CIVIL APPEAL No . 2539 of 2010
1. The Appellant filed a Writ Petition challenging the
Notification dated 27.06.2007 issued under Section 5 (2)
of the Minimum Wages Act, 1948 (hereinafter, “the Act”).
The said Writ Petition was dismissed by the High Court.
Aggrieved by the judgment of the High Court, the
Appellant has approached this Court.
2. In exercise of the powers conferred by Section 5(2)
of the Act, the Finance Commissioner and Principal
Secretary to the Government of Haryana, Labour
Department issued a Notification on 27.06.2007
fixing/revising the minimum rates of wages in respect of
different scheduled employments as mentioned in the
schedule therein with effect from 01.07.2007. The
relevant provisions of the Notification dated 27.06.2007
are as under:
Unskilled employees having 10 years’
experience would be deemed categorized as
semi-skilled “A”.
After 3 years of experience in semi-skilled “A”,
the employees would be deemed categorized
as semi-skilled “B”.
After 3 years of experience in skilled “A”, the
employees would be deemed categorized as
skilled “B”.
xxx Note:
1. The minimum rates of wages being fixed/ revised are linked with Haryana State Working
Consumer Price Index Number (base year 197273=100) with July 2007 as the base month. The
rate of neutralization will be Rs.2.31 per point on the rise or fall of the Consumer Price Index
Number, adjustment in wages shall be made six monthly i.e. 1st January and 1st July, every year
after taking into account the average rise or fall in the Haryana State Working Class Consumer Price
Index Number half-yearly ending December and June respectively.
2. The minimum rates of wages being now fixed/ revised shall not be affected as a result of the
linkage as much as the wages shall not fall below those being fixed/ revised now.
3 The wages of apprentices appointed under the Apprentices Act, 1961 (52 of 1961), shall be
regulated under the said Act.
4. There shall be no difference between the wages
for men and women workers.
5. Where any of the above categories of workmen
are engaged/ employed through a Contractor, the Occupier/ the Principal Employer shall be
personally responsible for ensuring the payment of the minimum rates of wages by the Contractor.
6. If any category of workers employed in the employment is not mentioned specifically by
name, he/she shall not be paid less than the minimum wages fixed for similar category having
same skill.
7. While calculating the per day wages, the
monthly wages shall be divided by 26 days but for deduction, if any, shall be calculated monthly
wages divided by 30 days.
8. The categorization of employment in Brick Kiln
is placed at Annexure-A.
9. Above rates are without food. Wherever food is
given customarily, it shall be extra.
10. Trainees will be paid 75% of the wages
applicable to the category but it will not be less than the Minimum Wages for an unskilled category
of worker. The period of training will not be more than one year.”
3. The above Appeal was taken up along with the other
Writ Petitions which were filed for the same relief. Without
a detailed discussion on the issues which arose in the Writ
Petition, the High Court dismissed the Writ Petition by
observing that the contention raised by the Petitioners
regarding the impermissibility of classification of workmen
was misconceived and that the trainees would fall within
the purview of the Act.
Civil Appeal No. _______ of 2019 (Arising out of Special Leave Petition (Civil) No. 5832 of 2018)
Leave granted.
4. This Appeal by Special Leave is filed against the
judgment of the High Court dated 18.08.2017 by which
the Writ Petition filed by the Appellant questioning the
Notification dated 21.10.2015 issued under Section 5(2) of
the Act was dismissed.
5. By a Notification dated 21.10.2015, the Labour
Department of the Government of Haryana revised the
minimum rates of wages in respect of different scheduled
employments as mentioned in the schedules therein with
effect from 01.11.2015. It is necessary to reproduce the
relevant portion of the Notification dated 21.10.2015
which is as follows:
“Unskilled employees having five years
experience would be deemed categorized as semi
skilled “A”.
After 3 years of experience in semi skilled “A” the
employees would be deemed categorized as semi
skilled “B”.
