Can Management Withhold Salary During Court Proceedings Under the Industrial Dispute Act?

Is there any reference in the Industrial Dispute Act that management can withhold salary during the pendency of proceedings in court for a workman, or if management fails to prove 'misconduct' in court and submits a report without terminating/suspending the employee? An early reply will be highly appreciated.

Your question and the cause of action behind it, as narrated, are not clear to me. Whether the pending court proceedings are a sequel to the dispute raised by the workman consequent to his dismissal? If so, was any domestic inquiry conducted prior to the dismissal or not?

Management's failure to prove misconduct

The proposition "Management fails to prove the misconduct in the court and submits a report without terminating/suspending the employee" actually indicates simply the inquiry conducted before the court on the misconduct for which the punishment of dismissal was awarded based on a defective inquiry. Is the subsequent inquiry before the court meant to rectify these defects?

Payment of salary after dismissal

Payment of salary is a question after the orders of dismissal are set aside and the award of reinstatement with back wages by the court. Does the question relate to the unwillingness to implement the award in a situation of appeal against the award? Please clarify.

Dear Pharma Company HR,

Management cannot withhold the salary of an employee who is on the rolls of the employer. You have not mentioned the reasons for withholding the salary by the employer. Furthermore, you have not indicated whether an employee has been terminated from the service. If the service of an employee has been terminated, the question of payment of salary does not arise. Please apply your mind and furnish the required details.

Thank you for the prompt reply. In this case, an inquiry has been conducted after the transfer of the employee. To date, the employee has not been dismissed, but the salary has been stopped immediately after the transfer, i.e., 2 years back. As the C.B. case is in the labor court, regarding the question of demanding interim relief in court, the presiding officer has requested a reference regarding any interim relief provided by law. I seek your suggestion in this matter. The inquiry has been closed.

Most probably, the employee must be a Sales Promotion Employee. Did he join the new station after the transfer? Was there any dispute raised by the employee against the transfer? Please provide the complete details in a single go.

Employee Dispute Under the SPE Act

The employee is covered under the SPE Act. He never joined at the transferred location and asked for Standing Order compliance by the labor authorities, which was not there as the employers failed to show a certified copy of the model standing order as confirmed by the Labor Department. Immediately, the employee raised the dispute under section 10(1)(c) of the I.D. Act with a reference from the State Labor Department with a C.B. case. In this matter, to date, the management has neither suspended/terminated, charge-sheeted, nor retrenched the employee. The employee has placed an application for interim relief to look after his family on humanitarian grounds. The transfer order is still challenged in the absence of a standing order. Seeking your valuable comments.

Labor Department Reference

The reference of the Labor Department is: "Is the transfer of the Sales Promotion employee justified/legal? If not, then the concerned Sales Promotion employee has every right to get the benefits, etc., under what details?"

Conditions for Transfer of Service

The conditions for the transfer of service have been mentioned in the appointment letter. Does your establishment fall under the definition of "industrial employment" as defined in the Standing Orders Act? Is your establishment employing 50 or more employees?

Management Actions on Employee Transfer Refusal

When an employee refuses to report for work at the place where their services are transferred, did management issue a show cause notice?

Application for Interim Relief

The application for interim relief can be objected to by the management with valid arguments. If it is not a bona fide transfer and management did not follow the due procedure, the transfer order will be set aside.

"Industrial employment" (wrongly mentioned) should be read as "industrial establishment."

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If you have any further questions or need additional assistance, feel free to ask.

The employer has no legal backing to withhold the salary, whatever might be the reason behind this action. Not joining in the transferred place is not an excuse. Please refer to the Payment of Wages Act if he is covered under this act.

Dear Pharma Company HR,

The steady increase in industrial disputes between Pharma Companies and their SP Employees, particularly on the issue of transfer, is indicative of poor HRM in such enterprises. In my understanding, transfer is not the real point of contention for both management and the SPEs, as they are well aware that transfer is an aspect of employment. Unfortunately, the resourceful partners of employment in the Pharmaceutical Industry often resort to arm-twisting each other at the slightest provocation from either side, instead of addressing the root causes of performance issues and challenging service conditions created by each party respectively and resolving them amicably.

Due to the higher academic qualifications, attractive salary, perks, and the independent nature of the performance of the SPEs, managements refuse to recognize them as "workmen" under the Industrial Disputes Act, 1947, despite judicial rulings and statutory amendments. The SPEs, on the other hand, point fingers at the alleged unrealistic targets set by managements and the subjective supervisory controls exercised by middle-level managers. The widespread presence of most of these companies across India is seen as an advantage for managements. Therefore, transfers based on work exigencies are sometimes used as a strategy to terminate the services of an unwanted SPE, with employees resisting the transfers vehemently, citing victimization and unfair labor practices as grounds for their opposition.

To emphasize, transfer is a part of employment, and it is within the employer's prerogative to decide the location, duration, and conditions of an employee's work. However, such transfers should not be used as a means of victimization or abuse of power, and they should align with the terms of the employment contract and relevant Standing Orders. An employee who chooses not to comply with transfer orders cannot claim wages or salaries, even if they raise a dispute under section 2k of the ID Act, 1947. The Labor Court does not have the authority to provide interim relief to such an employee. The management, if permitted by the service regulations, can take disciplinary action against the employee and dismiss them with the prior approval of the Labor Court under section 33(1) of the ID Act, 1947. In the absence of such actions, the employment relationship continues, although the employee is not entitled to wages or salary during the period of non-compliance under the principle of no work, no wages.

Thank you for raising these important points in your post.

To add to my previous reply in continuation: If the employee succeeds in the dispute that his transfer was illegal or a measure of victimization, the impugned transfer order would be set aside, and he can rejoin the previous post/station. However, his claim for salary for his absence in disobeying the nullified transfer orders has to stand judicial scrutiny only in the backdrop of the actual purpose and the circumstances leading to his transfer and the distance of the destination to which he was transferred.