International Labor & Employment Law Committee Newsletter

Issue: November 2012

Editor: Tim Darby | Africa and Middle East Editor: Karen Seigel | Asia and Oceania Editor: Ute Krudewagen | Canada Editor: Gilles Touchette | European Editor: Paul Callaghan | Latin America Editor: Juan Carlos Varela | Law Student Editor: Irene Lehne, Earle Mack School of Law at Drexel University


Withdrawal of Social Security Accumulations Permitted upon Cessation of Employment for Expatriates From Countries Having a Social Security Agreement with India

Veena Gopalakrishnan and Vikram Shroff, Nishith Desai Associates, Mumbai/Bangalore/Delhi

Foreign nationals working in India (International workers) who are covered under a Social Security Agreement (SSA) between India and any other country have now been allowed to withdraw their accumulated provident fund balance under the Employees Provident Fund Scheme, 1952 (EPF Scheme)on ceasing to be in employment with the establishment covered under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (EPF Act).1 Prior to this amendment, an international worker was allowed to apply for withdrawal of provident fund accumulationsonly on retirement from service at any time after the attainment of 58 years of age (except under specified conditions) or in accordance with the SSA applicable to such employee, if any. In October 2008, it was made mandatory for international workers to contribute under the EPF Act. Earlier in 2012, expatriates in India contributing to a social security plan in another country and covered by a bilateral economic agreement with India were recognized as exempt from social security contributions in India.2

The Amendment also allows the provident fund accumulations to be paid to theinternational workers' bank account directly or through the employer. Previously, the provident fund dues for international workers were to be paid only to their bank accounts in India or in accordance with the SSA applicable to them. Therefore, it is no longer mandatory for international workers to maintain a bank account in India after cessation of employment with the Indian establishment in order to receive the provident fund accumulations.

The Amendment also clarifies the position on determining the 'eligible service' for international workers under the Employees' Pension Scheme, 1995 (Pension Scheme) and provides that:

  • In the case of an "existing member" or a "new entrant," the actual service rendered in India shall be treated as eligible service; and
  • In case of a member covered by a SSA, the period of coverage under the social security program in another country shall be added to the actual service and the aggregate thereof may be treated as eligible service for receiving pension benefits in accordance with the SSA.

1The Ministry of Labour and Employment has amended provisions in the EPF Scheme and the Pension Scheme with respect to expatriates by issuing notifications dated October 5, 2012.


Acquittal of Criminal Charges Does Not Preclude the Continuance of Disciplinary Proceedings

Sajai Singh and Soumya Patnaik, J Sagar Associates, Bangalore

Criminal and departmental (employer) proceedings are entirely different, and acquittal by a criminal court does not preclude an employer from taking action by way of a disciplinary enquiry if otherwise permissible, a well-settled principle that the Calcutta High Court reiterated in a recent case.1

In the case the Petitioner was charged in a criminal case concerning the making of a fraudulent withdrawal from an account. While the criminal appeal was still pending, the Respondent filed a departmental charge-sheet against the Petitioner. Though the Petitioner was subsequently acquitted of criminal charges, the departmental (employer) inquiry concluded otherwise and issued an order of dismissal of the Petitioner. The Petitioner filed for quashing of the departmental proceedings on the grounds of his acquittal of the criminal charges.

The Division Bench negated this proposition based on the fact that criminal and departmental proceedings require different standards of proof, and acquittal in a criminal case should be no bar to initiating or continuing disciplinary proceedings against an employee.

1Keshab Chandra Saha v. United Commercial Bank and Ors.2012 LLR 362.

Employees May Not Be Disciplined or Terminated in Departmental (Employer) Proceedings Without an Independent Inquiry and Evidence

Sajai Singh and Soumya Patnaik, J Sagar Associates, Bangalore

Termination of an employee based on departmental (employer) proceedings that did not include an independent inquiry has been overturned by the Bombay High Court in a recent case.1

In the challenged judgment, the Petitioner had been charge-sheeted (i.e., charges had been brought) for a criminal offense under the Prevention of Corruption Act of 1988, following which the Respondent employer had charge-sheeted the employee for the same offenses in a departmental (employer) inquiry. The Departmental Inquiry proceeded on the same charge-sheet as that of the criminal case, without any independent evidence, and the Petitioner was terminated without being given an opportunity to reply to the show-cause notice. In the criminal case, the Sessions court had acquitted the Petitioner.

The Court held that punishment could only be imposed on the basis of some evidence, and without a record of any evidence, it cannot be said that an inquiry had been duly conducted.