After 3 years of experience in skilled “A” the
employees would be deemed categorized as
skilled “B”
xxx
xxx
Notes:
1.The minimum rates of wages notified herein above are basic rates of minimum wages which are not permitted to be segregated into components in the form of allowances by the employer. The minimum rates of wages being fixed/ revised are linked with Haryana State Working Class Consumer Price Index number (base year 1972-73=100) with July 2015, as the base month. There shall be 100% neutralization of the rise or fall of the consumer price index number on pro rata basis; the adjustment in wages shall be made six monthly i.e. on 1st January and 1st July every year, after taking into account the average rise or fall in the Haryana State Working Class Consumer Price Index half yearly ending December and June respectively.
2.The minimum rates of wages now being fixed/ revised shall not be affected as a result of the linkage as much as the wages shall not fall below those being fixed/ revised now.
3.The wages of apprentices appointed under the Apprentices Act, 1961 (52 of 1961), shall be regulated under the said Act.
4.There shall be no difference between the wages for men and women.
5.Where any of the above categories of workmen are engaged/ employed through a contractor, the occupier/ the principal employer shall be personally responsible for ensuring the payment of the minimum rates of wages by the contractor.
6.If any category of workers employed in the employment is not mentioned specifically by name, he/she shall not be paid less than the minimum wages fixed for similar category having same skills.
7.While calculating the per day wages, the monthly wages shall be divided by 26 days but for deduction, if any, shall be calculated as monthly wages divided by 30 days.
8.The categorization of employment in Brik Kiln is placed above at Annexure-A.
9.Above rates do not include food charges. Wherever food is given customarily, it shall be extra.
10.Trainees shall be paid 75% of the wages
applicable to the category, but it shall not be less
than the Minimum Wages for an unskilled category
of worker because an unskilled worker does not
require any training. The period of training shall
not be more than one year.
6. It was submitted on behalf of the Appellant before
the High Court that the segregation of wages into
components in the form of allowances was permissible.
The further contention of the Appellant before the High
Court was that Note 10 of the Notification which fixed the
minimum wages for trainees at 75% of the wages
applicable to that category and also limited period of such
training to one year was ultra vires the Act.
The provision for categorization of unskilled employees as
semi-skilled on their acquiring experience of a certain
number of years was stated to be beyond the jurisdiction
of the Government. Inclusion of Domestic Workers and
Safai Karamcharis in the list of scheduled employments at
Serial Numbers 49 and 50 was also in challenge in the
Writ Petition. The High Court rejected the submission of
the Appellants that there is prohibition of segregation of
wages into components in the form of allowances. The
challenge to 100% neutralization was also not accepted
by the High Court. The Act was held to be applicable to
the trainees by the impugned judgment. Insofar as the
categorization of workers was concerned, the High Court
was of the opinion that the categorization was justified
and indeed necessary as the workmen were continued in
their grades for a long number of years which resulted in
stagnation. The contention of the Appellants that
Domestic Workers and Safai Karamcharis could not have
been included in the list of scheduled employment at
Serial Numbers 49 and 50 was accepted by the High
Court. In view of the aforesaid findings, the High Court
concluded that Notes 1, 9 and 10 of the Notification dated
21.10.2015 were legal and valid. It is relevant to mention
that the High Court relied upon the judgment of a Division
Bench in Writ Petition (Civil) No.11326 of 20071 in support
of its findings.
7. Mr. Kailash Vasdev, learned Senior Counsel appearing
for the Appellants in Civil Appeal No. 2539 of 2010
submitted that the classification of workmen by the
1 Apparel Exporters & Manufacturers Association vs. State of Haryana – CWP No.9942 of 2007 dated 06.09.2007
Notification dated 27.06.2007 amounts to an interference
with the promotion policy of the Appellant which is beyond
the jurisdiction of the Government under the Act. He
stated that the Government does not have the power to
alter the conditions of service, contract or settlement
between the employer and the employee. He referred to
a settlement between employees and the employer which
specifies the regulation of wages. Mr. Vasdev argued that
the High Court erred in not realizing the difference
between a fair wage, a living wage, and a minimum wage.
