiry in the presence of the employee giving him due facilities for conducting his defense and recording of the findings of the inquiry officer;
  6. the disciplinary authority needs to peruse and consider the report of the inquiry officer and come to a bona-fide and unbiased conclusion that the services of the employee is to be terminated by way of punishment;
  7. issue show cause notice to the employee as to why the proposed action for awarding punishment should not be taken against him; and
  8. objective consideration of the reply of the employee, if any, and issue of order of  punishment by way of termination of  his services.

More cases

The enormity of abiding by the principle of natural justice cannot be overstressed. In the case of Gangadharan v. Kerala Fisheries Corporation Ltd., and others.1983 [63j-FJR-P. l00 , the Kerala High Court held that an order passed by the Board of Directors against an employee who was dismissed was unsustainable in law as the managing director against whose dismissal order the employee had appealed to the Board was actively involved in the Board proceedings. The dismissal and the procedure of appeal were held to be against the principle of natural justice, fair play and impartiality. Notably, the extent of punishment awarded should also be reasonable. The Supreme Court had held in the case of Ashok Kumar v. Union of India and another-1988-II- LLJ-P.344 that punishment should not be grossly disproportionate to the charge.

Further, it is worth keeping in mind that a slight variation in the outcome of a domestic inquiry and the related decision of a court can reverse the termination order of the employer. In a case of English Electric Co. of India Ltd., Madras v. Labor Court, Madras and another -1975-I-LLN-P  the Madras High Court held that where discharge from services was based on four charges proved by the inquiry officer but the Labor Court found that two charges were not justified, the Court correctly reinstated the employee with continuity of service.

PROBATIONER'S SERVICES- an exception?

{1} In the above background the position of termination of probationers' services stand on a different footing. Probationers hold a peculiar position in as much that he is under trial for his performance. In most of the cases even against permanent posts, the selected person is kept under probation for specified period. And where he is found suitable, he is confirmed. But the real position is that, probationers, in many instances, mostly in lower echelons of organization, fear losing their jobs abruptly without getting a chance to defend their cases. On the flip side one can say that a person takes a job as a probationer with this risk as he knows that he cannot command a permanent job from the outset because his employer needs time to assess him for suitability. And, from the employer's angle it can be said that he should not offer a permanent employment from the outset without knowing whether the person will be useful to him or not. Courts seem to agree with this rationality and are inclined to not interfere with the employer's action where he finds his probationer's performance not to his satisfaction and therefore terminates his services. In the case of   Palani Kumar [k] V  Indian Bank and another, 1980  I-P- 468 Madras High Court had held that once employer is not satisfied with the conduct of the probationer, it is well open to him to dispense with his services during probationary period. In another case of Estrela Batteries Ltd. Vs. State of U.P. 1979 [38] FLR-P 372, the Allahabad High Court held that if the employer, at the end of probationary period, is not satisfied with the work of the probationer, he has the right to discharge him. An exception was, however, carved out by Supreme Court, in the case of Kedardar Nath Vs. State of Punjab and others - 1973 [7J FLR-P-20 where it was held that where terms of appointment of the probationer clearly indicated that confirmation would automatically follow at the end of period of probation, or, where there is specific service rule to this effect, then, there would be confirmation at the end of the period.

{2} Significantly, there was no need to hold domestic inquiry, which is an essential element of natural justice, for upholding the preceding terminations. Interestingly the element of doing justice for probationers was upheld in another case of Oswal Pressure Die Casting Industry Vs. Presiding Officer and another [1998J 28 CLA 509 [SC] where the Apex Court had affirmed the need for bonafide action as well as need for action in good faith on the part of employer for termination even where there was no domestic enquiry. Here, a Probationer's appointment letter had the following words “………during the period of probation or at the end, your services can be terminated without assigning any reason or giving any notice.” His services were terminated with the words " ....you are not found fit to confirm. Therefore your services are terminated from today”. No inquiry was held in this case. The aggrieved Probationer challenged the termination before the Labour Court. The Employer's contention before the Court was that there was legality and justification of termination of Probationer's services after making overall assessment by Employer. The Court agreed with this, but since the Management’s Order stated that his work was not found satisfactory, it held that it was necessary to hold domestic inquiry. It was established that there was no such inquiry. The court therefore held that the Order was bad in law and decided reinstatement with full back wages. The Employer challenged the matter before the High Court, by a writ, which held that the Employer should have adduced evidence to show that the work of the Probationer was not satisfactory. Since no such evidence was produced, the writ petition was dismissed. The Employer went before the Supreme Court in appeal, which examined witnesses and it was established that the Probationer's work was not satisfactory. The Apex Court concluded that there was no mala-fide action by the Employer. While delivering the judgment the Court stated that once it was found by a court that the action of the Employer was done in good faith which was supported by some material, it could not substitute its satisfaction for the satisfaction of the Employer. The appeal of the Employer was, therefore, allowed.

{3} Thus, although the principle of natural justice, as far as holding a full blown domestic inquiry is concerned, may not apply for termination of probationer's services, it is essential that justice should be done by the employer by way of proper and bona fide assessment of performance of the probationer and if it is found after the assessment that he cannot be continued further in service, then alone, relieve him of his employment. There should be some material in support of the assessment. If employment rules allow a fairer deal, then, that should be followed. The probationer could be involved while judging his performance, although not essential.

CONCLUSION

In view of the significance of maintaining a satisfied work force and also weeding out unnecessary deadwood, it is very critical that the employers understand and follow in letter & spirit the laws relating to termination of employment. Employers should not only be upright in treating their employees but be equally fair when asking some of them to leave.    

AMITAV GANGULY

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