MODULE 2

DISCIPLINE IN INDUSTRY

Discipline in Industry
1. Doctrine of hire and fire - History of management's prerogative
2. Fairness in disciplinary process
3. Punishment for misconduct - Meaning of misconduct
4. Domestic enquiry
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Misconduct-and-Disciplinary-Enquiry.pdf

Industrial Discipline
Meaning:
Industrial Discipline refers to orderly working of the employees of an industrial undertaking
in accordance with established rules, regulations and convention. In an organization,
discipline is the orderly conduct of its members.

Doctrine of Hire and Fire

 Early labour laws were enacted to safeguard the interest of employers. It was
governed by the doctrine of laissez faire.
 Modern labour legislation, on the other hand, aims at protecting workers against
exploitation by employers.
 The advent of doctrine of welfare state is based on the notion of progressive social
philosophy which has rendered the old doctrine of laissez faire obsolete.
 The Doctrine of Hire and Fire as well as theory of Supply and Demand found free
scope under the old doctrine of laissez faire no longer holds good.
 According to the Doctrine of Hire and Fire, an employer is free to remove the
employee, whenever he/she wants, which is usually done on a discriminatory basis
and purely on the will of the employer.
 This is important from the view of the production as it increases the potential of
production, as everyone is competing for better production so that they can hired.
Hence, the production process keeps on getting better and better.
 There are reasonable restrictions also on the part of employer at times. Usually while
dealing with a labour class population such restrictions are not seen.
 This theory is seen bad as an employer cannot remove an employee merely based on
discrimination which the employer assumes to be a true fact and hence justify
discrimination.
 The regulations are meant to enhance the welfare of workers. The following are some
of the labour law that protect the workers from the hire and fire theory:
The Industrial Disputes Act, 1947: The law guides the hiring and firing rules of the
industrial sector. It requires that any company employing more than 100 workers
needs to get permission from the government before laying off workers which is
rarely granted. In the event of dismissal, a worker has up to 3 years to file an unfair
dismissal claim.

Misconduct
Meaning:
The expression misconduct as not been defined in any industrial legislation. However,
majorly misconduct can be categorized into three groups:
 Misconduct relating to work
 Misconduct relating to discipline
 Misconduct relating to integrity
Under the Model Standing Orders of the Industrial Employment (Standing Orders) Act, 1946,
the following shall be deemed to be misconduct:
 Wilful subordination or disobedience, whether alone or in combination with other, to
any lawful and reasonable order of a superior
 Theft, fraud or dishonesty in connection with the employer’s business or property
 Wilful damage to or loss of employer’s goods or property
 Taking or giving bribes or any illegal gratification
 Habitual absence without leave or absence without leave for more than 10 days
 Habitual late attendance
 Habitual breach of any law applicable to the establishment
 Riotous or disorderly behaviour during working hours at the establishment or any act
subversive of discipline
 Habitual negligence or neglect of work
 Frequent repetition of any act or omission for which a fine may be imposed to a
maximum of 2 percent of the wages in a month
 Striking work or inciting other to strike work in contravention of the provisions of any
law or rule having the force of law

Domestic Enquiry
 Domestic enquiry is like a trial in a court, but with some differences.
 In a court trial, crimes against the State or Society are addressed, while domestic
enquiry deals with offenses against the establishment, such as misconduct.
 The punishments for misconduct are based on the Standing Orders/Companies’ Rules
and Regulations that apply to the workplace.
 Court trials follow the Criminal Procedure Code, while domestic enquiries follow the
principles of “Natural Justice”
 Natural Justice refers to a fair and unbiased process that respects the rights of the
individuals involved in the enquiry.
 Domestic enquiry is not mandated by the Industrial Disputes Act or other substantive
laws like the Factories Act or Mines Act.
 However, it is included in the standing orders that are created under the Industrial
Employment (Standing Orders) Act.
 Domestic enquiry is a process outlined in these standing orders to address issues
related to misconduct and violations of company rules and regulations.
 While it is not a legal requirement, many establishments choose to conduct domestic
enquiries to ensure a fair and just resolution of internal matters.