He relied upon a judgment of this Court in Bidi, Bidi
Leaves and Tobacco Merchants’ Association v. State
of Bombay2 in support of his submission that the power
that is conferred on the Government was only to deal with
fixation and revision of wages and not to interfere with the
contractual rights and obligations. Mr. Harvinder Singh,
learned counsel appearing for the Petitioner in Civil Appeal
@ SLP (Civil) No.5832 of 2018 submitted that the
Petitioner has a grievance only regarding some portions of
the Notification dated 21.10.2015. His first objection to
the Notification was relating to the revision of minimum
2 1962 Supp (1) SCR 381
rates of wages for Security inspector/ Security officer/
Supervisor by relying upon the definition of “employee” in
Section 2(i) of the Act. He submitted that Security
inspector/ Security officer/ Supervisors will not fall within
the purview of the definition and hence, the State
Government did not have the power to fix/ revise the
minimum wages for the said categories. Similarly, the
learned counsel submitted that trainees cannot be
brought within the purview of the Act as they also do not
fall within the definition of “employee” under Section 2(i)
of the Act as all the trainees are not employed for hire or
reward. The learned counsel relied upon a judgment of
this Court in Haryana Unrecognised Schools’
Association v. State of Haryana3 in which it was held
that teachers working in an educational institution cannot
be held to be discharging either skilled or unskilled or
manual or clerical work and as such they did not fall
within the scope of “employee” under Section 2(i) of the
Act. Mr. Singh submitted that the Government did not
have the power to place a restriction on the period of
training which according to the Notification cannot be
3 (1996) 4 SCC 225
more than one year. He further argued that the
classification of employees was totally impermissible. He
also submitted that different minimum rates of wages
cannot be fixed for the same class of work in the same
scheduled employment. By the deemed categorization of
an unskilled employee as a semi-skilled employee after
five years experience, the Government fixed higher
minimum rate of wages for a worker who has completed
five years though he continued to work as an unskilled
employee. This would amount to higher minimum wages
being paid for a worker in the lower category on the basis
of deemed classification. He further submitted that the
prohibition of segregation of wages into components in
the form of allowances was beyond the competence of the
Government. By referring to Section 2(h) of the Act which
defines wages, the learned counsel for the Appellant
submitted that the very definition of wages means all
other remuneration in accordance with the terms of
contract or employment. According to Mr. Singh, there is
no concept of basic rate of minimum wages. He further
argued that the concept of principal employer and
contractor is foreign to the Act and the occupier/the
principal employer cannot be made responsible for the
payment of minimum rate of wages to a contract labour.
Allegations of exploitation of workmen by the employers
cannot be a ground for issuance of a notification under
Section 5 of the Act if the Government lacks jurisdiction.
8. Dr. Monika Gusain, learned counsel appearing for the
State of Haryana referred to Article 43 of the Constitution
of India to submit that it is the duty of the State to secure
a living wage to all workers. She submitted that the
Notifications were issued on the basis of
recommendations made by an Advisory Committee after
consultations with the employers and the workmen.
Splitting of the minimum wages into components is
permissible as there is no prohibition in the Act. She
contended that the deemed promotion of an unskilled
worker to a semi-skilled worker, based on experience, is
only for the purpose of entitling them to the next grade of
minimum wages which cannot be construed as a deemed
promotion or classification. Dr. Gusain stated that it has
come to the notice of the Government that trainees were
not being paid even the minimum wages applicable to an
unskilled workman for which reason it was decided that
trainees should be protected. The learned counsel for the
State of Haryana defended the Notifications dated
27.06.2007 and 21.10.2015 on the ground that they were
issued to protect the fundamental rights of the workers.
She also argued that the Appellants have not produced
any material to show the loss caused to them by the
Notifications, and hence, the judgment of the High Court
does not warrant interference.
