Employment LawEmployee cannot dictate the Appraisal Rights possessed by the Employer

The Supreme Court of India in M/s Bharti Airtel Limited v. A.S. Raghavendra (Neutral Citation: 2024 INSC 265) on April 2, 2024,  held that the employee cannot dictate the appraisal rights possessed by the Employer.

FACTS

A.S. Raghavendra (hereinafter referred to as “the Respondent”) was employed as the Regional Business Head (South) by Bharti Airtel (hereinafter referred to as “the Appellant”) in 2009, with an annual package of Rs. 22 lakhs, which included a fixed pay of Rs. 13,20,000 and a variable pay of Rs. 8,80,000. The Respondent was responsible for a team of four Account Managers overseeing different states.

In 2011, Respondent resigned through the company’s internal system, a move that was accepted, leading to a settlement of Rs. 5,92,538/- (Five Lakh Ninety-Two Thousand Five Hundred Thirty-Eight Only). Nearly 19 months later, he claimed that his resignation had been coerced and filed a petition with the Ld. Deputy Labour Commissioner, initiating conciliation proceedings that ultimately failed.

The dispute was subsequently referred to the Labour Court by the State Government under the Industrial Disputes Act 1947(hereinafter referred to as the  “ID Act”). In 2017, the Labour Court ruled that Respondent did not qualify as a “workman” and was instead performing a managerial role. Dissatisfied with this outcome, Respondent filed a writ petition before the Karnataka High Court, wherein the Karnataka High Court partially ruled in his favour, remanding the case back to the Labour Court. The Appellant’s subsequent appeal to the Division Bench was dismissed, leading the company to approach the Supreme Court.

ISSUES BEFORE THE SUPREME COURT

1. Whether the Respondent qualifies as a “workman” under Section 2(s) of the Industrial Disputes Act, 1947?
2. Whether the competent authority within the organization has the final say in employment appraisals and ratings?
3. Whether the resignation of the Respondent was under coercion or voluntary?

CONTENTIONS OF THE PARTIES

The Appellant argued that Respondent’s resignation was voluntary, as indicated by the language used in his resignation letter. The company argued that the letter represented a decision driven based on personal dissatisfaction rather than coercion from the company. The Appellant claimed that the Respondent’s position as Regional Business Head was managerial, which excluded him from the definition of “workman” under the ID Act.

They highlighted that his responsibilities and lack of authority to appoint, dismiss, or conduct disciplinary inquiries further supported this assertion.

Moreover, the company maintained that employment-related decisions, including appraisals and ratings, are the prerogative of the competent authority within the organization. While employees have channels to voice grievances, the final decision-making authority should ultimately rest with the competent authority.

The Respondent also contended that his resignation was forced due to unfair ratings and treatment by Appellant, asserting that it was not submitted of his free will. Despite his managerial role, Respondent argued that he qualified as a “workman” under Section 2(s) of the ID Act and sought relief accordingly.

It was contended that the grievances regarding unfair ratings were not adequately addressed by the company, which compelled to resign. This sense of compulsion, he argued, amounted to a forced resignation, thereby justifying his claims under the Industrial Disputes Act.

DECISION AND FINDINGS  

The Supreme Court found no evidence of compulsion in Respondent’s resignation letter, determining it to be voluntary and driven by personal dissatisfaction with his performance rating. It clarified that discontent with performance ratings does not constitute a forced resignation.

The court noted that dissatisfaction due to unfair ratings does not equate to a forced resignation, the hon’ble Supreme Court elucidated the definition of “workman” under Section 2(s) of the ID Act. ruling that high-ranking employees without the authority to appoint, dismiss, or conduct disciplinary inquiries cannot automatically be classified as “workmen.” This classification grants access to specific dispute resolution procedures. The Court emphasized that High Court intervention in Labour Court rulings should occur only when significant flaws are evident. It interpreted “not of his free will” to mean it does not always imply employer coercion.

The Court observed that the  Respondent had not alleged bias or victimization against Bharti Airtel. Ultimately, the Court concluded that the Respondent did not fall under the “workman” category, making the Labour Court reference inappropriate. This decision underscores precise standards for “workman” classification and reinforces employer authority in performance reviews and employment decisions.

The Supreme Court carefully analyzed the resignation letter submitted by the Respondent. The language used in the letter indicated that the resignation was voluntary, submitted with consideration of his family and career interests, and reflected dissatisfaction rather than coercion.

The court reiterated that the competent authority within an organization has the final say in employment appraisals and ratings. While employees have channels to voice grievances, the ultimate decision-making power lies with the designated authority. The court found no bias or victimization against Respondent and concluded that his resignation resulted from personal dissatisfaction rather than arbitrariness or high-handedness by the company.

AMLEGALS REMARKS

The Supreme Court’s in the present case  significantly influences the interpretation of employment terms and the definition of “workman” under Indian labor law. By ruling that Respondent’s resignation was voluntary and driven by personal dissatisfaction, the Court set a precedent that underscores the importance of clear and unambiguous language in resignation letters to prevent future disputes. The judgment clarifies that an employee’s discontent with performance ratings does not equate to a forced resignation. Furthermore, the ruling elucidates that high-ranking employees without the authority to appoint, dismiss, or conduct disciplinary inquiries cannot automatically be classified as “workmen,” thereby delineating the boundaries of “workman” status under the ID Act.

The judgment reinforces the authority of the competent authority within organizations, emphasizing that employees cannot dictate the terms of their employment. It also highlights the importance of maintaining clear documentation and following internal grievance procedures. For employees, the decision underscores the necessity of utilizing internal grievance channels and recognizing the finality of decisions made by the competent authority. It provides clarity on the criteria for being classified as a “workman,” particularly for those in managerial roles. This ruling thus serves as a crucial reference point for both employers and employees in understanding their rights and responsibilities within the framework of Indian labour law.

– Team AMLEGALS assisted by Mr. Saurav Dhamija (Intern)

For any queries or feedback, please reach out to falak.sawlani@amlegals.com or rohit.lalwani@amlegals.com