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.”
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.