Government Need Not Adjudicate If Employee Is 'Workman' Before Referring Dispute To Labour Court: Gujarat High Court

"Whether Highly Paid Supervisor Is A 'Workman' Under ID Act Must Be Adjudicated By Labour Court, Not Government" Gujarat High Court, in a significant ruling dated April 2, 2026, held that the appropriate Government is not required to adjudicate whether an employee qualifies as a 'workman' before referring an industrial dispute to the Labour Court.

A bench of Justice Bhargav D. Karia and Justice L.S. Pirzada observed that deciding an employee's status falls entirely within the adjudicatory domain of the Labour Court, as the Government only performs an administrative function at the reference stage.

The dispute arose when Sun Pharmaceutical Industries Ltd relieved a Senior Executive, claiming he had voluntarily resigned and accepted his full and final settlement of over four lakh rupees. The employee contested the resignation, alleging wrongful termination, and approached the Assistant Labour Commissioner. The Commissioner, acting as the appropriate Government, referred the matter to the Labour Court for adjudication under the Industrial Disputes Act, 1947. Sun Pharma challenged this reference order before the High Court, and following a Single Judge's dismissal, preferred the present Letters Patent Appeal.

The primary question before the court was whether the appropriate Government must determine if an employee is a 'workman' under Section 2(s) of the Industrial Disputes Act before making a reference. The court was also called upon to determine whether the Government is mandated to record written reasons while referring an industrial dispute to the Labour Court under Section 10(1) of the Act.

Scope Of Government's Power Under Section 10(1)

The bench noted that under Section 10(1) of the Industrial Disputes Act (ID Act), the appropriate Government is merely required to form an opinion on whether an industrial dispute exists or is apprehended. The court emphasized that discharging this duty is strictly an administrative function and not a judicial or quasi-judicial one. By referencing the Supreme Court's mandate in the Telco Convoy Drivers Mazdoor Sangh case, the bench clarified that the Government must absolutely refrain from entering the adjudicatory domain.

Determining 'Workman' Status Is A Judicial Function

Sun Pharma strongly contended that the employee, drawing a salary of Rs. 76,268 per month as a Senior Executive, was employed in a supervisory capacity and thus excluded from the definition of a 'workman' under Section 2(s) of the ID Act. Rejecting the plea to quash the reference on this ground, the court ruled that ascertaining the actual existence of an employer-employee relationship requires a factual inquiry. The bench observed that the Assistant Labour Commissioner rightfully avoided recording findings on the merits of this relationship.

"to decide the merits as to whether respondent no.3 is a ‘workman’ or not, falls within the domain of adjudication on merits by the Labour Court."

No Requirement To Record Reasons For Making Reference

The appellant company also argued that the Government failed to record reasons while making the order of reference, demonstrating a severe non-application of mind. The court dismissed this argument by conducting a conjoint reading of Section 10(1) and Section 12(5) of the ID Act. Relying on the precedent set in Sultan Singh, the bench established that the Government is statutorily mandated to record and communicate reasons only when it refuses to make a reference, not when it allows one.

Effect Of Alleged Voluntary Resignation

Addressing the company's claim that the employee's voluntary resignation and acceptance of full settlement severed any legal relationship, the court categorized this as a heavily disputed question of fact. The bench noted that deciding whether the resignation was genuine or constituted wrongful termination goes to the very root of the legal dispute. Consequently, the employer remains at liberty to raise all these factual contentions, including the cessation of the master-servant relationship, before the Labour Court during trial.

Limited Scope Of Judicial Review

The court further elaborated on the scope of interference under Article 226 of the Constitution in matters of industrial reference. Distinguishing various precedents cited by the appellant, the bench noted that a writ court can only interfere if the futility of the reference is demonstrable from a bare reading of the order. Because determining the employee's managerial status and the validity of the resignation requires adducing evidence, the High Court held it cannot conduct this factual scrutiny in its writ jurisdiction.

The High Court ultimately dismissed the Letters Patent Appeal, upholding the Single Judge's decision to leave the factual disputes for the Labour Court's thorough determination. The court granted the appellant company full liberty to raise all contentions regarding the employee's supervisory status and the alleged voluntary resignation during the upcoming adjudicatory proceedings.

Date of Decision: 02 April 2026