Minimum Wages Act does not empower Govt to alter the terms of contract; June 2007 Notification partly quashed

Supreme Court: Partly upholding the validity of Notification dated 27.06.2007 issued under Section 5(2) of the Minimum Wages Act, 1948, the bench of L Nageswara Rao and MR Shah, JJ held that the prohibition of segregation of wages into components in the form of allowances in the Notification is impermissible.

By way of Notification dated 27.06.2007 issued under Section 5(2) of the Minimum Wages Act, 1948, the Finance Commissioner and Principal Secretary to the Government of Haryana, Labour Department fixed/revised the minimum rates of wages in respect of different scheduled employments. The said notification was challenged on the ground that the provision for categorization of unskilled employees as semi-skilled and of semi-skilled employees as skilled on their acquiring experience of a certain number of years was stated to be beyond the jurisdiction of the Government. It was also argued that the prohibition of segregation into components in the form of allowances was beyond the competence of the Government.

Accepting the aforementioned submission, the Court said,

“There is no power vested in the Government by the Act to make alterations to the terms of a contract. The Act only confers jurisdiction in Government to fix/revise the minimum rate of wages notwithstanding the contract.”

It further said that 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 ad is beyond the jurisdiction of the Government.

Conclusion

(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 and semi-skilled as skilled on the basis of their experience is ultra vires;

(e) Fixing the training period for one year is beyond the jurisdiction of the Government.

The Court, however, made it clear that the 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. It also said,

“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 resorting to redressal of other remedies regarding their grievances.”

[Hindustan Sanitaryware and Industries Ltd. v. State of Haryana, 2019 SCC OnLine SC 632, decided on 29.04.2019]

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