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Reinstallment and back wages:- An analysis under Indian Labour law

Indian industrial areas are increasing, and so are the problems associated with them.  The Indian Labour laws are capable of dealing with problems concerning wrongful termination, unequal wages, and security issues, but still, there are some areas of law which need standard written law.  A large number of industrial disputes are about the wrongful termination of an employee. This dispute corrupts the relationship between employer and workman/employee.


The majority of industrial workers in India are working in informal sectors.  While working, they face problems such as low wages, lack of security, no access to legal information and advice, and so on. Wrongful termination is one of the complex issues that have been faced by the workmen for decades.

Under the Industrial Disputes Act, of 1947, a 'workman' includes any person employed in an industry to do manual, unskilled, skilled, technical, operational, or clerical work.

The termination of a workman is held to be illegal as there was a violation of section 25F of the Industrial Dispute Act of 1947. Wrongful termination occurs when an employer unlawfully dismisses a workman without proper cause, violating the terms of employment or contravening statutory provisions. A large number of the industrial disputes that are being filed in Labour Courts are about wrongful termination. The concepts of right and remedy work in parallel with each other under Indian law, and so they are adopted in the Labour Laws as well. 



Wrongful termination of workmen leads to legal disputes between the employer and the workman. Our Indian legal system works on the principle of “ubi jus ibi remedium”, where there is a right, there is a remedy.  The Indian labour law provides remedies for such wrongful termination, such as reinstatement back wages, and compensation.   

Reinstatement is when an employee is placed back in their position if the termination never happened. Back wages are a form of compensation awarded to the employee for the period between their wrongful termination and the date of reinstatement. However, these terms have not been define in the Industrial Dispute Act. A workman is entitled to reinstatement and back wages in case termination practised was illegal, unjust, unfair and opposed by law. 

An analysis of various awards and judgments passed by the Tribunal and courts will give a clear picture of the principle set out about reinstatement and back wages. 

An earlier, payment of full-back wages was in practice.  Supreme Court in its judgment Hindustan Hindustan Tin Workers (Pvt) Ltd V Employee of Hindustan Tin Workers (Pvt) Ltd, Held that wrongfully terminated workmen would be entitled to full back wages. Later, in the case of Deepali Gundu Surwase V Kranti Junior Adhyapak Mahavidhyapak Mahavidhyalay ( D.Ed) and Ors, the Hon’ble Supreme Court laid down certain propositions that needed to be looked  at before deciding the issue of reinstatement and back wages, such as;

1. The length of service of the workman, nature of misconduct found against the workmen, and the financial condition of the workman and similar other factors.

 2. In case of wrongful termination of an employee, reinstatement and back wages are a rule.

3. The workman who is wrongfully terminated and deceiving to back wags has to plead or make a statement in the first instance to the court that he or she is not gainfully employed or employed with lesser wages, and if the employer wants to deny back wages to the workman, then it is on him/her to specifically plead and prove that the employee was gainfully employed during the intervening period. 

The suprajudicial judgment was later followed in the case of Jayantibhai Raojibhai Patel V Municipal Council, Narkhed & Ors, it was held that if an employee is wrongfully terminated, the employer is responsible, for compensating them for the period between termination and reinstatement by paying back wages. 

Back wages are not a rule. In Jasbir Singh V Haryana State Agriculture Mktg, the Supreme Court stated that compensation is another remedy to provide justice. It stated, as follows (para 7), “It is true that earlier view of this Court articulated in many decisions reflected the legal position that if the termination of an employee was found to be illegal, the relief of reinstatement with full back wages would ordinarily follow. However, in the recent past, there has been a shift in the legal position and a long line of cases, this Court has consistently taken the view that relief by way of reinstatement with back wages is not automatic and may be wholly inappropriate in a given fact situation even though the termination of an employee is in contravention to the prescribed procedure. Compensation instead of reinstatement has been held to meet the ends of justice.”

