Employers Cannot Circumvent Or Diminish Workers' Rights And Benefits Through Settlements Or Contracts - SC

The Supreme Court reiterated the significance of the Industrial Employment (Standing Orders) Act, 1946 (the Act) as a beneficial law safeguarding workers' rights and entitlements. The Court emphasized that employers cannot circumvent or diminish workers' rights and benefits through settlements or contracts. The only situation in which employers can override Model Standing Orders issued under the Act is if the agreement reached is more advantageous to the employees.  

This principle was upheld by Justices Abhay S Oka and Sanjay Karol. The case involved 169 workmen associated with the Bharatiya Kamgar Karmachari Mahasangh who were engaged by Jet Airways for various tasks under fixed-term contracts. Despite completing over 240 days of regular work, the workmen were treated as temporary loader-cum-cleaners, drivers, and operators. Disputes arose when their fixed-term contracts were not renewed. 

In 2002, another union, the Bharatiya Kamgar Sena, reached a settlement with the airlines, which abandoned the demands for back wages and permanency. However, the Bharatiya Kamgar Karmachari Mahasangh approached the Central Government Industrial Tribunal (CGIT) seeking relief. The CGIT ruled that the non-renewal of fixed-term contracts did not amount to retrenchment under Section 25-H of the Industrial Disputes Act, and hence, the demand for reinstatement with full back wages was rejected. 

The workers' appeal was also dismissed by the Bombay High Court, which found no scope for re-employment. 

Upon hearing the case, the Supreme Court clarified that certified Standing Orders issued by the State government hold statutory force and represent a contractual agreement between the employer and the worker. As such, employers and workers cannot enter contracts that override the established statutory contract embedded in the certified Standing Orders. 

The Court disagreed with the lower courts' decisions that the non-renewal of contracts was solely due to policy changes and that settlements could alter the service conditions prescribed in the Standing Orders. 

Consequently, the Supreme Court allowed the appeal of the appellant union and declared that the workers were entitled to all the benefits outlined in the Bombay Model Standing Order.