Loss of Confidence Must Be Proven, Not Presumed: Punjab & Haryana High Court Enhances Back Wages for Workman Wrongfully Terminated

"Once Termination Is Found Illegal, Denial of Substantial Back Wages Amounts to Penalising the Workman for the Employer’s Wrong", In a significant ruling reinforcing settled principles of labour jurisprudence, the Punjab and Haryana High Court, on November 19, 2025, held that unsubstantiated allegations of "loss of confidence" cannot justify termination, and where such termination is declared illegal, reinstatement must ordinarily be accompanied by meaningful back wages. In Manmohan Singh Bisht v. The Industrial Tribunal-cum-Labour Court-III, Faridabad and Another, Justice Kuldeep Tiwari allowed the workman’s writ petition in part by enhancing back wages from 25% to 50%, holding the Tribunal’s partial denial of wages unjustified in the face of the employer’s failure to establish any valid cause for dismissal.

The Court ruled:

“Considering the three years of service rendered by the workman, and the fact that the reason for termination of his services was found to be fallacious, this Court deems it appropriate to enhance back wages from 25% to 50% from the date of termination until reinstatement.”

"Loss of Confidence Must Be Justified Through Evidence; It Cannot Be a Cloak for Arbitrary Termination"

The dispute arose after the Industrial Tribunal at Faridabad, in its award dated March 20, 2017, directed the reinstatement of the petitioner-workman, Manmohan Singh Bisht, holding that his termination on the alleged ground of “loss of confidence” was unsupported by any material evidence. The Tribunal, however, awarded only 25% back wages, calculated from the date of termination until reinstatement.

Contesting the limited wage relief, the workman filed a writ petition under Articles 226 and 227 of the Constitution, urging that he was entitled to full back wages in light of the Tribunal’s clear finding that the termination was illegal and devoid of any proven misconduct.

While the Court refused to grant 100% back wages, it agreed that the award of mere 25% was disproportionately low, especially when no evidence was led by the employer to show gainful employment or misconduct on the workman's part.

"There Is No Rule of Thumb – But Principles of Equity Must Prevail"

Justice Tiwari thoroughly examined precedents from the Supreme Court, notably Deepali Gundu Surwase v. Kranti Junior Adhyapak Mahavidyalaya and Hindustan Tin Works Pvt. Ltd. v. Employees, to reiterate that while full back wages are not an automatic consequence of reinstatement, their award cannot be arbitrarily curtailed where the employer is entirely at fault.

“Ordinarily, therefore, a workman whose service has been illegally terminated would be entitled to full back wages, except to the extent he was gainfully employed during the enforced idleness. That is the normal rule,” the Court quoted from Hindustan Tin Works.

Importantly, the Court reminded that the burden to prove gainful employment lies on the employer, and in its absence, denial of back wages is unsustainable.

“The management failed to establish bona fide and reasonable grounds for loss of confidence… The workman rendered three years of service. The Tribunal should have determined his entitlement to back wages in accordance with settled principles,” the Court observed.

Reinstatement Alone Is Not a Complete Remedy – Partial Wages Without Fault Is Unjust

In a notable observation, the Court clarified that simply reinstating a wrongfully terminated employee without adequately compensating the wage loss during the enforced idleness period penalises the employee for no fault of theirs, especially when the employer alone was the wrongdoer.

“In cases of wrongful/illegal termination of service, the wrongdoer is the employer and the sufferer is the employee/workman… There is no justification to relieve the employer of the burden to pay dues in the form of back wages,” the Court noted, quoting from Deepali Gundu Surwase.

While the management argued that no plea or evidence was led by the workman to show he was unemployed, the Court found this argument weak in the absence of any positive plea or evidence from the employer demonstrating that the workman was, in fact, gainfully employed.

Final Directions: Back Wages Enhanced; Interest on Delay

Modifying the Tribunal’s award, the High Court directed that the petitioner be paid 50% of the last drawn wages as back wages from the date of termination until reinstatement. Furthermore, the amount is to be paid within four weeks, failing which interest at 9% per annum will accrue.

“Respondent No.2/management is directed to remit the aforesaid amount to the petitioner/workman within four weeks… failing which the petitioner shall be entitled to 9% interest per annum,” the Court ordered.

The Court, however, took note that after reinstatement, the workman’s services were terminated again, which he chose not to challenge. As a result, the enhanced back wages pertain only to the earlier period of illegal termination.

No Free Pass for Employers in Cases of Arbitrary Termination

The judgment is a timely reminder that termination based on vague grounds like “loss of confidence” will not withstand judicial scrutiny unless substantiated by credible evidence, and that denial of wages to the aggrieved employee without cause amounts to compounding injustice.

“The approach of the Tribunal should not be rigid or mechanical but flexible and realistic… Justice, equity and good conscience must inform every adjudication of back wages,” the Court concluded.

Date of Decision: November 19, 2025