Posts tagged ‘Industrial disputes act’


The labour law, at present in India, is not highly favouring employees drawing handsome salary, working in IT and other related fields. The applicable labour laws do not assure the job security of skilled employees, particularly who work mainly in managerial, administrational and supervisory roles. In the absence of specific contracts which protect the interest of employees, employers continue to adopt a hire and fire policy. The present discussion includes within its ambit IT Sector and other higher level employment.

In Karnataka almost all IT and other major companies come under the definition of ‘commercial establishment’ and hence The Karnataka Shops and Commercial Establishment Act, 1961 is applicable to the employees working in them.

As per sec-39 of the said Act, an employer can remove or dismiss an employee who has put in at least 6 months of continuous service only for a reasonable cause and after issuing one month notice or giving him salary instead. This means that if an employee has put in less than 6 months of service an employer can terminate him at his will.

If, after an enquiry, it had come to the notice of employer that there is some misconduct on the part of the employee, then the employee is not entitled for notice or salary in lieu of notice.

An employee who is removed or dismissed from his service shall have the right of appeal before the Assistant Commissioner of Labour within 30 days from the date on which the order of removal or dismissal was communicated to him.

If the appellate authority finds that the employee has been removed or dismissed without reasonable cause or without proof of misconduct and if the employer does not agree to reinstate him, employee shall be entitled to compensation calculated at the rate of one month pay for every year of service. If the employee or the employer is not satisfied with the order of appellate authority they can apply for a revision of the said order by the district judge.

Other states have passed similar acts for Shops and Commercial Establishments.

The Industrial Dispute Act 1947 also deals with the termination of employees. However this Act is not applicable in the case of the following employees:
a. Employees who are employed in managerial or administrative capacity
b. Employees who are employed in a supervisory capacity and whose monthly income exceeds Rs. 10,000/- per month.

As per this Act, if an eligible employee, who had been in continuous service for not less than 1 year, then the employer can terminate him only by following the below mentioned procedure:
a. The workman to be given 1 month notice in writing indicating the reasons for retrenchment/termination or one month salary instead of notice.
b. The workman has been paid at the time of retrenchment compensation equivalent to 15 days average pay for every completed year of service.
c. Notice in the prescribed manner is served on the appropriate government authority.

In spite of what is discussed above, if there is any employment contract between the employer and employee, which provides better conditions in favour of the employee, then the same will have applicability over and above the statutory provisions mentioned before.