The apex court has ruled that a government servant reinstated to his post will be entitled to all the “back benefits” but an employee who had started some other “gainful” job or business during the period of his dismissal may face partial withholding of the benefits.
"In case, the dismissal/removal of a civil servant is declared illegal for a defect in disciplinary proceedings without attending to the merits of the case, the entitlement to back benefits may be put off till the inquiry is conducted in the matter finally determining the fault of the civil servant.
“In case, where there is some fault of the civil servant, including a situation where concession of reinstatement is extended to the civil servant while applying leniency or compassion or proportionality as standard and where penalty is modified but not wiped off in a way that the civil servant is restored to his position, the back benefits will be paid as determined by the authority/court.
“We, however, reiterate that “gainful employment/profitable business” creates an overarching exception that would cover all cases involving the question of back benefits," said a 13-page judgment authored by Justice Syed Mansoor Ali Shah.
Justice Shah was part of a division bench also comprising Manzoor Ahmad Malik that looked into the scope of entitlement of a civil servant to back benefits on his reinstatement after his wrongful removal or dismissal is set aside or the penalty imposed on him is set aside.
The bench also considered the treatment of the period spent by a civil servant away from duty due to dismissal from service or absence from duty and the purpose and meaning of the terms leave without pay or leave of the kind due granted to a civil servant.
Justice Shah noted that an employee on reinstatement on merits cannot be deprived of back benefits.
The judgment said in the past, the concept of arrears of pay was dealt with by Fundamental Rule 54 (FR) and the Civil Service Rule (Punjab) 7.3 (CSR) issued by the federal government and the Punjab government, respectively.
"Any such deprivation would be against the constitutional rights guaranteed to an employee. Besides, CSR 7.3 (a) also points in this direction.”
The court noted that it is important to structure the discretion to be exercised by the authority or court in granting arrears of pay after the order of dismissal, removal or reduction in rank has been set aside.
“This discretion is to be structured keeping in mind the constitutional provisions discussed above, the wisdom handed down by the jurisprudence evolved till date and the administrative and financial oversight envisaged under the FR, the CSR and Esta Code.”
The court noted that reinstatement or restoration of an employee to the post may be purely on merits; on technical grounds without touching the actual merits of the case and on the ground of leniency where the actual order is either converted into a lesser penalty or totally set aside.
"We also feel inclined to underscore that a civil servant cannot be burdened with the loss of service benefits without attributing any charge to him," it said.
The court said appellate authorities, without saying a word about the charge “often, as in two of these petitions” reinstate a civil servant taking a lenient view or on compassionate ground or on the ground of proportionality.
"This view usually becomes the ground to deny back benefits to the reinstated civil servant. It is underlined for the sake of clarity that the matter of ‘leniency’ or ‘compassion’ or ‘proportionality’ does not erode the charge rather it does not consider the award of penalty to be appropriate in the case.
“It may so happen that the charge stands established yet the authority or the court, applying leniency or compassion or proportionality as standard, feels inclined to extend concession of reinstatement to the civil servant.
“Notably the civil servant in such a case is not reinstated unconditionally and, therefore, he may be denied a portion of pay – while maintaining a proportion between the gravity of the fault of the civil servant and special/extenuating circumstances of the case – he would otherwise get on reinstatement.
“It would be in step with the second proviso to section 16 of the Act and would also be consistent with the spirit of FR 54(b) and CSR 7.3(b),” the judgment said.
It said if an employee is reinstated, the authority or the court needs to clearly state that though the charge ascribed to the employee stood proved, concession is being shown to him to avoid the rigors of major penalty, which would otherwise be unwarranted in view of peculiar circumstances of the case.
"In case of reinstatement or restoration to a post on merits, the employee is entitled to full back benefits and there is no discontinuity of service, thus the question of intervening period does not arise in such a case.
“The discretion under the second proviso to section 16 of the Act is to be exercised in favour of the employee by granting him all the back benefits."
Discrimination
The court noted that reinstating an employee but not allowing him to enjoy the same terms and conditions of service as his colleagues is also discriminatory under Article 25.
“All this snowballs into offending the right to dignity (Article 14) of an employee for being treated as a lesser employee in spite of being reinstated or restored into service," said the judgment.
The court said it is important to underline that the term back benefits has not been mentioned in the service laws of Punjab or Pakistan. However, the term has a wide usage in the sub-continental jurisprudence, including ours, for a longtime.
“According to the Black’s Law Dictionary, Back Pay is the salary that an employee should have received but did not because of an employer’s unlawful action. The Back Pay Award is a judicial decision that an employee or ex-employee is entitled to an accrued but uncollected salary or benefits.”
It said the purpose of a Back Pay Award is to make the employee whole, ie, restore the economic status quo that would have been obtained but for the wrongdoing on the part of the employer.
The order said back pay is a compensation for the tangible economic loss resulting from an unlawful employment practice. “Back pay largely translates into back benefits under our jurisprudence. Back benefits are, therefore, retroactive payments," said the judgment.
The court noted that the “concept of reinstatement into service with original seniority and back benefits” is based on the established principle of jurisprudence that “if an illegal action/wrong is struck down by the court, as a consequence, it is also to be ensured that no undue harm is caused to any individual due to such illegality/wrong or as a result of delay in the redress of his grievance.”
“If by virtue of a declaration given by the court a civil servant is to be treated as being still in service, he should also be given the consequential relief of the back benefits (including salary) for the period he was kept out of service as if he were actually performing duties.
“A civil servant once exonerated from the charges would stand restored in service as if he were never out of it and would be entitled to back benefit.”
The court also said where the order of dismissal, removal or reduction in rank is set aside unconditionally back benefits are to be paid necessarily.
"The grant of back benefits to an employee who has been illegally kept away from his employment is a rule and denial of service benefits to such reinstated employees is an exception.
“When a civil servant is reinstated in service and his dismissal from service is held to be illegal and for no fault of his, then his reinstatement in service would mean that he has always been in service and as a consequence be paid salary from the day he was illegally removed or dismissed from service.
"One of the exceptions of not granting full back benefits is that if the reinstated employee had accepted another employment or engaged in any profitable business during the intervening period; in such a case, the said amount would be set off against the salary."
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