Labour laws in India and Suspension pending Domestic Enquiry

As per Indian employment laws, an employer has the right to suspend an employee pending enquiry, however such a suspension should be
for good reasons. The suspension pending enquiry can be effected for smooth conduct of enquiry or to enable the management to collect
evidence or keeping in mind discipline in the factory. However, it is imperative under Indian employment law that there should be sufficient
reasons for suspending an employee when enquiry against him is pending.
As per Indian employment law, an employee is entitled to subsistence allowance during the period of his suspension. The quantum of
subsistence allowance is determined by the Industrial Employment (Standing Orders) Act, 1946 if applicable. The said Act provides for
Subsistence Allowance as under;
Section 10-A of the Industrial Employment (Standing Orders) Act, 1946;Payment of Subsistence Allowance
(1) Where any workman is suspended by the employer pending investigation or inquiry into complaints or charges of misconduct against
him, the employer shall pay to such workman subsistence allowance
(a) at the rate of fifty per cent. of the wages which the workman was entitled to immediately preceding the date of such suspensions, for the
first ninety days of suspension; and
(b) at the rate of seventy- five per cent. of such wages for the remaining period of suspension if the delay in the completion of disciplinary
proceedings against such workman is not directly attributable to the conduct of such workman.
(2) If any dispute arises regarding the subsistence allowance payable to a workman under sub- section (1), the workman or the employer
concerned may refer the dispute to the Labour Court, (14 of 1947 ) constituted under the Industrial Disputes Act, 1947 , within the local limits
of whose jurisdiction the industrial establishment wherein such workman is employed is situate and the Labour Court to which the dispute is
so referred shall, after giving the parties an opportunity of being heard, decide the dispute and such decision shall be final and binding on the
parties.
(3) Notwithstanding anything contained in the foregoing provisions of this section, where provisions relating to payment of subsistence
allowance under any other law for the time being in force in any State are more beneficial than the provisions of this section, the provisions of
such other law shall be applicable to the payment of subsistence allowance in that State.
However, if Standing Orders are not applicable, the suspension allowance will be decided by the terms of employment. If the terms of
employment are silent on the suspension allowance, the employer can suspend the employee, however the employee will be entitled to full
wages.
The Honble Bombay High Court in Manohar P. Kharkar and another V/s Raghuraj and another, 1981 held, after consulting the decisions of
various other High Courts, that domestic enquiry is not a must in every case. The Court has further stated that an employee can be
removed from service without holding an enquiry into allegations of misconduct if either the employer possesses such a right of removal
under the contract or the service Rules or the employee does not possess any right to the post held by him. It is no doubt held in many of
these cases that the innocuous wording of the order is not conclusive and the Court can find the truth of the matter by going behind the order
to find if the order is intended to be punitive and is passed in breach of the procedural safeguards.
Further, It is, however, pertinent to note that the employer can justify such termination even when spurred by the undisclosed acts of
misconduct, when challenged on reference under the Industrial Dispute Act. The Labour or Industrial Court then has to adjudge the truth or
otherwise of the misconduct on merits, even if no enquiry was held or enquiry if held was found to be defective.
The above judgement states that the decision for terminating an employee on the grounds of misconduct may be without domestic enquiry
but the same may be challenged before the Labour court by the aggrieved employee in reference and the Management shall have to justify
such termination before the Labour Court. The Labour Court or Industrial Court would then have to adjudge the truth or the misconduct on
merits, even if no enquiry was held or enquiry if held was found to be defective.
Further, in Kamal Kishore Lakshman V/s Pan American World Airways [1987 I LLJ 107] the Honble Supreme Court held that The legal
position firmly established is that if there has been no appropriate domestic enquiry or no enquiry at all before disciplinary action is taken, it is
open to the employer to ask for such opportunity in the course of adjudication. In the facts of the present case, the order of separation
grounded upon loss of confidence has been justified before the Labour Court and the Labour Court has come to that conclusion upon
assessment of the evidence.
Therefore, Indian employment law stands clear on the issue that if an employee is terminated without domestic enquiry, it shall be open to
the employer to explain such termination in the course of adjudication.