Supreme court in the case of D N Krishnappa V The Deputy General Manager, observed that simply because the reinstatement order was being contested and there was a hold on the reinstatement order while the proceedings were ongoing, it should not be used as a reason to withhold back wages from the employee. Especially when eventually the order of reinstatement became final. 


The Supreme Court in its recent decision in the case of Ramesh Chand V Management Of Delhi Transport & Ors emphasized the principle that an order for reinstatement does not necessarily include a directive for the payment of back wages. The outcome is determined by the details and context of each case.  

In another judgement, the Hon’ble Supreme Court held that “the nature of employment and how the workman has been employed are not significant for consideration while invoking the mandatory compliance of Section 25F of the ID Act 1947. 

The Judiciary consider reinstatement as a remedy for wrongful termination.  However, courts do consider various factors, such as the nature of the work, the employer-employee relationship, and the feasibility of reinstatement, while granting this relief. On the other hand, the judiciary believes that compensation is also a remedy available that can be considered for granting relief depending on the facts of the case. 

Delhi high court in National Institute of Immunology V Vinod Kumar Gupta held that a worker was a daily wager working with the management for an approximate period of 1 year. The termination of the worker was illegal concerning section 25F of the Industrial Dispute Act 1947. Since the workman reached the age of 56, the court, in the interest of justice, has granted compensation of Rs 1,50,000 instead of reinstatement. 


One action that can be taken to overcome this situation is to mandate a departmental inquiry before termination. The Indian labour law does not directly define any mandatory provision for departmental inquiry in case of terminating the service of a workman, which also opposes the principle of natural justice.   

Even after guidelines set out by the courts in various judgments the remedy of reinstatement and back wages is not a matter of rule but subject to relevant facts and circumstances. Reinstatement and back wages are only granted when the termination is effected contrary to the statutory provisions. Accurately calculating back wages can be quite complicated, especially when the worker has earned a variety of benefits. Determining the quantum of back wages is one of the go-to solutions to deal with this situation. 

Often despite the provision for reinstatement and back wages, there can be difficulties. It could be changes in circumstances, the dynamic of work or workplace, or irreparable harm to the relationship between the employee and employer.

The lengthy legal procedure for obtaining reinstatement and back wages is time-consuming, and the enforcement of court orders poses another challenge which impacts the effectiveness of these remedies. A time-barred provision to set off the legal dispute of wrongful termination can be enacted.  


In India, the legal system regarding the reinstatement and payment of wages after the wrongful termination is designed to ensure that those who are affected are restored to their positions and compensated for any losses resulting from their unlawful termination. While these remedies exist, their practical implementation and effectiveness often depend on various factors, including the specifics of the case and the willingness of the parties to comply with court orders.

Employment disputes involving wrongful termination highlight the delicate balance between employer interests and employee rights, underscoring the importance of fair and just practices in the workplace. The evolving legal landscape continues to address these issues, striving to provide equitable solutions for both employers and employees within the bounds of Indian labour law.


1. What is reinstatement in Indian Labour Law?

Reinstatement is the process of when an employee is placed back in their position if the termination is found to be unlawful.


2. Under which circumstances can an employee be instated in India? 

An employee might be reinstatement if his/her termination is found to be unjust, and the courts or tribunal order their reinstatement as a remedy. 

3. What are the back wages laws in Indian employment law? 

Back wages are the compensation amount awarded by the court and paid by the employer from the date of termination to the date of reinstatement when reinstatement is ordered by the court.

4. What is the method of calculation of back wages in India? 

The calculation is primarily based on the salary would have received if the workman had not been wrongfully terminated, including any increment, or benefits they might have accrued during that period. 

5. Is reinstatement always Granted along with back wages in India? 

Reinstatement and back wages are common remedies awarded for wrongful termination but they might not always granted. The court considers various factors of the case and may grant compensation as a remedy. 


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