What Happens When Employer Loses Confidence on His Employee

An employer has no other alternative but to initiate a disciplinary proceeding against an employee on whom the management has lost confidence for some acts like forging documents, signatures etc. Maximum punishment a management can give is termination of service for losing confidence on the employee. But on what circumstances such harsh punishment is justifiable?

Discharging an office duty requires confidence, trust and integrity and when an employer losses such confidence on the employee, then there is no other alternative but to dismiss the employee after holding a domestic enquiry, as held by the Hon’ble Supreme Court of India. However, before terminating the service of any employee, it is essential to make sure that the charges as levelled against the delinquent employee has been substantially proved. Only for this purpose, managements often prefer to appoint a labour law advocate as an Enquiry Officer who is conversant with industrial disputes and labour laws to conduct such enquiry. If charges are sufficiently proved in the enquiry, there is hardly any scope of reinstatement if the matter adjudicated before the Labour Court.

In a case, Mr. X was terminated from service after he was found guilty in the enquiry. He was charged with forging signatures in order to obtain loans, preparing false salary certificate, stealing company’s letterhead etc. and all the charges were proved. Mr. X raised an industrial dispute wherein the Labour Court modified the order to compulsory retirement with effect from the date of termination. Being unsatisfied with the award of the Hon’ble Labour Court, the management moved before the Hon’ble High Court and filed a writ petition. The Hon’ble High Court set aside the award of the Labour Court and held that once the management has lost confidence in its employee the order of punishment becomes immune from challenge. Hence, the termination of an employee is valid when the management has lost confidence in him.

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