9. At this stage, it is necessary to refer to the relevant
provisions of the Act. “Wages” and “Employee” have
been defined in Sections 2(h) and 2(i) of the Act which
reads as under:
“2(h) “wages” means all remuneration, capable of
being expressed in terms of money, which would,
if the terms of the contract of employment,
express or implied, were fulfilled, be payable to a
person employed in respect of his employment or
of work done in such employment, [and includes
house rent allowance], but does not include—
(i) the value of—
(a) any house-accommodation, supply of light,
water, medical attendance, or
(b) any other amenity or any service excluded by
general or special order of the appropriate Government;
(ii) any contribution paid by the employer to any Pension Fund or Provident Fund or under any
scheme of social insurance;
(iii) any travelling allowance or the value of any
travelling concession;
(iv) any sum paid to the person employed to
defray special expenses entailed on him by the nature of his employment; or
(v) any gratuity payable on discharge;
2(i) “employee” means any person who is
employed for hire or reward to do any work, skilled or unskilled, manual or clerical, in a scheduled
employment in respect of which minimum rates of wages have been fixed; and includes an out-
worker to whom any articles or materials are given out by another person to be made up, cleaned,
washed, altered, ornamented, finished, repaired, adapted or otherwise processed for sale for the
purposes of the trade or business of that other person where the process is to be carried out
either in the home of the out-worker or in some other premises not being premises under the
control and management of that other person; and
also includes an employee declared to be an
employee by the appropriate Government; but
does not include any member of the Armed Forces
of the [Union].”
10. The appropriate government is empowered by
Section 3 of the Act to fix the minimum rates of wages
payable to the employees employed in an employment
specified in Part I and Part I (b) of the Schedule. Section 4
of the Act provides that the minimum rate of wages fixed
or revised under Section 3 may contain:
“(i) a basic rate of wages and a special allowance
at a rate to be adjusted, at such intervals and in
such manner as the appropriate Government may
direct, to accord as nearly as practicable with the
variation in the cost of living index number
applicable to such workers (hereinafter referred to
as the “cost of living allowance”); or
(ii) a basic rate of wages with or without the cost
of living allowance, and the cash value of the
concessions in respect of supplies of essential
commodities at concession rates, where so
authorised; or
(iii) an all-inclusive rate allowing for the basic rate,
the cost of living allowance and the cash value of
the concessions, if any.”
11.The procedure for fixing or revising the minimum rates of wages is dealt with under Section 5 of the Act. After following the procedure prescribed under Section 5, the appropriate government can fix/revise the minimum rates of wages and issue a notification to that effect. An obligation is imposed on the employer by Section 12 of the Act to pay to every employee engaged in a scheduled employment wages at a rate not less than the minimum rates of wages fixed by the notification issued under Section 5 of the Act. The authority conferred on the Government in fixing or revising the minimum rates of wages under the relevant provisions of the Act was dealt with by this Court in Bidi, Bidi Leaves and Tobacco Merchants’ Association (supra). This Court held: “What is the extent of the authority conferred on the respondent in fixing or revising minimum rates of wages under the relevant provisions of the Act? In dealing with this question we must necessarily bear in mind the definition of the term “wages” prescribed by Section 2(h). As we have already seen the term “wages” includes remuneration which would, if the terms of the contract of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment. In other words, the term “wages” refers to remuneration payable to the employee as a result of the terms of employment. What would be the amount to which the employee is entitled if the other terms of the contract are performed? That is the question which has to be asked in determining what the term “wages” means under Section 2(h). No doubt Sections 3, 4 and 5 authorise the appropriate Government to fix the minimum rates of wages. In other words, if the wages fixed by a contract which is either express or implied are found to be low, authority is conferred on the appropriate Government to increase them so as to bring them to the level of what the said Government regards as the minimum wages in the particular scheduled employment in the particular area concerned. This means that power is conferred on the appropriate Government to modify one term of the contract express or implied between the employer and the employee and that is a term which has reference to the payment of wages. If for a certain piece of work done by the employee the employer has agreed to pay him either expressly or by implication a certain amount of wages the appropriate Government can issue a notification and prescribe that for the said work done under the contract the employer must pay his employee a much higher rate of wages and the higher rate of wages thus prescribed would be deemed to be the minimum rate of wages between the parties. It would, however, be noticed that in defining “wages” clause 2(h) postulates that they would be payable if the other terms of the contract of employment are fulfilled. That is to say, in authorising the fixation of minimum rates of wages the other terms of the contract of employment have always to be fulfilled. The fulfilment of the others terms of the contract is a condition precedent for the payment of wages as defined under Section 2(h) and it continues to be such a condition precedent even for the payment of the minimum rates of wages fixed and prescribed by the appropriate Government. The significance of the definition contained in Section 2(h) lies in the fact that the rate of wages may be increased but no change can be made in the other terms of the contract. In other words, the Act operated on the wages and does not operate on the other terms of the contract between the employer and the employee. That is the basic approach which must be adopted in determining the scope and effect of the powers conferred on the appropriate Government by the relevant provisions of the statute authorising it to prescribe minimum rates of wages or to revise them. What the appropriate Government is authorised to do is to prescribe, fix or revise wages and wages are defined to be remuneration payable to the employees if the terms of the contract of employment, express or implied, were fulfilled. This definition runs, as it inevitably must, through the material provisions of the Act and its importance cannot therefore be ignored.”
