Do Indian employment laws allow Termination of an Employee without Domestic Enquiry?

The philosophy of industrial jurisprudence articulates that neither under the Constitution nor under an agreement of employment can termination for misconduct have effect without an enquiry. The right to hearing is a fundamental right (audi alteram partem). Principles of Natural Justice are part and parcel of civilised society and forms the very basis of labour laws in India. That’s why Indian employment laws provide for conducting enquiries when employer observes that an employee has committed misconduct.

Industrial Employment (Standing Orders) Act, 1946 provides for the procedure for conducting enquiries. The enquiry is conducted to ascertain whose contention, the management’s or the worker’s, is correct and what the worker has to say about his alleged misconduct. To know about best practices under Indian employment law associated with Termination of employee.

The Standing Orders provide for issuance of a Charge Sheet. . It can be said that issuing of show cause notice, charge sheet and holding of an enquiry is obligatory. On issuance of Charge Sheet the management has to prove its charges by leading evidence. As per employment laws in India, the worker has the right to cross examine the management witnesses. The worker also has the right to lead evidence. The witnesses examined by the workers can be cross examined by the management. However, the law of evidence is not applicable to the enquiry.

On this background whether management can terminate services of the employee without holding enquiry into the allegation of misconduct is examined –

The employer per se cannot dispense with enquiry. However, there may be instances and circumstances when the employer may not be able spend time or it may not be possible for him to hold the procedural methods. In the rarest of rare cases, if the employer is unable to conduct domestic enquiry or it is not possible for the management, in the interest of the organisation, to continue with the services of the employee, the employer can terminate the services without holding a domestic enquiry. However, as per employment laws in India, such termination has to be justified before the Court and the employer shall have to place or record reasons for not conducting the enquiry. For example, in light of the recent spate of violence that ran across Maruti’s Manesar plant, it would be impossible for Maruti’s management to, on one hand, conduct enquiry on such a large scale of so many rioting workmen and on the other hand, keep such violent workmen in employment. Therefore enquiry need not be held before terminating such workmen.

The Courts in many matters have held that if there has been appropriate domestic enquiry or no enquiry at all before disciplinary action was taken, it is open to the employer to ask for the opportunity to lead evidence in case of inappropriate domestic enquiry or no enquiry, at the earliest stage of the proceedings. There has to be concise pleading to this effect in the Written Statement. In the absence of such concise pleadings and not availing the opportunity at the earliest, the Courts may not grant the employer to lead evidence.

Labour law in India therefore, 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. An employer should be very careful about terminating the services of the employee without domestic enquiry. It should be a highly exceptional and not a standard practice. If utmost care is not taken in such matters it may lead to decline in Industrial relations and consequent violence.

The Hon’ble Bombay High Court in Manohar P. Kharkar and another V/s Raghuraj and another (Writ Petition No. 658 of 1981, decided on: 18.09.1981) held 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.

In the case of The Workmen of Hindustan Steel Limited v/s Hindustan Steel Limited [AIR 1985(SC) 251], a serious misconduct was committed by the workmen constituting of a larger number of female employees and they were hesitant to partake in the domestic enquiry. The employer dismissed the workmen without holding an enquiry and hence the indicted workers sought reinstatement; Justice Desai D.A in the present case held that, “if the employer manages to convince the court of law about his case and condition with support of documents or witnesses, the services of an employee even in the case of serious misconduct can be dispensed with by the employer without holding an enquiry.”

Further, in Kamal Kishore Lakshman V/s Pan American World Airways (Civil Appeal No. 2568 of 1986, decided on 03.12.1986) 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 Dr. Mrs. Sumati P Shere, Apellant V/s Union of India & Ors. (Civil Appeal No. 2192 of 1989 (Arising out of Special leave petition No. 14411 of 1988) decided on 03.04.1989) it was decided by the Hon’ble Supreme Court that it was highly unfair for an employer to terminate the services of his employee on the ground of inefficiency without a proper assessment of his work and prior intimation to him. The Court held –

“We must emphasize that in the relationship of master and servant there is a moral obligation to act fairly. An informal, if not formal, give-and-take, on the assessment of work of the employee should be there. The employee should be made aware of the defect in his work and deficiency in his performance. Defects or deficiencies; indifference or indiscretion may be with the employee by inadvertence and not by incapacity to work. Timely communication of the assessment of work in such cases may put the employee on the right track. Without any such communication, in our opinion, it would be arbitrary to give a movement order to the employee on the ground of unsuitability….We are not laying down the rule that there should be a regular enquiry in this case. All that we wish to state is that if she is to be discontinued it is proper and necessary that she should be told in advance that her work and performance are not up to the mark.”

Therefore, whereas, it is necessary to take a complaint in writing and the services of a workman cannot be dispensed without holding an enquiry, an employer is allowed to dispense with the enquiry in rare cases; provided the employer is able to prove before the court of law that it was difficult to hold the enquiry or it was counterproductive and might have resulted in irreversible damage.