Basic Principles for Domestic Enquiry

The Principle of Natural Justice:
 A domestic enquiry is a quasi-judicial proceeding and an essential requirement laid to
carry out a domestic enquiry is that the Principle of Natural Justice must be followed.
 These are a basic of the principles of Justice which are founded on Equity and Reason and
without which no Justice can be done.
 It is a matter of substance and not of form.
 It includes two basic principles of Equity:
 Nemo Judex in Propria cause sua: No one shall be a judge in his own case and he
must not have any personal interest in the case
 Audi alterem partem: No decision can be given against a party without a reasonable
hearing from both the parties.
 The management of the industrial establishments at all times must satisfy this principle to
maintain a neutral attitude towards the workmen and the employees at a workplace.
Right to make representation
The delinquent employee must be informed about the charges levelled against him and shall
be provided with an opportunity to be heard so he can refute them and establish his
innocence, as these are his rights which cannot be denied by the employer or the organisation.
He must be given an occasion to cross-examine the witnesses in his defence and evidence at
the enquiry should be adduced in his presence. If proven guilty, the punishment awarded,
should be in proportion to the misconduct committed.
These principles of natural justice are specified in Sections 2(b), 5(2), 10A (2) and 13A of
The Industrial Employment (Standing Orders) Act, 1946.6