12.The learned counsel for the Government of Haryana argued that the workmen are exploited by the employers and the notifications were issued after taking into account the recommendations of the expert body to protect the interests of the workmen. The point raised by the Appellants pertains to the jurisdiction of the Government in the issuance of the notification. The grievances of the workmen can be redressed by the fora constituted under the Industrial Disputes Act, 1948 if the Government does not have the competence to deal with certain issues in a notification under the Act. In Bidi, Bidi Leaves and Tobacco Merchants’ Association (supra), Justice Gajendragadkar, observed :-“It is well settled that industrial adjudication under the provisions of the Industrial Disputes Act 14 of 1947 is given wide powers and jurisdiction to make appropriate awards in determining industrial disputes brought before it. An award made in an industrial adjudication may impose new obligations on the employer in the interest of social justice and with a view to secure peace and harmony between the employer and his workmen and full co-operation between them. Such an award may even alter the terms of employment if it is thought fit and necessary to do so. In deciding industrial disputes the jurisdiction of the tribunal is not confined to the administration of justice in accordance with the law of contract. As Mukherjea, J., as he then was, has observed in Bharat Bank Ltd., Delhi v. Employees of the Bharat Bank Ltd., Delhi the tribunal “can confer rights and privileges on either party which it considers reasonable and proper, though they may not be within the terms of any existing agreement. It has not merely to interpret or give effect to the contractual rights and obligations between them which it considers essential for keeping industrial peace”. Since the decision of the Federal Court in Western India Automobile Association v. Industrial Tribunal, Bombay , it has been repeatedly held that the jurisdiction of Industrial Tribunals is much wider and can be reasonably exercised in deciding industrial disputes with the object of keeping industrial peace and progress (Vide: Rohtas Industries, Ltd. v. Brijnandan Pandey, Patna Electric Supply Co. Ltd., Patna v. Patna Electric Supply Workers' Union). Indeed, during the last ten years and more industrial adjudication in this country has made so much progress in determining industrial disputes arising between industries of different kinds and their employees that the jurisdiction and authority of Industrial Tribunals to deal with such disputes with the object of ensuring social justice is no longer seriously disputed.”
