Deputation of employees has been a practice widely used by employers across all sectors to meet various objectives. Some organisations depute employees for business requirements, whether to group companies or to its clients, while others view it as an opportunity for knowledge transfer to benefit themselves as well as their employees.
Regardless of the circumstances and objectives of deputation, it is important to understand the right manner in which deputation must be done. This becomes essential to ensure that the process of deputation and the related provisions in the contract between the employer and the deputee employee leave no room for ambiguity or dispute.
In a recent decision titled Ms. Sarita Singh vs. M/s Shree Infosoft Private Limited, [CA 346/2022 decided on 12.01.2022], Hon’ble the Supreme Court of India examined whether, on the facts of the case, an employee had been deputed, in the real sense of the term.
The employee was a software developer who joined the services of the company on terms of employment, including the stipulation that on return to India from any overseas deputation, she must serve the company for varying periods, depending on the length of deputation. In the event of failure to comply, the employee would be liable to repay the amount spent by the company on deputation, covering the cost of travel, insurance premium, per diem, visa fee and other associated expenses.
The employee was initially sent for a meeting to the US for a period of one week, subsequently extended to more than a month. Ticket and other expenses incidental to the visit were borne by the employer. The employee returned to India and reported for work on 21st September 2013.
Upon her return from the US, the employee worked with the company for some time and then resigned.
Having left the company, the employee received an advocate’s notice demanding payment of an amount described as “overseas deputation and salary for the notice period.”
The recovery suit, which the company filed, was decreed to the extent of the expenses undertaken by the Company towards the travel and stay of the employee to the US. The judgment was affirmed in first as well as second appeal, and the employee filed an appeal before the Supreme Court against the judgment of the High Court.
Deconstructing the clause relating to deputation, the Supreme Court observed as under:
“ . . . Significantly, while the terms and conditions of employment have been reduced to writing, there is no valid evidence on the basis of which it can be deduced that the appellant was sent on deputation overseas. On the contrary, it is the contention of the appellant that she was sent overseas for a business meeting. . . . There is no material evidence on the record to indicate that the appellant was sent on deputation. Deputation has a definite connotation in law…”
Earlier Judgments referred by the Supreme Court Bench:
For this, the Court relied upon a crucial observation in its earlier judgment titled State of Punjab v. Inder Singh (1997) 8 SCC 372, as hereunder:
“18. The concept of “deputation” is well understood in service law and has a recognized meaning . . . In simple words “deputation” means service outside the cadre or outside the parent department. Deputation is deputing or transferring an employee to a post outside his cadre, that is to say, to another department on a temporary basis. After the expiry period of deputation, the employee has to come back to his parent department to occupy the same position unless in the meanwhile he has earned a promotion in his parent department as per the Recruitment Rules. Whether the transfer is outside the normal field of deployment or not is decided by the authority who controls the service or post from which the employee is transferred. There can be no deputation without the consent of the person so deputed and he would, therefore, know his rights and privileges in the deputation post. The law on deputation and repatriation is quite settled as we have also seen in various judgments which we have referred to above…”
The court also emphasized upon the tripartite and consensual nature of deputation. For this, the Court took support from its earlier decision in Umapati Choudhary v. State of Bihar (1999) 4 SCC 659, as hereunder:
“8. Deputation can be aptly described as an assignment of an employee (commonly referred to as the deputationist) of one department or cadre or even an organization (commonly referred to as the parent department or lending authority) to another department or cadre or organization (commonly referred to as the borrowing authority). The necessity for sending on deputation arises in public interest to meet the exigencies of public service. The concept of deputation is consensual and involves a voluntary decision of the employer to lend the services of his employee and a corresponding acceptance of such services by the borrowing employer. It also involves the consent of the employee to go on deputation or not. In the case at hand, all the three conditions were fulfilled…”
In light of these, the Court observed as follows:
“Thus, a deputation involves a tripartite consensual agreement between the lending employer, borrowing employer and the employee. Specific rights and obligations would bind the parties and govern their conduct. A transient business visit without any written agreement detailing terms of deputation will not qualify as a deputation unless the respondent were to lead cogent evidence to indicate that the appellant was seconded to work overseas on deputation. This aspect of the case has completely been ignored by all the three courts below. The claim was not substantiated having regard to the plain terms of the contract.”
Key Takeaways
Albeit the instant judgment is delivered in the facts of the particular case, it does convey a significant and wider message to employers as to what deputation amounts to and how it must be carried out.
Deputation, essentially, at a minimum requires the following:
- The deputer’s consent to depute, the borrower’s consent to borrow
- Consent by the employee to be deputed, and
- Written agreement between the deputing employer, the borrowing employer, and the employee as to the terms of deputation.
The judgment makes it clear that mere provisioning for deputation by way of incorporation of a standalone clause in the Employment Agreement might not be sufficient to evidence deputation, in all cases. Therefore, as a matter of best practice, it is ideal that an employer appropriately factors in the above aspects, in order to mitigate risk in such matters.
