Arbitrary termination by bare notice is unconstitutional; compensation may replace reinstatement where restoration is impracticable.
A rule allowing termination of a confirmed public sector employee on 90 days' notice or pay in lieu was held unconstitutional because it conferred unguided, arbitrary power inconsistent with equality and fairness in public employment. Reinstatement was not treated as automatic in every case: where the employee is senior and restoration would be impracticable or contrary to public interest, compensation may be awarded instead. The Court found a lump sum based on 3.33 years' salary and admissible allowances to be reasonable, rejecting a larger amount as excessive. Ancillary directions covered tax treatment and retirement benefits.
Issues: (i) whether the rule permitting termination of a confirmed employee of a public sector undertaking by 90 days' notice or pay in lieu thereof was constitutionally valid; (ii) whether, on such rule being held void, reinstatement was always mandatory or compensation in lieu of reinstatement could be awarded; (iii) what amount of compensation would be reasonable in the circumstances.
Issue (i): whether the rule permitting termination of a confirmed employee of a public sector undertaking by 90 days' notice or pay in lieu thereof was constitutionally valid.
Analysis: A rule enabling termination of a permanent or confirmed employee by bare notice confers an unguided and arbitrary power capable of selective and discriminatory exercise. Such a provision is inconsistent with the guarantees of equality and fairness in public employment and cannot be sustained merely because the employer is a public sector undertaking. A public authority cannot be left free to terminate service on whim, caprice, or personal preference.
Conclusion: The rule was unconstitutional and void.
Issue (ii): whether, on such rule being held void, reinstatement was always mandatory or compensation in lieu of reinstatement could be awarded.
Analysis: The relief following invalid termination is not rigidly confined to reinstatement in every case. While reinstatement may ordinarily follow for lower level employees, the Court may tailor relief to the exigencies of public interest, especially in the case of senior managerial personnel. Where the relationship has broken down and reinstatement would be detrimental to the undertaking and to the employee, the Court may direct compensation instead of restoration to service.
Conclusion: Reinstatement was not inevitable and compensation in lieu of reinstatement could be granted in a fit case.
Issue (iii): what amount of compensation would be reasonable in the circumstances.
Analysis: A lump sum equal to eight years' salary would be excessive and would confer an unjustified windfall. Having regard to the employee's position, the likely return on investment, the loss of promotion prospects, and the need to provide a fair substitute for reinstatement, compensation based on 3.33 years' salary including admissible allowances was held to be appropriate. Ancillary directions were also issued regarding tax treatment and retirement benefits.
Conclusion: Compensation equivalent to 3.33 years' salary and allowances was held to be reasonable.
Final Conclusion: The termination rule was struck down, and the employee obtained monetary relief in substitution of reinstatement with consequential directions for payment of salary, benefits, costs, and tax relief.
Ratio Decidendi: A rule empowering a public authority to terminate a confirmed employee by bare notice is unconstitutional if it permits arbitrary and discriminatory exercise of power, and where reinstatement would be inappropriate, the Court may award reasonable compensation in lieu of reinstatement.
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