Telangana High Court Quashes Labour Authority Order Asking Cognizant To Pay Sacked Employee

The Telangana High Court quashed an order asking Cognizant Technology Solutions India Pvt. Ltd. to pay allowances to a terminated employee, ruling that the labour authority has no jurisdiction in such cases involving information technology firms.

In 2013, Cognizant had terminated a manager, who challenged the move at the appellate authority under the Shops and Establishments Act. The labour authority directed the company to pay him allowances from the date of termination till the inquiry was completed in 2017, holding that the probe wasn’t conducted properly and the employee wasn’t given an opportunity to present his case.

Cognizant filed a writ petition under Article 226 of the Constitution in the Telangana High Court, challenging the order passed under the Telangana Shops and Establishment Act.

A bench comprising Justice P Naveen Rao observed that the then Andhra Pradesh government had exempted companies in the information technology sector from the purview of the law, including the provisions regulating termination of an employee. As such, the authority had no jurisdiction in this case, the court said.

The court, however, noted that it did not decide the matter on merits.

Employment in India is governed under various laws passed by the central and state governments, including the Shops and Establishment Acts, to regulate employment in the private sector. But states including Karnataka, Andhra Pradesh, Telangana and Maharashtra have exempted IT sector from its purview.

Cognizant’s Arguments

CR Sridharan, senior counsel for Cognizant, challenged the appellate authority’s order arguing:

• The terminated employee was drawing remuneration beyond the thresholds prescribed under the law and was not an ‘employee’ as defined in the act.
• The appellate authority lacked jurisdiction against the company as it was exempted from the purview of provisions of the Telangana S&E Act.
• Cognizant was protected under the exemption notification released by the Andhra Pradesh government in 2002.

Employee’s Argument

The counsel representing the employee argued:

• Cognizant was not entitled to claim exemption as it was a real estate company.
• The law requires a company to follow the prescribed procedure which the company failed to do.

Court’s View

The court quashed the order passed by the appellate authority saying:

• Decision to terminate an employee is outside the purview of the appellate authority’s powers under the law.
• The constituent documents of Cognizant clearly indicate that it is a company in the Information technology sector, entitling it to protection under the exemption notification.