Orissa High Court: Employers Can Dismiss Retired Employees for Misconduct

Orissa High Court upholds employer's authority to dismiss retired employees for misconduct. Case: The Sr. Branch Manager, NSIC vs. The Deputy Chief Labour Commissioner (Central).

The Orissa High Court affirmed an employer's authority to dismiss an employee, even after retirement, based on misconduct found during their service. Justice Sanjay Kumar Mishra clarified that if disciplinary proceedings begin before retirement, they can continue post-retirement per employer's rules, with possible penalties, including dismissal.

"Counsel PK Jena represented the petitioners, while Counsel RD Sarkar appeared for the opposite party."

Before retiring, Opposite Party No. 3 (OP No. 3) served as the Manager, Sub-Branch at the National Small Industries Corporation Ltd. (NSIC), Balasore. A disciplinary proceeding commenced against him shortly before retirement, leading to suspension pending inquiry.

Despite opportunities to defend, OP No. 3 refused to participate, claiming the proceedings were invalid post-retirement. Consequently, he was declared ex parte, and the Inquiry Officer found the charges genuine.

Due to the seriousness of the allegations and potential risks to NSIC's investments, OP No. 3 was dismissed upon retirement. Subsequently, OP No. 3 sought the release of his gratuity under the Payment of Gratuity Act, 1972. Initially granted by the Controlling Authority and upheld by the Appellate Authority, NSIC challenged these orders in the High Court, citing an overruled judgment. They argued the proven misconduct justified gratuity forfeiture.

"The High Court specified, 'The Petitioners-Employer had a right to impose the major penalty of dismissal with retrospective effect i.e. the date when the Opposite Party No.3 was superannuated, and legality of punishment imposed is subject to judicial scrutiny.'"

The Court ruled that NSIC rules didn't include gratuity forfeiture provisions. While withholding gratuity for pecuniary losses is allowed, forfeiting retirement benefits, like gratuity and leave encashment, is unlawful.

In response, the Court ordered NSIC to release OP No. 3's gratuity, pending since 2016.