Deputation: Understanding its Real Connotation and Right Practice

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.

-Sunil Arya
Advocate and Principal Associate

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2 thoughts on “Deputation: Understanding its Real Connotation and Right Practice”

  1. B.Chandrashekara Shetty

    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,

  2. B.Chandrashekara 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

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B. Chandrashekar Shetty - Advocate

Mr. Chandrashekar Shetty is a Senior Labour Law Compliance Auditor at BCP Associates and has audited multiple client companies across India. He is also a member of our senior legal advisory practice. Previously he has worked as Deputy Controller, Manager-Industrial Relations and Industrial Relations Officer in KPTCL, Bangalore for more than 30 years. Prior to this, he has dealt with Legal, Personnel and IR matters including Wage Settlements, Grievance Machinery, Manpower Study and Social Security Compliances for about 10 years. He is a Faculty member of Labour Law, HRD Centre, KPTCL Bangalore.

Mr. Shetty holds a B.Com. and L.L.B. degree, Post-Graduate Diploma in Business Administration, Diploma in Public Relations from Bangalore University and PG Diploma in Industrial Relations & Personnel Management from Bharatiya Vidya Bhawan. He is enrolled as Advocate in Karnataka Bar Council and is a Govt. Arbitrator of Chit Funds in Karnataka.

S Venugopal Rao

S Venugopal Rao is an experienced labour law and service matters expert and is a member of the senior advisory team at BCP Associates. Having joined the chambers of Mr. B C Prabhakar in 2012, he is knowledgeable and well versed in multiple employment and labour law topics.

S Venugopal Rao holds a Bachelor’s degree in Science from Karnataka University, Dharwar and Bachelor of Law from Bangalore University. He enrolled as advocate in Karantaka State Bar Council in 1976. He joined the chamber of Sri. Kolachalam Srinivasa Rao a leading civil advocate. After practicing for 6 years at Ballari, he joined Orient Paper Mills, Orissa (of G P Birla Group). He was designated as Manager (Law) under the Factories Act in 1995. In 1999, he joined Andhra Pradesh Paper Mills Rajahmundry as Manager Legal and was subsequently elevated as Dy. General Manager (Legal). As Factory Manager & Legal Head, he oversaw compliance of Factories Act and Rules there under towards safety, health and welfare, including compliance under Pollutions and Environmental laws and Explosives Act, etc. Additionally, he is well acquainted with Environment Management System ISO 14001: 2004, Occupations, Health and Safety Series 18000:1999. As Legal head in APPM he has briefed and appeared along with Senior Advocate before Appellate Authority constituted under Water (Prevention & Control of Pollution) Act. He retired from the services of Andhra Pradesh Paper Mills in 2011.

As legal head he has handled important cases both in Labour and Civil and has experience in drafting and vetting Contracts, Agreements, Lease Agreement, Conveyance Deeds, , Affidavits and scrutiny of several legal and other documents, Preparing and settling Petitions, Appeals, Plaints, Written Statements, Rejoinders, Affidavits and Written Arguments etc. for submission/pleadings for various legal proceedings.

C K Devappa Gowda - Advocate

C.K. Devappa Gowda (CKD) is an Advocate and Labour Law expert. He holds a Bachelor’s Degree in Science from the University of Mysore and a Degree in Bachelor of Law from Bengaluru respectively. He also holds a Diploma in Social Service Administration from the National Institute of Social Science, Bengaluru. After completing his studies, he had enrolled as a Advocate and initially practiced in the Civil Code attached to the office of BCP. He then worked as Personnel Officer in Chemicals and Textile Manufacturing Industries for 5 years. Thereafter took up employment in one of the largest Public Sector Bank. He has worked in different parts of the country and has extensive experience in the cross country IR domain. The significant part of his service was at corporate level overseeing and implementing HR policies and practices and management of IR. He has been a member of personnel committee of Indian Bank Association.

After retirement from service, Mr. Gowda has been working with Mr. BC Prabhakar’s firm for the last 12 years. He has expertise in all areas of people management, drafting of documents relating to service matter including the settlements under the ID Act. He has dealt with all employment laws including appearance before the Courts, Tribunal and Authorities under the different Labour Laws. Mr. Gowda is one of the senior Labour Law experts at BCP Associates.

