Bombay High Court Directs Chalet Hotels To Pay ₹25 Lakh Compensation To Former Driver Terminated Without Inquiry

Bombay High Court Directs Chalet Hotels To Pay ₹25 Lakh Compensation To Former Driver Terminated Without Inquiry

The court held that an employer-employee relationship existed between the hotel and the driver despite payment of his salary by the contractor providing transport services to the hotel.

Urvi MahajaniUpdated: Monday, February 05, 2024, 07:57 PM IST
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The Bombay High Court has directed the Chalet Hotels Ltd, which operates a star category hotel under the brand name ‘Renaissance Hotel and Convention Centre’, to pay Rs25 lakh as a lump sum compensation to a former driver who was terminated in 2010 without disciplinary inquiry and retrenchment compensation. 

The court held that an employer-employee relationship existed between the hotel and the driver despite payment of his salary by the contractor providing transport services to the hotel. Bhikan Deokar was initially appointed by the hotel as a driver in February 2002 for a year. The hotel had control over his work due to the authority to dismiss and take disciplinary action. 

Court's observations

“In my view, therefore no serious error can be traced in the finding recorded by the Labour Court that there existed an employer-employee relationship between the Hotel and the workman,” Justice Sandeep Marne observed on January 30. 

The HC was hearing appeals filed by the hotel and Deokar challenging the order of the Labour a court which had directed Deokar’s  reinstatement with 50% backwages. Hotel contended that since Deokar was not its employee,  it cannot be directed to reinstate him. Deokar challenged the order seeking 100% backwage. 

The high court relied on six parameters, as laid down by the Supreme Court, to determine the employer-employee relationship — initial appointment, salary payment, authority to dismiss, disciplinary action, continuity of service, and extent of control.

Details of case

Chalet Hotels engages third-party vendors for transportation services for its patrons. Deokar served as a driver for these transportation services. He was initially hired by Chalet hotel in February 2002 as a direct employee. Then worked through various contractors. He services were  terminated on December 28, 2010 by contractor M/s. Orix Auto Infrastructure Services Ltd. which led to the dispute. 

On January 29, 2019, the labour court set aside Deokar’s termination and directed that be be reinstated with 50% back wages. Both the parties challenged this befor the HC. 

Justice Marne noted that Deokar continued in service of the hotel without a break despite changes in contractors, satisfying the continuity of service test. Deokar's initial appointment was by the hotel, not the contractor, Justice Marne held. 

Besides, the court said that the hotel had issued two warning letter during contractual employment indicating  disciplinary action, supervision, and control over the Workman's activities. Thus, except for the test of actual payment of salary, all other tests prescribed by the Apex Court are satisfied. 

The court, however , said that 100% backwages were not warranted as, considering Deokar's admission of earning wages as a “Badli” Driver. 

Considering that 13 years have lapsed since Deokar’s termination and the “unsavoury relationship”  between the parties, the court awarded a lumpsum compensation of Rs25 lakh as full and final settlement.

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