1Ramesh s/o RangnathraoSonawane v. Maharashtra State Electricity Board, 23rd December 2011. Unreported, available online at

Industrial Tribunal Is Not Appellate Authority Over a Departmental Inquiry

Sajai Singh and Soumya Patnaik, J Sagar Associates, Bangalore

The National Industrial Tribunal cannot sit as the appellate forum over a departmental (employer) inquiry the Delhi High Court held in a recent case.1

The Appellant, an employee of Indian Airlines, was dismissed for misusing the Interline ticket facility meant for staff and their families, based on the findings of a departmental enquiry. The conclusions of the report were founded on a detailed examination of oral and documentary evidence brought before the Inquiry Officer. The National Industrial Tribunal subsequently set aside the dismissal on the grounds that the charge could not be proved based on the evidence supplied by the Inquiry report.

The court held that the Tribunal exceeded its jurisdiction in reviewing de novo the evidence recorded by the Inquiry Officer. The Tribunal is not intended to sit as an appellate forum over the findings of a departmental inquiry, the court held. While the Tribunal does have powers to review the evidence and reach an independent conclusion, this discretion is required to be exercised cautiously and judiciously. Where the principles of natural justice have been followed, and evidence on record indicates misconduct on the part of the employee, it is not open to the Tribunal to arrive at a different conclusion based on the sufficiency of evidence.

1RLMoria v. Chairman cum MD, National Aviation Company of India Ltd & Ors, MANU/DE/2530/2012

Payment of Back Wages Is Not Appropriate Where Charges of a Serious Nature Are Proved But an Employee Is Reinstated on Procedural Grounds

Sajai Singh and Soumya Patnaik, J Sagar Associates, Bangalore

It is not proper to award back wages to an employee when the charges against him were of a serious nature and have been proven, the Uttarakhand High Court has held.1

In this case, the Petitioner was a bus conductor charged with misconduct during the course of work. Criminal charges had been filed against him and he had been found guilty thereafter. Accordingly, the employer conducted a disciplinary enquiry on charges of misconduct. The Petitioner had been allowed to participate in the enquiry and topresent evidence. The Petitioner was dismissed following the enquiry. However, prior to initiating the enquiry, a show cause notice (explained below) had not been served upon the Petitioner.

When the Petitioner challenged the dismissal, the Labour Court held that the enquiry was bad in law because of the failure to provide a show cause notice. The Labour Court ordered the Respondent to reinstate the Petitioner. The Respondent had reinstated the Petitioner, but without regularizing his period of suspension and without paying him back wages to him. As a result, Petitioner filed a writ petition before the High Court by the Petitioner.The High Court held that since the Petitioner had been given full opportunity to participate in the disciplinary enquiry, and because charges of serious misconduct had been proved against him, it would not be illegal to withhold back wages and consequential damages from him.

A show cause notice has not been defined in any employment statute in India. However, over time, it has been recognized as an essential part of a duly conducted disciplinary enquiry. It amounts to a communication addressed to an employee who has allegedly committed some misconduct in relation to his employment, and contains a statement of allegations with complete details of the alleged misconduct, calling upon him to give his explanation and show cause as to why appropriate disciplinary action should not be taken against him.

1Rajendra Kumar s/o Late Raj Kishore v. Managing Director, Uttarakhand Roadways Transport Corporation and Another, 30th March 2012. Available at

No Requirement of Re-examination of a Witness Already Examined in the Departmental (Employer) Proceeding

Sajai Singh and Soumya Patnaik, J Sagar Associates, Bangalore

The Labour Court is not required to re-examine an individual in a challenge to an employee's termination, the High Court of Jharkhand has held,1 dismissing the petition of the Appellant, who had challenged the decision of the Labour Court upholding the employer's termination of his services for taking a bribe. The issue raised by the Appellant was that the person from whom the Appellant had allegedly received the bribe had not been examined by the Labour Court.

The High Court held that examination of the person from whom the Appellant had allegedly received the bribe was unnecessary since he had previously been examined in the departmental (employer) proceeding.

1Dudhnath Ram v. Management of M/s, Tata Iron and Steel Co. Ltd, 2012 LLR 814.MANU/JH/0488/2012

Law Requiring Religion- and Caste-Based Head Count by Employers Under Consideration

Veena Gopalakrishnan and Vikram Shroff, Nishith Desai Associates, Mumbai/Bangalore/Delhi

A proposal for a law that will require companies, both in the public and private sector, to do a headcount of their workforces by religion and caste is being considered by the Ministry of Minority Affairs, according to a recent news report.1 It appears that the move is being made with a view to impede discrimination based on religion and ensure equal opportunity in employment. More information in this respect is awaited.



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