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CS Executive · Capital Market and Securities Laws · Securities and Exchange Board of India

An employee of the existing Securities and Exchange Board is absorbed into the regular service of the statutory Board under the transfer provisions. The employee later claims retrenchment compensation under the Industrial Disputes Act, 1947 on the ground that the old employer ceased to exist. Which is correct?

The claim fails. Under the SEBI Act, absorption of an employee into the Board's regular service under the transfer section does not entitle the employee to compensation under the Industrial Disputes Act or any other law, and no court, tribunal or authority may entertain such a claim.

  1. AThe claim succeeds because the change of employer amounts to retrenchment
  2. BThe claim succeeds only before a labour court and not before a civil court
  3. CThe claim succeeds if the employee's terms are not identical in every respect
  4. DThe claim fails because absorption under the section gives no entitlement to compensation and courts or tribunals cannot entertain such a claimCorrect

Explanation

Section 10(2) says that, notwithstanding the Industrial Disputes Act, 1947 or any other law, absorption of an employee by the Board in its regular service under this section does not entitle the employee to any compensation, and no such claim shall be entertained by any court, tribunal or other authority. Hence the claim fails regardless of forum.

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