Employment contract establishes workplace responsibilities between employer and employee. It constitutes numerous rights attributable to employees (in terms of salary, bonus, house accommodation, Leave and Maternity benefits, perks, retirements benefits) by employer of the organization and the obligations on part of employees to maintain confidentiality pertaining to clients information, trade secrets, hold accountability of work performed and the job role assigned. This workplace relationship between employers and employees have always been in constant state of evolution so that nature of dispute arises due to diversity in the interests that should be resolved speedily.
Employment disputes often arise due to conflicts over contractual obligations, wages, termination, and workplace treatment. Following our various disputes that arise due to non-adherence of workplace policies by employer to avoid litigation disputes before hand:
Wage and Payment Disputes: As per section 5 of payment of wages act, 1936, mandates that the wages of every person employed in any railway, factory or industrial or other establishment shall be paid before expiry of the seventh day. Any unauthorized deductions from wages must be as per said act. Further, Section 3 of Minimum wages act, 1948, states that the appropriate government shall fix minimum rates of wages payable to employees employed in an employment specified in Part I or Part II of the schedule. Failure to comply the provisions of these acts can lead to legal implications. Any overtime disputes may occur when employees are not paid for additional hours worked under the Factories Act, of 1948.
Unfair Dismissal & Termination Disputes: The Industrial Disputes Act, of 1947, lays down legal provisions for resolving issues regarding non-payment or delays in wages, dismissals of workers, and wage condition.
In Dushyant Janbandhu v. Hyundai Autoever India (P) Ltd., 2024 SCC OnLine SC 3691, the Supreme Court ruled that wage disputes and termination legality fall under the jurisdiction of the Payment of Wages Act, 1936, making them non-arbitrable. The employer was penalized with a ₹5 lakh cost for indecently dragging the matter to arbitration without adhering to proper termination procedures.
In Neetu Bala v. Union of India, the Court held that denying appointment due to pregnancy was arbitrary, illegal, and violative of Articles 14 and 16 of the Constitution. It reaffirmed that pregnancy is not a disability but a natural consequence of marriage and emphasizing protection against discrimination in employment.
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https://indiankanoon.org/doc/172049020/
https://indiankanoon.org/doc/83563697/
Contractual Disputes in Labor Contracts: Disputes in employment agreements often arise from breaches related to non-disclosure, confidentiality, or non-compete clauses. As per section 27 of the Indian Contract Act, 1872, any agreement restraining a lawful profession, trade, or business is void, except for limited statutory exceptions. This clause restricts an individual from starting a competing business, taking up employment, or engaging with a competitor.
Indian courts have consistently refused to enforce non-compete clauses. In Niranjan Shankar Golikari v. The Century Spinning & Mfg Co., the Supreme Court invalidated non-compete clause preventing a supervisor from joining a competitor. Similarly, in percept D’Mark (India) Pvt Ltd v. Zaheer Khan, the Court refused to restrict the cricketer from switching companies post-contract. These rulings set out precedent against enforcing this clause.
In Swati Priyadarshini v. State of Madhya Pradesh, the Supreme Court reinstated that an employee whose contract was not renewed due to any alleged misconduct or lead to termination for stigmatic reasons requires a proper inquiry, reinforcing procedural fairness in employment disputes. This mentioned ruling underscores the significance of adhering to the principles of natural justice and showcase the essence of conducting proper inquiries before taking disciplinary actions against employees.
Workplace Harassment & Discrimination Claims: The employment contract is nowadays outlining the organizations commitment to prevent and addressing sexual harassment complaints (covered under the POSH Act, 2013 in India) or any kind of discriminatory practices in promotions, pay, or work assignments or hostile work environment complaints. Therefore, it essential to have ideal workplace polices in this regard.
In renowned case of Vishaka v. State of Rajasthan case (1997), seeking the enforcement of women’s fundamental rights under Articles 14, 19, and 21 of the Indian Constitution. In the absence of specific laws addressing sexual harassment at the workplace, the Supreme Court issued the vishakha guidelines, directing the government to establish legal measures to prevent such harassment. These guidelines are preventive measures that mandated employers to provide a protected working environment, to establish a complaints committee and ensure prompt redressal of such complaints.
Conclusion
In nutshell, we can conclude that employment disputes are an inevitable aspect of employment relationships. Employers must fulfill their contractual obligations to avoid disputes, while employees must adhere to workplace policies and contracts. Resolving such disputes efficiently through labor courts, tribunals, or alternative dispute resolution mechanisms ensures industrial peace and protects both parties’ rights. Upscale Legal Team assists their clients by offering their legal opinion on workplace policies, handling disciplinary actions legally. Our firm offers legal support in drafting and reviewing of employment contract that complies with relevant employment and labour laws and protects the rights of both parties. Our legal team is equipped to mediate between employees and employers to reach fair resolution outside court and provides litigation support, whenever needed. A fair legal framework and strict adherence to labor laws are essential to maintain a balanced employer-employee relationship; therefore we help businesses to navigate the compliances related to Factories Act, industrial Disputes Act, Indian Contract Act and Minimum wages act for smooth functioning of their operations. Our team comprises of experienced and seasoned lawyers who provide skilled representation of matters in court, defending the client’s interests and strives for favorable outcomes.
