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This article has been written by Nishank Govil, pursuing the Diploma in Labour, Employment and Industrial Laws (including POSH) for HR Managers from LawSikho.


While termination from service could be voluntary or due to the cessation of contract but dismissal is the gravest form of termination and is a means of punishment for any misconduct committed by the employee. In case of termination, the employee is entitled to Provident Fund, Gratuity, leave encashment, etc. Dismissal, on the other hand, can deprive an employee of these benefits, tantamount to the severity of the misconduct. Though there is no proper definition of misconduct as per Section 14 of the Industrial Employment (Standing Order) Act, 1946, the following are the list of acts and omissions which will amount to misconduct.

  1. If an employee commits any kind of willful disobedience of any lawful & reasonable order of the superior.
  2. If an employee commits any kind of theft, fraud, or dishonesty with respect to the employer’s business or property.
  3. If an employee willfully causes any kind of loss or damage to the employer’s goods or property.
  4. If an employee engages himself/ herself in taking or giving a bribe or any kind of illegal gratification.
  5. If an employee is habitually absent without taking any leave from the service or is absent from the service for more than 10 days without taking any prior leave 
  6. If any employee is habitual of coming late.
  7. If any employee behaves riotously or disorderly during his/ her working hours at the workplace or commits any act which violates the discipline of the workplace.
  8. If any employee is habitual of negligent behavior or neglects the work assigned to him.
  9. If any employee strikes work or influences other employees to strike.
  10. Sexual harassment including sexually determined behavior whether directly or by implication.

In any case, the employer should not dismiss an employee without conducting a proper disciplinary inquiry unless the employer has proper justification for his action. This disciplinary inquiry justifies the employer’s action of dismissal in the eyes of law. Dismissing an employee without proper justification or evidence is unjust on the part of an employee & may attract strict action against the employer from Labour court in form of heavy penalty or compensation paid to the dismissed employee, and also the employer has to reinstate the employee to the service. 

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Cases to support employer’s action of dismissal without conducting a disciplinary inquiry 

  1. Case 1: In the case of, Workmen of Motipur Sugar Factory vs Motipur Sugar Factory, in which supreme court justified the action dismissal by the employer on account of the act go-slow by the workers. The workers in the factory were not happy with the changes introduced in the incentive plan implemented by the employer and decided to go slow. The employer issued a notice to all workmen to record their willingness, to ramp up the production to a normal level within two days, any employee failing to do so will attract an order of dismissal without any notice. None of the workmen but three gave their willingness following the notice. The employer then dismissed all those workmen, who didn’t record their willingness to improve their performance. Following which an appeal was filed by the workers in the industrial tribunal against the dismissal order issued by the employer, who held the dismissal justified, considering the evidence which proved that the workmen wilfully agreed to go slow and were not ready to improve their performance in future as well. The case finally went up to the supreme court who also dismissed the appeal reinstating the tribunal decision as final. 
  2. Case 2: In the recent case of State of Uttarakhand vs Sureshwati wherein the respondent, Smt. Sureshwati claimed that she was illegally retrenched from the service without conducting any disciplinary inquiry or payment of retrenchment compensation. But the inquiry found out the reason for her dismissal was that she didn’t work in school from July 1997 nor filed any leave application. The school, on the other hand, appointed another clerk in her place due to her continuous absence. Later when the school started receiving grant-in-aid from the Uttarakhand government in May 2005 and came under Uttarakhand School Education Act, 2006, she filed a complaint against the school claiming that she worked continuously till March 2006 and was retrenched from her service without conducting any disciplinary inquiry. The Labour Court held that Smt. Sureshwati was not entitled to any retrenchment benefits, and there was sufficient evidence against her to prove her absence from the service. Later, the High Court allowed the writ petition filed against the Labour Court Award, on the ground that no inquiry was conducted regarding the abandonment of service by the employee. Hence an appeal was then filed before the supreme court against the judgment passed by the High Court. The supreme court said that the dismissal cannot interfere merely on the ground that the employer didn’t conduct a disciplinary inquiry before dismissal provided that the employer can justify its action by producing evidence before the labor court.               

The definition of retrenchment is clearly defined in Section 2(oo) of the Industrial Disputes Act which says “the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include—
(a) voluntary retirement of the workman; or
(b) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation on that behalf; or
(bb) termination of the service of the workman as a result of the non-renewal of the contract of employment between the employer and the workman concerned on its expiry or of such contract being terminated under a stipulation in that behalf contained therein; or
(c) termination of the service of a workman on the ground of continued ill-health;” 

The Supreme Court explicitly defines the jurisdiction of the tribunal when adjudicating disputes relating to dismissal or discharge, in the case of Workmen of Messrs Firestone Tyre vs Management & Others (1973), which says Even if no inquiry has been held by an employer or if the inquiry held by him is found to be defective, the Tribunal in order to satisfy itself about the legality and validity of the order, has to give an opportunity to the employer and employee to, adduce evidence before it. It is open to the employer to adduce evidence for the first time justifying his action, and it is open to the employee to adduce evidence contra.

Process of taking disciplinary action

If any employee is accused of being a part of any misconduct as defined above, a disciplinary committee has to be set up by the employer in order to look into the charges of misconduct framed against the employee. The following instructions must be followed in case of misconduct reported against an employee specified in the Schedule 1 Rule 14 of the Industrial Employment (Standing Order) Central Rules, 1946,

1. For the purpose of determining the guilt of the employee a detailed investigation of inquiry shall be held & the employee shall remain suspended when any disciplinary proceedings contemplated or pending against him, the employee shall be provided with a subsistence allowance at the rate of 50% of his salary during the period of suspension.

2. The authority investigating the matter shall take into account the gravity of the misconduct, previous record of misconduct if any, or any other extenuating or aggravating circumstances, that may exist.

3. The employee must be provided with a reasonable opportunity of making representation.

  1. At the conclusion of the inquiry, If the employee is found guilty of misconduct, an order of dismissal, suspension, fine, stoppage of annual increment, or reduction in rank shall be passed.
  2. If on the conclusion of the inquiry, the employee has been found to be not guilty of any of the charges framed against him, he shall be deemed to have been on duty during the period of suspension and shall be entitled to the same wages as he would have received if he had not been placed under suspension after deducting the subsistence allowance paid to him for such period.

    6. A copy of the order passed by the authority imposing the punishment shall be supplied to the workman concerned.


The employer should always keep in mind the principle of natural justice which gives the right to an employee to be heard before his/her dismissal. In case if the employer uses his power and dismisses an employee without proper justification, the employer has to face action which is evident from a case of Workmen of M/s Firestone Tyre vs Firestone tire and Rubber Company, wherein the supreme court ordered the employer to pay 75% of basic and dearness allowance for all employees who has been laid off due to short supply of tires because of a strike. Therefore, it’s not always necessary to set up disciplinary committees by the employer, if the employer’s actions are justified.   

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