Supreme Court: No Agreement/ Contract can override the benefits available to the employees in the Model Standing Order

Khyati Bhatia , Apoorv Shishodia

July 31, 2023

Supreme Court: No Agreement/ Contract can override the benefits available to the employees in the Model Standing Order

Introduction:
On July 25, 2023, the Hon’ble Supreme Court, comprising of Hon’ble justices Abhay S Oka and Sanjay Karol, ruled on the case of Bharatiya Kamgar Karmachari Mahasangh vs M/s. Jet Airways Ltd . The Hon’ble Supreme Court emphasized the significance of the Industrial Employment (Standing Orders) Act, 1946 ("Standing Orders Act") as a beneficial legislation and clarified that no agreement, contract, or settlement that waives the rights of the employees can override the benefits provided to the employees under the Standing Orders Act.
Facts:
The case involved the respondent, M/s. Jet Airways Ltd., employing around 169 (One Hundred Sixty Nine) workmen on temporary fixed-term contracts in various roles such as loader-cum-cleaners, drivers, and operators and all of those workmen had completed more than 240 (Two Hundred Forty) days of service with the respondent. The issue arose when the fixed-term contracts of these workmen were not renewed, and despite having completed 240 (Two Hundred Forty) days of service, they were still treated as temporary employees. This contradicted the provisions of the Bombay Industrial Employment (Standing Orders) Rules, 1959 ("Bombay Model Standing Order").
However, a settlement was previously reached on May 02, 2002, between the respondent and another union called Bharatiya Kamgar Sena. This settlement dropped the demands for reinstatement of the workmen with permanent employment and back-wages as per the Bombay Model Standing Order. However, the workmen raised a dispute regarding their rights under the Bombay Model Standing Order, leading the matter to be adjudicated before the Central Government Industrial Tribunal ("CGTI”) and further leading to Bombay High Court (“High Court”). Both the CGTI on March 30, 2017, and the High Court on January 10, 2018, ruled in Favor of the respondents and appellant being unsatisfied with the decision of the CGIT and High Court, appealed before the Hon’ble Supreme Court.
Issues:
The two main issues that were dealt and examined in detail by the Hon’ble Supreme Court were as follows:

  • Who is the appropriate authority empowered to issue the Standing Order(s) under the Standing Order Act?
  • Can a private agreement or settlement between the parties override the Standing Order?

Findings and Observations of the Supreme Court:
Regarding the first issue, the Hon’ble Supreme Court, analysed the intent of the legislation under Section 2(b) of the Standing Orders Act and reached to a conclusion that in the present case in hand, the appropriate Government is not the Central Government but the State Government, as the respondent is not under the control of the Central Government within the ambit of the definition of Section 2(b) of the Standing Orders Act. Additionally, the Hon’ble Supreme Court referred to Section 15 of the Standing Orders Act, which empowers the appropriate state Government to formulate the rules for the purpose of implementing the intent of the Standing Orders Act within their respective states. Consequently, as the appropriate Government in this case was the State Government of Bombay, therefore, the Bombay Model Standing Order was deemed applicable to the parties.
Regarding the second issue, the Hon’ble Supreme Court stated that certified standing orders hold statutory force and represent a contract between the employer and the workman. Therefore, any contract or agreement that attempts to override the statutory contract embodied in the certified standing orders cannot be considered valid, unless that is more beneficial to the workmen. The Hon’ble Supreme Court referred to various past judgments, including U.P. SEB v. Hari Shankar Jain , Sudhir Chandra Sarkar v. Tata Iron and Steel Co. Ltd. , Western India Match Co. v. Workmen , and Rasiklal Vaghabibhai Patel v. Ahmedabad Municipal Corpn , to support its stance on the scope and dominance of the Standing Orders Act over contracts of employment.
“The Act being the beneficial legislation provides that any agreement/contract/settlement wherein the rights of the employees are waived off would not override the Standing Orders.”
In light of the above, the Hon’ble Supreme Court disagreed with the findings of the CGTI and the High Court and held that any agreement, contract, or settlement that waives off the rights of the employees cannot override the Standing Orders Act. Consequently, the appeal was allowed, and the workmen were affirmed to be entitled to all the benefits available to them under the Bombay Model Standing Order.

Conclusion:
In a groundbreaking and precedent-setting ruling, the Hon'ble Supreme Court has emphatically established that the foundation of any contractual agreement or arrangement between employers and employees must rest upon the bedrock of the model standing orders enacted by the appropriate Government (central or state). This landmark judgment ushers in a new era of workers' rights and harmonious employment relationships, aiming to protect and empower the workforce across the nation. With this ruling, a clarion call has been sent to employers and establishments, urging them to reconsider their existing terms and conditions and adopt measures that prioritize the welfare and interests of their workforce. For too long, certain employers have sought to manoeuvre around the established model standing orders, depriving employees of the full spectrum of benefits they rightfully deserve. This judgment serves as a wake-up call for such entities, signalling an end to outdated and exploitative practices.

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