As per Indian employment laws, an employer has the right to suspend an employee pending enquiry, however such a suspension should be for good reasons. The suspension pending enquiry can be effected for smooth conduct of enquiry or to enable the management to collect evidence or keeping in mind discipline in the factory. However, it is imperative under Indian employment law that there should be sufficient reasons for suspending an employee when enquiry against him is pending.
As per Indian employment law, an employee is entitled to subsistence allowance during the period of his suspension. The quantum of subsistence allowance is determined by the Industrial Employment (Standing Orders) Act, 1946 if applicable. The said Act provides for Subsistence Allowance as under;
Section 10-A of the Industrial Employment (Standing Orders) Act, 1946;Payment of Subsistence Allowance –
“(1) Where any workman is suspended by the employer pending investigation or inquiry into complaints or charges of misconduct against him, the employer shall pay to such workman subsistence allowance–
(a) at the rate of fifty per cent. of the wages which the workman was entitled to immediately preceding the date of such suspensions, for the first ninety days of suspension; and
(b) at the rate of seventy- five per cent. of such wages for the remaining period of suspension if the delay in the completion of disciplinary proceedings against such workman is not directly attributable to the conduct of such workman.
(2) If any dispute arises regarding the subsistence allowance payable to a workman under sub- section (1), the workman or the employer concerned may refer the dispute to the Labour Court, (14 of 1947 ) constituted under the Industrial Disputes Act, 1947 , within the local limits of whose jurisdiction the industrial establishment wherein such workman is employed is situate and the Labour Court to which the dispute is so referred shall, after giving the parties an opportunity of being heard, decide the dispute and such decision shall be final and binding on the parties.
(3) Notwithstanding anything contained in the foregoing provisions of this section, where provisions relating to payment of subsistence allowance under any other law for the time being in force in any State are more beneficial than the provisions of this section, the provisions of such other law shall be applicable to the payment of subsistence allowance in that State.”
However, if Standing Orders are not applicable, the suspension allowance will be decided by the terms of employment. If the terms of employment are silent on the suspension allowance, the employer can suspend the employee, however the employee will be entitled to full wages.
The Hon’ble Bombay High Court in Manohar P. Kharkar and another V/s Raghuraj and another, 1981 held, after consulting the decisions of various other High Courts, that domestic enquiry is not a must in every case. The Court has further stated that – “an employee can be removed from service without holding an enquiry into allegations of misconduct if either the employer possesses such a right of removal under the contract or the service Rules or the employee does not possess any right to the post held by him. It is no doubt held in many of these cases that the innocuous wording of the order is not conclusive and the Court can find the truth of the matter by going behind the order to find if the order is intended to be punitive and is passed in breach of the procedural safeguards.”
Further, “It is, however, pertinent to note that the employer can justify such termination even when spurred by the undisclosed acts of misconduct, when challenged on reference under the Industrial Dispute Act. The Labour or Industrial Court then has to adjudge the truth or otherwise of the misconduct on merits, even if no enquiry was held or enquiry if held was found to be defective. “
The above judgement states that the decision for terminating an employee on the grounds of misconduct may be without domestic enquiry but the same may be challenged before the Labour court by the aggrieved employee in reference and the Management shall have to justify such termination before the Labour Court. The Labour Court or Industrial Court would then have to adjudge the truth or the misconduct on merits, even if no enquiry was held or enquiry if held was found to be defective.
Further, in Kamal Kishore Lakshman V/s Pan American World Airways [1987 I LLJ 107] the Hon’ble Supreme Court held that – “The legal position firmly established is that if there has been no appropriate domestic enquiry or no enquiry at all before disciplinary action is taken, it is open to the employer to ask for such opportunity in the course of adjudication. In the facts of the present case, the order of separation grounded upon loss of confidence has been justified before the Labour Court and the Labour Court has come to that conclusion upon assessment of the evidence.”
Therefore, Indian employment law stands clear on the issue that if an employee is terminated without domestic enquiry, it shall be open to the employer to explain such termination in the course of adjudication.