Auditing the Employee Suspension & Payment of "Subsistence Allowance" In BRSR Report - A Case Study of HR Practice From Hindustan Unilever Ltd Leading To Human Right Violation.

HR Practice - Human Right Violation - HR Practice  On "Subsistence Allowance". 

* Birendra K Jha                                                                                                                                                                                 Certified Social Auditor; Practitioner Social Impact Assessment Audit; Practitioner BRSR Audit. EMail: birendrajha03@yahoo.com

 

The Hindustan Unilever Ltd ( HUL ) is the top ten SEBI listed entity with a Market Capital of  ₹ 5,63,174 Cr. The shares are listed at Bombay Stock Exchange and National Stock Exchange. The HUL is binded to submit the Third Party BRSR's Independent  Audit covering HR Practices under Principle 3 and 5 to the stock exchange.

Non payment of "Subsistence Allowance" is poor HR Practice and violates the Human Right protection available to the employee, as it contradicts the Labour Law. 

A Case is given from the  Hindustan Unilever Ltd ( HUL ). The Hindustan Unilever Ltd ( HUL ) is the top ten SEBI listed entity with a Market Capital of  ₹ 5,63,174 Cr. The shares are listed at Bombay Stock Exchange and National Stock Exchange. The HUL is binded to submit the Third Party BRSR's Independent  Audit covering HR Practices under Principle 3 and 5 to the stock exchange. Most of the reputed companies in India, do frequently poor HR Practices leading to  violation of the fundamental human Right. This is skill gap of the company. Social Auditors while auditing such poor track record company should must be on top watch and vigil condition. They should must invoke "Professional Skepticism". This one sample case study demonstrates, adequately  the plight of the HR Practices.       

Case Study- Hindustan Unilever Limited (HUL).

The Hindustan Unilever Limited (HUL), previously known as Hindustan Lever, has past history of several labor law violations in India, including failure to pay subsistence allowance, allegations of failing to provide full salaries during lockdown or case involving dismissal and reinstatement of worker. These issues have led to strikes, legal disputes, and industrial unrest. The HUL's  Nabha factory went on strike after the company allegedly failed to provide full salaries during the lockdown,   which was declared illegal by the Labour Department  under the Industrial Dispute Act. Similarly, in a case involving a worker who displayed a canteen item on the Union notice board, was dismissed. The Labour Court however directed reinstatement with continuity of service. The management's at the other side was claiming  reputational damage.  The HUL failed to apply mind there is proper legal procedure of dismissal. That was not applied. 

Natubhai Mohanlal Patel was an employee working with Hindustan Unilever Limited at its  Daman Detergents Factory, Survey No.34, Silver Industrial Estate, Village Bhimpore, Daman. The Management on some ground suspended the employee Natubhai Mohanlal Patel. The Company provided following structured order: 

“Your suspension pending enquiry will continue till the enquiry is completed and the decision is made thereupon. You are advised to report at the factory gate everyday at 11.00 a.m. and mark your attendance in the register provided for this purpose. Please note that in case you fail to mark your attendance, you will be treated as absent for the day and no subsistence allowance will be payable to you for that day.”

The Suspension Order provided above is the point of attraction here, where the Order is defective. Employee under suspension can not be forced "to  report at the factory gate everyday at 11.00 a.m. and mark the attendance in the register". This is harsh and illegal. Natubhai Mohanlal Patel didn't turned up at factory gate for recording attendance. On this ground Management ceased the subsistence allowance.  Consequently Natubhai Patel was terminated. Before termination of service whether Natubhai Mohanlal Patel was provided one opportunity of defence reply under "Natural Justice? This is doubtful. Further Natubhai Mohanlal Patel was not provided subsistence allowance at the time of full and final clearance.  

The Management failed to understand  that any  statutory benefit granted to the workman under the Section 10(A) of the Industrial Employment (Standing Orders) Act, 1946 or recent Wage Code which addresses the payment of wages during suspension  cannot be permitted to be curtailed by the Model Standing Order or the Certified Standing Order as the Act is superior to any subordinate legislation. A similar view has been taken by a Division Bench of the Patna High Court in the case of Secretary, Bihar State Electricity Supply Workers, Union v. Presiding Officer, Industrial Tribunal, [1995 L. & I.C. 2752]. 

In the case of Manoj Kumar Panda Vs. Orrissa Air Products Ltd., the Division Bench of the Orissa High Court again in a similarly placed case held that as per the provisions of Section 10(A) of the said Act read with clause 14(4)(b) and (e) of the Central Rules, 1946 there is no provision or requirement for marking of attendance at the factory gate during the period of suspension.

In  Jagdamba Prasad Shukla Vs. State of U.P. and Ors. the Hon'ble Supreme Court of India has held that payment of subsistence allowance in accordance with the rules in a case of suspension is not a bounty but a right and the employee is entitled to be paid the subsistence allowance. The Hon'ble Supreme Court of India in  Paragraph Nos. 8 of this  decision set the ruling law of India as  herein under:-

"8. The payment of subsistence allowance, in accordance with the Rules, to an employee under suspension is not a bounty. It is a right. An employee is entitled to be paid the subsistence allowance. No justifiable ground has been made out for nonpayment of the subsistence allowance all through the period of suspension i.e. from suspension till removal. One of the reasons for not appearing in enquiry as intimated to the authorities was the financial crunch on account of non-payment of subsistence allowance and the other was the illness of the appellant. The appellant in reply to show cause notice stated that even if he was to appear in enquiry against medical advice, he was unable to appear for want of funds on account of non-payment of subsistence allowance. It is a clear case of breach of principles of natural justice on account of the denial of reasonable opportunity to the appellant to defend himself in the departmental enquiry. Thus, the departmental enquiry and the consequent order of removal from service are quashed.”

Thus,  non-payment of Subsistence Allowance during Suspension  is  illegal. This is unfair, unjust and malafide condition on the part of the HUL Ltd. This is contrary to the provisions of Section 10(A) of the Industrial Employment (Standing Orders) Act. Violation of this Labour Law ceases the fundamental Human Right of the employee. 

Conclusion: 

Mr. Natubhai Patel, the employee of our study won the case. The Bombay High Court rejected and quashed the malafide order of the UAL. The Hon'ble Court granted the  subsistence allowance with interest. 

We hope the HUL shall take necessary corrective measures and uphold the law of the land. In entire cases of suspension,  the company shall pay immediately to its workmen the subsistence allowance, wherever unpaid. Such corrective measure shall drive change. This is the ultimate responsibility of the Social Auditor to drive that change. For this purpose the SEBI has endorsed the Third Party HR Audit for the  BRSR reporting.