2 thoughts on “Deputation: Understanding its Real Connotation and Right Practice”
Very interesting article, thanks dear Sunil. The true color of th deputation is entirely differrent. Both the central govt. and State goverment has the provisions in their service regulations providing for deputation of employees to outside the parent department. Certain types of work like public works, electricity work, health and medical servics is confined to respecstive department and statutory companies and it will be inevitable to get the specialized services from such departments on deputation basis which is also sometimes called as foreign services PW departmet officials work on deputation to Corporations, BDA, Slum Board, Universities etc. where specialized nature work is to be carried on for temparary period of 2-3 years. Engineers from electricity company may also be deputed to PW department, Metro railways etc., to execute specialzed work in which deputee is expertised.. Employees from State Accounts depart or Indian Audit & Accounts departments are under deputation service in many of the public sector undertakigs, zilla parishads, KSRTC, KPTCL etc. But all deputees holds lien of their posts and seniority in their parent department. Deputed officials also entitle to certian percentate of deputation allowaces.
In case of any disciplinary action or domestic enquiry is to to be instituted against deputees, the permission of his appointing/discipliary authorities is required, so also for impossing any penalty.
Thouh it is a matter of trio-consent in theory, it is the proragative of the appointed authority to finally decide of course for govt. or to govt. every thing is depending on the capacity and pressure of influences brought by the officials seeking deputation..
Time & again govt. makes voice that no deputation period shall more than 3 or 5 years. But in practice, even at the government secretariat including for ministers such deputed offiial continue to work till their retirement day also!
Coming to non-governmental organisaton, it is interesting to examine the deputation issue with the provision and prohibitions under the CLRA Act. Any estalishment can send its workers to other establishments as deputees for any period. Even group of establishments/industries indirectly support to crop up such deputing establishments to get services at comperatively cheaper cost outside the clutches of CLRA Act. The proposed code also for some estent appears to inclined to this which says that if a worker is the regular worker of the establishment lenting accord salary, increament etc., will not be a contract worker.( though there appears ambiguity while closely examining the definitiion of contract worker and contractor etc. in the code)
In spite of above availing specialized and expertised skill for temparary period or project wokrs, deputation system is required. Without exception, the public proscutors, munsiffs and civil judges also works on deputation in various foreign departments and organization. I remember the saying of Dr. Krishnamoorthy
an eminent IR personality and close friend of our Senior in his one of the address made in KEA program that ” if establishment wants temparary headache, avail and engage contract worker or else want permanent headache, have permanent worker”. Can we compare this with deputation service?
– B.Chandrashekhar Shetty,
On perusal of the facts of the case and the judgment of the Hon. Supreme Court, I am of the view, this is not the issue of deputation. There is no act of the foreign employer and the employer Shree Infosoft still controlling the employee and making payment of salary, even after she is sent to US. This is generally termed as an OOD(outside office duty) still under the control of the assigning employer under the terms & condition of the employment. As per the accepted conditions that in the event of any aberration of it, the emplooyee was liable to repay the amount spent by the company covering the cost of travel, visa, insurance premium and other associated expenses.
By the time the employee returned, there was a change in management and she is stated to subject to a sort of work harassment which made her to quit. She resigned and informed by the employer that her resignation was accepted and also intimated that the HRD would facilitate the exist proce. She got relieved from her duty by the management without asking her to pay for the breach of condition of employment by not continuing in the service for a period of six months after she returned (from deputation!) and also non payment of salary amount in lieu of notice period liable to be payable to the employer. THERE IS LAPSE BY THE HRD which should have asked for to fulfil the agreed conditions before her relief. It issued legal notice only subsequently to pay Rs.5,7,0000 which includes the salary for the notice period and the expenses incurred for her OOD to US and interest etc.
The contention of the appellent was that she was not deputed but sent for ‘business meeting’ as a part of her usual work. Her second defence that due to change in management she sufferred work harassment which made her to resign without without following notice period and hence not liable for payment to the employer. The court also conceded these points and allowed the appeal with cost on the respondent. The facts of the case appears to be outside the perview of deputation(which is OOD) though this term is enormously discussed in the order.
Truely, this judgment and facts of the case is a lesson to HR and legal persanalities dealing with employment law to be more cacious not only in framing rules but also to enforce it at right time.
Generally judgments are passed based on the records made available before it and the presentation of the facts how effecively made. When the leading Umadevi case judgment was delivered, every orgaizations irrespecive of whether it is government or non government organization blindly followed for many years. Only in the sebsquent cases when the provisions and powers of Industrial Dispute Act was argued, court felt this issue was not contended earlier and it is diluted in the future judgments. Even in the resent judgment pertaining to including or excluding of cetain allowances for coverage of EPF/ESI etc, the decision is rendered by the Hon. Courts on the documents produced before i a particular facts of the case, it is being generally adopted, though such allowances is essentially payable dependidng on the nature of work. The judge or the advocates are like an Artist, ” if the required good quality of stone is given, they create beatiful sculpture otherwise it depends on the quality of stone provided”. Documents and presentation is very important.
There are judgments, which opposes and not agree for the recovery of amount due to non completion of minimum period of service agreed to by the employee unless it is proved to the satisfaction of the court about the loss actually sustained by the employer. This issue was also highlighed by Prof. Sairam Bhat of NLSIU in the discussion arranged at BCPA.
– B.Chandrashkhara Shetty