Can an Employer deny back wages on the no work no pay principle ?

When Termination of service of employee is held to be illegal and the employer does not reinstate him in service, the employer cannot deny the claim for his back wages, relying on the principle- “No work No pay”.

The Supreme Court recently  in Shobha Ram Raturi vs. Haryana Vindhya Prasaran Nigam Ltd & Ors  (2016| CLR 228) ruled on the question of reinstating back wages when the termination of an employee  was found illegal.
The employee-appellant was retired much earlier from service on 31st Dec 2002, when he would attain the age of superannuation on 31st Dec 2015. The employee went against the retirement order passed against him by filing a writ petition in the High Court of Punjab and Haryana Court, which was allowed. The Single Judge of the High Court held that the employee to be treated as though he would be in continuous service,  however it also limited the consequential benefits to the employee’s terminal benefits. This order then went on appeal to a larger bench (in a letters patent appeal) which was rejected. The issue of payment of wages were therefore brought before the Supreme Court.

The Supreme Court observed that as the order of retirement was set aside by the High Court, the employee-appellant was also entitled to consequential benefits. The employee-appellant was restrained from rendering his service from 1.1.2003 to 31.12.2005, and if were allowed, he would have discharged his duties accordingly.  The Court stated that as the employer-respondent   themselves put the restraint, thus they cannot be allowed to deny the employee wages on the principle of “no work no wages”. The Court found that it was the employer’s duty to ensure that the services of the employee be utilised for the period mentioned above.

The order of the High Court was set aside and the employer was directed to pay the employee wages for the period mentioned above and with retiral benefits.

The employer, in such a situation cannot deny an employee their back wages on the principal of no work no pay, especially if the services were underutilised. When termination of service of the employee is held to be illegal and the employer does not reinstate him in service, the employer cannot deny the claim for his back wages, relying on the principle- “No work No pay”.

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