Srijatha Ghosh - POSH Specialist & Advocate

Srijata Ghosh serves as external member on the Internal Committee of several Companies across various sectors. She handles all kinds of POSH related matters including investigations and inquiries. She provides Training on Sexual Harassment across all verticals for Managers and Senior Management, General Awareness for all employees and Internal Committee members on the legislation (The Sexual Harassment of Women at Workplace Prevention, Prohibition and Redressal Act, 2013). She also formulates Policies for Prevention of Sexual Harassment at Workplace (“POSH”) and advises Companies on setting up of their Internal Committees. Srijata is involved in providing Legal Advisory services on POSH and other labour law matters for various clients.

In her previous experience, she has extensively dealt with End-to-End Contract Management, Due Diligence, POSH Compliances, Legal Advisory, etc. Srijata worked with Companies like Accenture India Private Limited, Quess Corp., Capgemini Business Services (India) Limited and Pramata Knowledge Solutions Private Limited. Srijata has handled varied legal issues including drafting, vetting and negotiation of contracts, drafting policies of various organizations. She has resolved issues relating to employment laws and has worked closely with the HR teams. She has provided legal advisory services to senior management. She was also associated with Kolkata High Court in counselling clients with legal matters such as Property, Due Diligence etc. Srijata has worked in an LPO Service Firm, Manthan Legal Services Private Limited for Legal Research, depositions, medical summaries, demand drafting etc.

Srijata completed her B.A.LL.B from M. S. Ramaiah College of Law, Bangalore University in 2009. Srijata is a member of the Karnataka Bar Council since 2010. She is also a member of the Gender Sensitivity Sub Committee of Karnataka Employer Association (KEA).

Caroline Lobo - POSH Specialist & Advocate

Caroline Lobo has been with BCP Associates for the past 2+ years. She has been handling matters and Inquiries related to the POSH Act including conducting inquiries and trainings/awareness programmes for Senior Management, employees as well as members of the Internal Committee on the POSH Legislation (The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“Act”) to address Workplace Harassment of Women. She is a member of the Internal Committee for many varied companies and organisations and has reviewed and scrutinized numerous hearings and inquiries on matters relating to sexual harassment at workplace.

She has also handled matters relating to employer-employee related Enquiries, wherein she has reviewed and conducted hearings and enquired into the matters and has guided the Internal Committee and provided guidance in providing recommendations to the management. She is also a Member of the Gender Sensitivity Sub-committee of Karnataka Employer Association (KEA).

Prior to joining BCP Associates, Caroline has has a wide range of experience in corporate, commercial and contract law, mergers and acquisition and has undertaken drafting, vetting, negotiating and finalizing legal and commercial transactions. She started her career in litigation then moved onto the Corporate sector. In the span of 13 years, she has worked at Chambers of Advocate Jayashree Murali, Krishnamurthy and Co. Legal Consultants, Colt Technology Services and Oracle India Pvt. Ltd. She always had a keen interest in Women and Child related issues. She has worked with Child Welfare Committee and NGOS’s. In addition, she has worked with Swasthi Health Resource and Centre, where she was the External member to the Internal Committee (IC). She worked closely with the committee in strategizing, planning, reviewing and implementing the assigned tasks, which included building material to raise awareness against sexual harassment at workplace. Further, she has been involved in conducting inquiries into matters related to sexual harassment at workplace.

Caroline earned her Law degree from University Law College, Bangalore, from where she graduated in the year 2005.

Manoj Kumar – Senior Associate

At BCP Associates, Manoj Kumar is involved in managing and conducting labour law compliance audits of principal employer and contractors. He is also involved in client co-ordination and conducting labour law training programs for vendors. He has conducted on-ground labour law audit for factories. Manoj also provides support in advising vendor clients on labour law queries. He completed B.A., LL.B. from BMS College of Law, Bangalore in 2016

Rashmitha Venkatachalam Das - POSH Specialist & Advocate

Rashmitha Venkatachalam Das is the External Member of the Internal Committee of several reputed Organizations across various sectors. Handling complex inquiries has been her forte and she is extremely passionate about it. She is actively involved in providing Training on Sexual Harassment (Prevention, Prohibition and Redressal) Act, 2013 across all verticals for Managers and Senior Management, General Awareness for all employees and Internal Committee members. Rashmitha possesses capabilities in delivering sessions in Hindi and Kannada, in addition to English. She has formulated Policies for Prevention of Sexual Harassment at Workplace (“POSH”), advised companies on setting up of their Committee. Rashmitha is involved in providing Legal Advisory services on POSH for various clients spread across diverse sectors. She has also been handling domestic enquiries for various clients. 