Process of Domestic Enquiry

1. Fact-Finding Enquiry or Preliminary Enquiry:
 A preliminary investigation is conducted to determine if there is any evidence
of misconduct by an employee.
 The preliminary investigation is important because it helps decide if further
action, such as a formal disciplinary inquiry, is necessary.
 The purpose of the preliminary investigation is to gather enough information
to frame a charge against the employee and satisfy the employer.
 The employee does not need to be present during the preliminary
investigation.
 The complaint can be made by another employee or by the employee's
supervisor.
 The need for a preliminary investigation depends on the nature and severity of
the offense.
 The statements collected during the preliminary investigation are not directly
used in the formal inquiry unless the management presents them as evidence.
 If there are discrepancies between the statements given during the preliminary
investigation and the final inquiry, the inquiry officer may ask the witnesses
for clarification.
 According to a significant court ruling (Amulya Ratan Mukharjee Vs. Eastern
Railway, 1962), authorities must conduct a preliminary investigation or fact-
finding inquiry when they receive an employer's complaint. This informal
inquiry helps the authorities understand the facts of the case, determine if any
misconduct has occurred, and decide whether to proceed with a formal charge
against the employee.
2. Essentials of a fair enquiry: There are 3 principles governing the process for
conducting a domestic enquiry. They are:
 The service rules or the standing orders
 The method followed by courts of law
 The principles of natural justice
An enquiry cannot be initiated unless:
  The employee against whom charges are levelled must have clear information
and idea as to what accusations are alleged on him.
 The witnesses are examined ordinarily in the presence of the employee in
respect of the charges
 The employee is given a fair opportunity to examine witnesses including
himself in his defence if he so wishes on any relevant matter
 The enquiry officer records his findings with reason for the same in his report
3. Charge and Charge Sheet: A domestic enquiry begins when a charge sheet is
issued to the workman. The charge sheet bears all the details of the misconduct
such as the misconduct committed, the date and time of its commission and the
relevant section of the Standing Orders under which the misconduct falls.
The charge sheet must clearly set forth the charge and ask the delinquent to submit his
explanation within a reasonable time, i.e. within 24 or 48 hours depending on the
gravity of the misconduct. The employer is at the liberty to take disciplinary action for
the sake of disciple and proper order in his organization, but the question has to be
dealt in a reasonable manner and in accordance with common sense, if the kind of
misconduct committed has not been mentioned in the Standing Order.
Ingredients of a charge sheet:
 Name of the person charged
 Employee number
 Address
 Date, Time and Place of Occurrence
 Narration of the misconduct alleged
 Relevant clause and specific act of misconduct under the standing
orders/settlement
 Calling for an explanation within a stipulated time
 If the charge rests on a written report, a copy of that report to be enclosed.
Show Cause Notice:
After deciding the punishment for the misconduct proved against the Disciplinary
Authority should issue a show cause notice furnishing his order and proposing the
punishment and advising the employee to show cause why such a punishment should
not be awarded to him.
Service of the Charge Sheet:
 The Standing Orders provide rules on how to give the charge sheet to the
employee who has done something wrong.
 The charge sheet should normally be given directly to the employee, and we
should always get a written acknowledgement from them.
 If the employee is not present or refuses to take the charge sheet when given to
them, we should send it to their local and permanent address by registered
mail. We should also ask two witnesses to confirm their refusal.
 If the postal service returns the charge sheet, the employer should display it on
the notice board if there is a rule for that. If there is such a rule, it is also
necessary to publish it in a local newspaper that many people read, using the
regional language.
 Just displaying the charge sheet on the company notice board is not enough.
Representation of the charge sheeted employee:
 The enquiry may proceed ex-parte if the employee refuses to take part in the
enquiry after presenting himself or when he does not report for the enquiry in
spite of a notice being served on him.
  A charge-sheeted employee may be represented by co-worker or the
union/association executives and any request by the delinquent employee
seeking for assistance of a lawyer for representing his case, should be decided
by the enquiry officer and not by the management.
 If the enquiry officer is either a practising lawyer or legally trained person, a
full opportunity should be given to the delinquent employee to represent his
case through the lawyer.
4. Appointment of Enquiry Office:
 In the Saran Motors Pvt. Ltd. v. Vishwanathan case in 1964, it was decided that a
proper and authorized person should be appointed to conduct an internal
investigation into any complaints made against an employee.
 The person chosen to be the investigation officer can be someone from inside or
outside the company, as long as there are no rules or Standing Orders preventing
it.
 The investigation officer is responsible for explaining the investigation process
and the charges against the employee.
Suspension Pending Enquiry:
 When an employee is suspended by the employer while an investigation or inquiry
into misconduct is ongoing, the employer is required to provide the employee with
a subsistence allowance.
 The subsistence allowance is determined based on the Industrial Employment
(Standing Order) Act, 1946. For the first 90 days of suspension, the allowance is
50% of the employee's wages prior to the suspension. For the remaining period of
suspension, if the delay in completing the disciplinary proceedings is not the fault
of the employee, the allowance is increased to 75% of their wages.
 Suspension can occur when there are serious charges against an employee, and it
may be accompanied by serving them with a charge sheet.
 There are several circumstances that may warrant suspension, such as pending or
anticipated disciplinary proceedings, engaging in activities harmful to the state's
interests or security, involvement in criminal investigations or trials, or when the
employee's presence may impact discipline or public interest.
 If there is sufficient evidence from criminal or departmental proceedings
indicating the employee's guilt, suspension can be imposed, leading to conviction,
dismissal, or other consequences.
 The Industrial Employment (Standing Orders) Act, 1946 requires that the
suspended employee receives a subsistence allowance equal to half of their wages
for the first 90 days of suspension, and three-fourths of their wages for the
remaining period, as long as the delay in completing the disciplinary proceedings
is not caused by the employee's own behavior.
5. Consideration of explanation by employee:
After a charge sheet has been served on the accused workman may send his
explanation in either of the following ways:
 Admitting the charges and pleading for mercy
 Denying the charges in totality
 Requesting for more time to submit the explanation after inspection of certain
documents which is in possession of the management
 The employee may not submit the explanation at all
Actions for the above 4:
  If an employee admits to minor charges against them, a detailed investigation
may not be necessary. However, for serious misconduct, an investigation must
be conducted regardless of the employee's admission.
 When an employee denies the charges and claims they are false or motivated,
a proper investigation should be conducted before any punishment is given.
 If an employee has reasonable grounds and requests more time to provide their
explanation, an extension should be granted to avoid complications.
 If an employee fails to submit their explanation within the given time frame,
the management should take steps to conduct a thorough investigation.
Supply of relevant materials:
The enquiring authority may require documents in proof of charge of the alleged
misconduct. As per the Principles of Natural Justice, such copies of those documents
should be supplied to the delinquent workman. In the case of Meenglass Tea Estate v.
Workmen 1963, the SC held that the workman who is to answer to change must not
only know the accusation but also the testimony by which the accusation is supported.
Examination of Witnesses:
 In the Tata Engineering and Locomotive Co. Ltd. vs. S.C. Prasad case in 1969,
the Supreme Court provided some general rules for examining witnesses.
 According to the Supreme Court, if the employee denies the allegations
mentioned in the charge sheet during the internal investigation, it is the
responsibility of the management to prove those allegations.
 The employee should also be given a fair chance to present their own evidence
and support their defense during the investigation.
6. Final Report after the enquiry:
 The Enquiry Officer needs to create a detailed report that includes all the
findings from the investigation and submit it to the relevant authority for
deciding on any punishment, if necessary.
 When conducting the investigation, the Tribunals must follow the principles of
Natural Justice. If they do so, their decision cannot be challenged on the basis
that the procedure used was not the same as in a court of law or that the
Evidence Act's requirements for presenting evidence were not strictly
followed.
 If the Enquiry Officer fails to adhere to the principles of Natural Justice, such
as not giving the employee a fair opportunity to be heard, present evidence, or
cross-examine witnesses, or if the Officer is biased against the employee, the
investigation will be considered invalid.
7. Punishment:
 The management should determine the punishment for an employee based
solely on the investigation findings, the employee's past record, and the
seriousness of the misconduct.
 The punishment given to the employee should be communicated to them in
writing as soon as possible.
 The communication letter should include references to the charge sheet, the
investigation, the findings, and the effective date of the punishment.