Industrial Relations Challenges in Manufacturing: How Do You Handle Show-Cause Notices?

Industrial Relations (IR) Issues in the Manufacturing Industry

Please share with me some different Industrial Relations (IR) issues in the manufacturing industry.

Show-Cause Notice Section

Also, please tell me under which section a show-cause notice has been issued.

There is no specific section under which a 'Show Cause Notice' can be issued. However, you may refer to the sections from The Industrial Standing Orders Act 1946 (Applicable Model Standing Orders) for the acts defined as 'misconduct' and ask the employees to reply to the misconduct they are accused of.

A show cause notice is essentially a letter requesting an explanation about alleged misconduct by an employee. The concerned employee must submit a written explanation for such allegations, based on which further action should be decided.

Regards,
Atul S Malve
Manager - HR & Admin

IR issues are of utmost importance in any organization. It means the one-to-one relations that you, as a representative of the management, have with all the workmen. The workmen should necessarily have a sense of belonging to the organization in order to give their best output. In return, the company also needs to address their issues. This is possible through effective interaction. The management has to adopt a firm and fair approach in dealing with these issues.

Sub-IR Issues: Show Cause Notice

There is a law governing the subject of disciplinary action in the form of the Industrial Employment (Standing Orders) Act 1946. If your establishment is an industrial establishment employing 100 or more workmen (except in Maharashtra where the Act becomes applicable in case of 50 or more workmen), you will be covered by the Industrial Employment (Standing Orders) Act 1946. Each state frames model standing orders governing service conditions of workmen employed in the industrial establishments located in that state. The model standing orders provide for the initiation of disciplinary action against a delinquent 'workman' and prescribe a procedure as to how to take disciplinary action which involves serving a charge sheet or show cause notice.

However, the Standing Orders Act is not applicable to persons who are not 'workmen' within the meaning of Sec 2(s) of the Industrial Disputes Act 1947. Therefore, if your establishment is not covered by the Standing Orders Act or the delinquent employee is not a workman, you cannot invoke standing orders to take disciplinary action against a delinquent employee. In such a case, you need to frame conduct and discipline rules for the company or, in the absence of it, you may have to incorporate relevant clauses in the letter of appointment, which thereby permit your company to take disciplinary action against him.

However, an employer cannot punish an employee for misconduct by just an order. The principles of natural justice require an employer to hear the delinquent employee first before punishing him for the misconduct. In the absence of standing orders or service rules or relevant clauses in the letter of appointment, it is thus the principles of natural justice that require an employer to serve a show cause notice or charge-sheet on the delinquent, putting him on notice of the allegations against him and inviting his explanation for the same.

Trust this will clarify the position.

Regards,
B. Saikumar
HR & Labour Law Consultant
Chipinbiz Consultancy Pvt. Ltd.
Mumbai.

Dear Sir, Is it mandatory to issue a second show cause notice to the delinquent after serving the inquiry report to the delinquent for his comment, and if the received explanation is not satisfactory? Please enlighten me on this. Regards, Sacheein

Sub-IR Issues - Show Cause Notice

When an employee is alleged to have committed misconduct, they cannot be terminated arbitrarily by the employer because the principles of natural justice impose an obligation on the employer to hear the employee and ascertain their guilt before punishing them. The principles of natural justice consist of two basic principles, namely:

• No one should be a judge in their own cause.

• An employee shall be heard first before any action is taken against them.

These principles of natural justice are recognized by the courts of law and control the whole field of discipline in the employment sector. Therefore, if any employer does not follow these principles and proceeds to punish an employee either by inflicting any penalty or by dismissal, the courts may treat such action of the employer as punitive and quash it. They may direct reinstatement of the employee in the service of the company. Thus, any such unilateral and arbitrary action may involve not only financial implications but also cause a lot of embarrassment for the company. There are well-defined procedures to be followed in respect of disciplinary actions.

You may search Google for material or e-books on the subject.

Regards,
B. Saikumar
HR & Labour Law Consultant
Chipinbiz Consultancy Pvt. Ltd
Mumbai.

Sub-second Show Cause Notice

The Honorable Supreme Court in Ramzan Khan's case held that the delinquent employee should be heard regarding the inquiry report and findings on the basis of which the disciplinary authority proposes to impose a penalty on him. No action that adversely affects an employee should be taken behind his back according to the principles of natural justice. Therefore, it became incumbent on the employers to issue a second show cause notice to the delinquent employee before imposing any penalty based on the inquiry findings. Even though this judgment was delivered in connection with Article 311, which is applicable to civil services, the industry, both in the public and private sectors, has also followed this condition. However, the standing orders or rules of the private industry do not contain such a stipulation requiring the service of a second show cause notice on the employee. Therefore, the courts have made this requirement less rigid by holding in some cases that failure to issue a second show cause notice will not vitiate the inquiry unless the delinquent employee shows that such omission has caused prejudice to his defense.

However, by way of abundant caution, it is advisable to issue a show cause notice as it may become a contentious issue subsequently before the courts where the employer is called upon to defend his failure or omission once the employee discharges his burden of proving how it caused prejudice to his defense.

Regards,
B. Saikumar

HR & Labour Law Consultant

Chipinbiz Consultancy Pvt. Ltd.

Mumbai.