Even ‘piece-rate’ tailors regular employees: Delhi High Court asks firm to pay man Rs 1.25 lakh dues 25 years after dismissal

“The court directs the petitioner (garment company) to pay to the workman (tailor) a consolidated sum of Rs 1,25,000 in full and final satisfaction of the relief granted under the impugned award, including reinstatement and consequential monetary benefits,” the May 14 order read.

The Delhi High Court further added that the said compensation was determined having regard to the proved period of service of the tailor from July 1998 to August 1999 and the lapse of time since cessation of employment.

‘Couldn’t undertake stitching work elsewhere’

• Upholding the labour court’s finding of illegal retrenchment, the Delhi High Court observed that engagement on a piece-rate basis alone does not exclude a worker from the protection of labour laws.
• The court added that the said conclusion rests on the admitted and proved period of employment of the tailor with Sanjay Garments from July 1998 to August 1999.
• The Delhi High Court found that there is no material placed on record to indicate that the tailor was free to undertake stitching work elsewhere in the manner ordinarily associated with an independent contractual arrangement.
• The bench held that these circumstances cumulatively establish that the tailor was working under the control and supervision of the garment company.
• It was added that the mere fact that remuneration was computed on a piece-rate basis could not, by itself, negate the existence of an employer-employee relationship.
• The relevant test for determining the existence of an employer-employee relationship is the test of control and supervision, it was further stated.
• The Delhi High Court clarified that the test deals with whether the employer exercises control not merely over the ultimate result of the work but also over the manner in which the work is performed.
• The high court directed that the said amount should be paid to the tailor within eight weeks.

Dispute dating back to 1999

It was placed on record before the Delhi High Court that the petitioner, Sanjay Garments, is under the sole proprietorship of Shri Sanjay Kumar. The establishment is engaged in garment stitching work, engaging four to five persons at a time.

The tailor, Rakesh Kumar, was engaged in stitching work at the said establishment. He claimed to have worked with the management for over 12 years, initially with M/s Dayal Sons Selection and thereafter with M/s Sanjay Garments, both of which were functioning from the same premises and last drew wages of Rs 2,000 per month.

The tailor claimed that he was working as a permanent employee under the supervision and control of the management.

However, according to the petitioner, the workman was engaged on a piece-rate basis for stitching work from July 1998 till August 1999 and was earning Rs 2,600 per month.

The garment company also denied the existence of any concern in the name of M/s Dayal Sons Selection and contended that the workman had voluntarily left the work in August 1999 after securing better employment elsewhere and accepted Rs 2,000 towards full and final settlement of dues.

The workman alleged that his services had been terminated illegally and unjustifiably in August 1999 without notice, chargesheet, domestic enquiry or payment of earned wages for July 1999. It was added that a complaint was lodged on behalf of the workman through the All India Engineering & General Mazdoor Union before the assistant labour commissioner, on August 5, 1999, alleging illegal termination, non-payment of wages for July 1999, and seeking reinstatement in service.

In July 2010, the labour court ruled in favour of the tailor, holding that the termination amounted to illegal retrenchment and directed reinstatement with 80 per cent back wages.

Aggrieved by the same, the garment company moved the Delhi High Court in 2013, challenging the award.

Engagement merely on ‘piece-rate’ basis

• Appearing for the garments company, advocate Paritosh Bhudhiraja argued before the Delhi High Court that the tailor had merely been engaged on a piece-rate basis for stitching work and was not a regular employee of the said company.
• It was further submitted that there was no termination of service by the garment company and that the tailor had voluntarily left employment in August 1999 after securing better employment elsewhere.
• It was also contended that there was no material on record to justify the conclusion that M/s Sanjay Garments was a continuation of M/s Dayal Sons Selection or that both concerns constituted the same establishment.

‘Still a workman’

• Representing the tailor, advocate Krishna Dev Pandey submitted that the tailor was continuously working with the garment company since 1988 under its supervision and control and that both M/s Dayal Sons Selection and M/s Sanjay Garments were being operated from the same premises in New Delhi.
• It was argued that the plea of piece-rate engagement did not negate the existence of an employer-employee relationship and that the labour court had rightly held the tailor to be a “workman”.
• It was further contended that the termination was effected illegally and in retaliation for the demands raised for statutory benefits.