13.There is no power vested in the Government by the Act to make alterations to the terms of a contract. Jurisdiction is conferred by the Act on the Government to fix/revise the minimum rates of wages notwithstanding the contract. The Notification dated 21.10.2015 postulates that unskilled employees having five years experience would be deemed categorized as semi-skilled “A”; that after three years of experience in semi-skilled “A”, the employees would be deemed categorized as semiskilled “B”; that after three years of experience in skilled “A”, the employees would be deemed categorized as skilled “B”. Such categorization or classification by deeming workmen in one category to belong to another category is in direct contravention of the contract between the employer and the employee and is beyond the jurisdiction of the Government. Inclusion of Security inspector/ Security officer/ Supervisor at Serial No.9 in the table “Minimum rates of wages in respect of all scheduled employment” in the Notification is ultra vires the provisions of the Act. They do not fall within the definition of “employee’ in Section 2(i) as they do not discharge any skilled or unskilled, manual or clerical work.4 Similarly, not all trainees can be included in the Notification. Trainees who receive wages during the period of training would fall under the definition of “employee” as has been fairly admitted by the learned counsel for the Appellants. It is the Appellant’s case that such of those trainees who are not paid any wages cannot be included in the notification. We are in agreement with the said submission as only a person who is employed for “hire or 4 See: Haryana Unrecognized Schools’ Association (supra) reward” will fall under the definition of “employee”. Consequent upon the above finding, the trainees who are not paid wages cannot be included in the notification and the fixation of minimum wages for such trainees at 75% is also not valid. To make it clear, the minimum wages fixed for trainees who are appointed for reward is not interfered with. The period of training to be undergone by a trainee would depend upon the contract between the employer and the employee. There is no power vested in the Government under the Act to decide the period of training and any stipulation with regard to the training period is ultra vires.
14.The word “employee” as defined in the Act means any person who is employed for hire or reward in a scheduled employment. There is no distinction made between a person employed by the principal employer and a person employed through a contractor. Any person who employs, whether directly or through any other person, one or more employees in a scheduled employment falls within the definition of an “employer”.5 A close scrutiny of the definitions of the employer and the 5 Section 2(e), Minimum Wages Act, 1948 employee would show that workmen employed through the contractors fall within the purview of the Act. We reject the submission made on behalf of the Appellants that the contract workmen are not covered under the Act.
15.The other point that remains to be considered is regarding the segregation of wages into components in the form of allowances. It is useful to refer to the judgment of this Court in Airfreight Ltd. v. State of Karnataka6 in which this Court observed: “20. … … … Once rates of minimum wages are prescribed under the Act, whether as all-inclusive under Section 4(1)(iii) or by combining basic plus dearness allowance under Section 4(1)(i), are not amenable to split up. It is one pay package. Neither the scheme nor any provision of the Act provides that the rates of minimum wages are to be split up on the basis of the cost of each of the necessities taken into consideration for fixing the same.”
16.“Wages” is defined in Section 2(h) to mean all remuneration, capable of being expressed in terms of 6 (1999) 6 SCC 567 money, which would, if the terms of the contract of the employment, express or implied were fulfilled, be payable to a person in respect of his employment or of work done in such employment and includes house rent allowance. There are four exclusions in the definition of wages which pertain to travelling allowance, value of housing accommodation, supply of light, water, medical attendance, etc. If certain components of the remuneration are taken care of by the employer, he cannot be asked to pay twice over such allowance/ payments which are part of the remuneration. Therefore, we are of the opinion that the prohibition on segregation of the wages into components under the notification dated 21.10.2015 is not a valid exercise of power.
17.Our conclusion in respect of some parts of the Notification will not affect the Notifications as such. The part of the Notifications other than that which are dealt with by this judgment shall continue to be in force. We make it clear that the employers shall not be entitled to recover any amounts paid under the Notifications to the workmen on the ground that they have succeeded in this case. As the findings recorded in this judgment pertain to the jurisdiction of the Government under the Act, the workmen are not precluded from seeking redressal of their grievances by resorting to other remedies available to them under law.
18.The upshot of the above discussion is : (a) The prohibition of segregation of wages into components in the form of allowances in the Notification is impermissible; (b) The security inspector/ security officer/ security supervisor cannot be included in the Notification; (c) Trainees who are employed without payment of any reward cannot be covered by the Notification; (d) Categorization of unskilled employees as semiskilled on the basis of their experience is ultra vires the Act; (e) Fixing the training period to a period of one year is beyond the jurisdiction of the Government.
19.For the aforementioned reasons, the appeals are allowed. [L. NAGESWARA RAO] [M.R.SHAH] New Delhi, April 29th, 2019.