Jodhpur: The Rajasthan High Court has held that an employee cannot be deprived of a regular pay scale without being given an opportunity of hearing as such action has civil consequences.
A Division Bench of Chief Justice Sanjay K. Agrawal and Justice Munnuri Laxman dismissed four appeals filed by Banswara Kray Vikray Sahakari Samiti Ltd. against employees whose regular pay scales were withdrawn following an audit.
The employees were initially working as LDCs on a fixed salary of ₹12,000 per month. In May 2013, the Society appointed them against regular posts and granted them the applicable regular pay scale instead of the fixed ₹12,000
However, after an audit in February 2018 found their appointments irregular, the Society withdrew the regular pay scale and brought their salary back to ₹12,000 per month. The employees challenged this action and filed a plea stating that their pay was reduced without notice or an opportunity to be heard.
The Single Judge accepted their plea and set aside the order reducing their pay scales, holding that such a reduction had civil consequences and therefore required compliance with the principles of natural justice.
HC: Pay Cannot Be Cut Without Giving Employee a Chance to Respond
Before the Division Bench, the Society stated that the appointments had resulted from irregularities allegedly committed by its then Manager, against whom disciplinary action was later initiated following the audit.
The Society also contended that withdrawing the regular pay scales merely restored the employees to their earlier position and, therefore, no separate hearing was necessary.
The employees relied on a Supreme Court ruling, which held that re-fixation of pay resulting in financial loss cannot be done without following principles of natural justice.
The Division Bench observed that “Whenever the pay of an employee is reduced, such reduction entails civil consequences” s and the affected employee must be given an opportunity of hearing before such reduction.
Finding that the pay reduction violated natural justice, the Bench upheld the Single Judge’s order and dismissed all the concerned appeals.