Rashmitha possesses experience both at Law Firms and Corporates in various capacities. She started her career at Krishnamurthy and Co, Legal Consultants and then moved on to work as an In- House Legal Counsel with Companies such as Biocon Limited, Columbia Asia Hospitals Private Limited, Adecco India Private Limited. With a long stint in the Corporate side, Rashmitha decided to pursue further education in Law with a specialization in Labour and Employment Laws. She has rich experience in drafting, vetting and negotiation of various types of contracts, providing legal opinions and has driven the team in formulating process and procedures and their implementation. She has drafted several employment related policies in Corporates. Rashmitha has been a part of various key committees in Organizations and assisted committees in scrutiny of documents pertaining to human organ transplant as well as clinical trials.

Rashmitha holds an LL.M. in Labour and Employment Laws from University Law College, Bangalore, which she completed in the year 2018 with Two Gold Medals. She is also a Rank Holder at the University. She has completed BA, LL.B. from Bangalore Institute of Legal Studies, Bangalore University in the year 2009. Rashmitha is a member of the Karnataka Bar Council since 2009 and also a member of the Gender Sensitivity Sub Committee of Karnataka Employer Association (KEA).

Manisha Vidyadhar – Senior Associate

At BCP Associates, Manisha Vidyadhar is involved in managing and conducting labour law compliance audits of principal employer and contractors. She is also involved in client co-ordination and conducting labour law training programs for vendors. She has conducted on-ground labour law audit for factories. Manisha also provides support in advising vendor clients on labour law queries.  She completed B.A., LL.B. from BMS College of Law, Bangalore in 2016.

Amrutha Ananth – Principal Associate

At BCP Associates, Amrutha is a part of the Legal Advisory practice, Legal Audit practice and Labour Code Alignment Programme (LCAP). Amrutha specialises in Labour and Employment Laws and compliance having advised some of India’s leading companies for some of their most complex labour law matters.

Amrutha has more than seven years of experience in labour and employment law and has conducted several audits for both, principal employer and contractor for various leading IT/ITES companies, manufacturing sectors like pharma, automobile, construction and start-ups.

She is actively involved in drafting and reviewing employment contracts, HR policies, Employee Handbook, show cause notice, etc. for various organizations spread across diverse sectors. As a part of the Labour Code Alignment Program, she assists companies in review and alignment of their existing wage and employment policy with the provisions of the Labour Codes.

Sunil Arya – Principle Associate

At BCP Associates, Sunil Arya is part of the labour and employment law advisory and HR Policy practice and is actively involved in drafting and reviewing of employment contracts, opinions, HR policies, employee handbook, show cause notice, etc. for various clients spread across diverse sectors. He conducts training on labour and employment laws. Sunil is also involved in labour law compliance audits of principal employer and contractors and has conducted on-ground labour law audit for factories. In addition, he is engaged in knowledge creation and management of the firm and keenly writes on developments in labour and employment laws.

Prior to joining BCP Associates, Sunil has 10 years of post-qualification experience in diversified portfolios of advisory, drafting, policy analysis and dispute in the domains of contracts, general civil matters, employment law, competition law and construction arbitration matters. Sunil started his career as a Law Researcher in Delhi High Court. He moved on to be part of regulatory analysis team of CIRC, a unit of CUTS International. In addition, Sunil has been part of legal team of Jindal India Thermal Power Limited. He has also taught competition law, tax law and investment law at VIPS, Delhi.

Sunil holds LL.M. from The Indian Law Institute, Delhi. He is First Rank Holder in his thesis. He completed B.A, L.L.B. (Hons.) from I.P. University, Delhi. He also holds First Rank in P.G. Diploma in Competition Policy and Laws from The National Law University, Delhi.

Chandrakala K A – Principle Associate

At BCP Associates, Chandrakala has 12+ years of experience in conducting and managing labour law compliance audits of principal employer and contractors. She is also involved in co-ordination with many clients. She has conducted on-ground labour law audit for factories. She also provides support in advising vendors on labour law queries. Chandrakala is actively involved in research and providing valuable inputs to the firm pertaining to updation in labour law audit function.

Chandrakala started her career in litigation in chamber of Sri. Ashok where she was involved in drafting, pleading and appearance before Karnataka High Courts and lower courts on the criminal side.

Chandrakala completed B.A in Arts from Kuvempu University, Shimoga in 2003 and LL.B. from Mangalore University in 2006.