Orissa High Court Orders SBI to Pay Rs 40 Lakh Compensation to Sweepers Wrongfully Terminated After 30 Years

Kaustav Chowdhury
Jul 13
4 min read

In a ruling that underscores the importance of protecting long-serving workers, the Orissa High Court has ordered the State Bank of India (SBI) to pay Rs 20 lakh each to two sweepers who were wrongfully terminated after nearly three decades of service. The division bench of Justices Krishna S Dixit and Chittaranjan Dash noted that the workers had given their "sweat and blood" to the institution and observed that in the current era of artificial intelligence, they are unlikely to find new employment.

Background: Three Decades of Service, Then Termination

The case, Mayadhar Nayak and Baina Nayak v. State Bank of India, involves two daily-wage sweepers who worked at SBI's Government Treasury Branch in Bhubaneswar. Mayadhar Nayak joined in 1994 and Baina Nayak in 1995, both serving continuously as daily-wage employees for approximately 30 years.

Despite their long tenure, neither worker was granted permanent status. In 1999, they approached the High Court seeking regularisation of their employment. While this case was still pending before the Court, SBI terminated both workers on July 19, 2025, invoking provisions under the Industrial Disputes Act. The termination while judicial proceedings were ongoing raised serious concerns about the bank's conduct.

The Court's Observations and Order

The division bench delivered a strongly worded order in favour of the workers. The Court observed that Mayadhar and Baina Nayak had dedicated the best years of their lives to SBI, giving their "sweat and blood" to the institution. The bench took particular note of the changed economic landscape, stating that in "the AI era," these workers are unlikely to secure new employment, making the termination all the more unjust.

SBI had initially offered Rs 5 lakh to each worker as settlement. The Court dismissed this offer as grossly inadequate, remarking that it was "too little at a time when bread is costlier than ever." The bench ultimately ordered SBI to pay Rs 20 lakh to each worker, totalling Rs 40 lakh, with the payment to be made within 8 weeks of the order.

Legal Significance: Rights of Daily-Wage Workers

This ruling carries significant implications for workers employed on daily-wage or contractual arrangements for extended periods. Indian labour law has long recognised that workers who have served continuously for years cannot simply be treated as disposable. The Industrial Disputes Act, 1947 provides protections against arbitrary termination, particularly for workmen who have completed 240 days of continuous service in a year.

The Supreme Court has also addressed similar issues. In cases involving unauthorised absence and reinstatement claims, the Court has emphasised that each termination must be assessed on its own merits, and procedural fairness is non-negotiable.

A key aspect of this case is the duration of service. Workers who serve for 30 years, even on daily wages, develop a legitimate expectation of continued employment. Courts have consistently held that employers cannot engage workers for decades and then discard them without adequate compensation. The recent changes under the EPF Scheme 2026 further reinforce the push towards stronger social security protections for all categories of workers.

The AI Era Remark: A Sign of Changing Times

One of the most notable aspects of this judgment is the Court's reference to the "AI era" while assessing the impact of termination on the workers. This observation reflects a growing judicial awareness that the employment landscape is rapidly changing. For unskilled and semi-skilled workers who have spent their entire careers in one role, the prospect of finding new employment in an increasingly automated economy is bleak.

This remark may well set a precedent for future cases where courts consider the employability of terminated workers in light of technological disruption. As automation and AI continue to transform the job market, courts may increasingly factor in the practical impossibility of reemployment when determining compensation for wrongful termination.

Remedies Available to Wrongfully Terminated Workers

Workers who believe they have been wrongfully terminated have several legal avenues. Under the Industrial Disputes Act, a terminated worker can raise an industrial dispute through the appropriate government, which may refer the matter to a labour court or industrial tribunal. The worker can also approach the High Court directly under Article 226 of the Constitution, as Mayadhar and Baina Nayak did in this case.

Beyond reinstatement and compensation for wrongful termination, workers should also be aware of their entitlements under other labour laws. Those who have completed five years of continuous service are eligible for gratuity under the Payment of Gratuity Act. Workers who suffer injuries during the course of employment may also seek workmen compensation for workplace injuries. Additionally, consumer forums can sometimes be relevant when service-related grievances overlap with employment disputes, and complaints can be filed through the E-Daakhil portal for such matters.

What This Means for Employers

The ruling serves as a cautionary tale for employers, particularly large institutions like banks that employ significant numbers of contractual and daily-wage workers. Keeping workers on daily wages for decades without regularisation, and then terminating them without adequate compensation, invites judicial scrutiny and substantial financial liability.

Employers should ensure that long-serving daily-wage workers are either regularised or provided fair terminal benefits that reflect their years of service. Offering token amounts, as SBI did with its Rs 5 lakh offer, is likely to be viewed unfavourably by courts, especially when weighed against decades of continuous service.

Key Takeaways

1. The Orissa High Court ordered SBI to pay Rs 20 lakh each (Rs 40 lakh total) to two sweepers terminated after approximately 30 years of daily-wage service.

2. The Court noted that in the "AI era," terminated unskilled workers are unlikely to find new employment, a factor that influenced the compensation amount.

3. SBI's initial offer of Rs 5 lakh per worker was rejected as inadequate, with the Court remarking it was "too little at a time when bread is costlier than ever."

4. Employers who keep workers on daily wages for decades without regularisation risk significant judicial intervention and financial liability upon termination.

5. Wrongfully terminated workers can raise industrial disputes, approach the High Court under Article 226, and may also be entitled to gratuity and other statutory benefits.