Categorization of unskilled employees under the Minimum Wages Act as semiskilled and semi-skilled as skilled on the basis of their experience is ultra vires – Supreme Court
ABCAUS Case Law Citation:
ABCAUS 2898 (2019) (05) SC
Important Case Laws Cited/relied upon by the parties
Bidi, Bidi Leaves and Tobacco Merchants’ Association v. State of Bombay 2 1962 Supp (1) SCR 381
Haryana Unrecognised Schools’ Association v. State of Haryana 3 (1996) 4 SCC 225
Airfreight Ltd. v. State of Karnataka 6 (1999) 6 SCC 567
The Appellant had approached the Hon’ble Supreme Court against the dismissal of their Writ Petition challenging the Notification issued under Section 5 (2) of the Minimum Wages Act, 1948 (the Act).
The Finance Commissioner and Principal Secretary to the Government of Haryana, Labour Department, in exercise of the powers conferred by Section 5(2) of the Act, issued a Notification fixing/revising the minimum rates of wages in respect of different scheduled employments. The said Notification inter alia provided for the following categorisation of the employees:
(i) Unskilled employees having 10 years’ experience would be deemed categorized as semi-skilled “A”.
(ii) After 3 years of experience in semi-skilled “A”, the employees would be deemed categorized as semiskilled “B”.
(iii) After 3 years of experience in skilled “A”, the employees would be deemed categorized as skilled “B”.
The case of the Petitioner was inter alia 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 beyond the jurisdiction of the Government.
The Hon’ble Supreme Court observed that 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.
According to the Court, the categorization or classification by deeming workmen in one category to belong to another category was in direct contravention of the contract between the employer and the employee and was beyond the jurisdiction of the Government.
The Hon’ble Supreme Court also held that inclusion of Security inspector/ Security officer/ Supervisor in the table “Minimum rates of wages in respect of all scheduled employment” in the Notification is ultra vires the provisions of the Act. According to the Court, they do not fall within the definition of “employee’ in Section 2(i) of the Act as they do not discharge any skilled or unskilled, manual or clerical work.4 Similarly, not all trainees can be included in the Notification.
The Hon’ble Supreme Court observed that trainees who receive wages during the period of training would fall under the definition of “employee”. The Hon’ble Supreme Court concurred with the appellant in that trainees who are not paid any wages cannot be included in the notification as only a person who is employed for “hire or reward” will fall under the definition of “employee”.
Consequently, the Hon’ble Supreme Court opined that the trainees who are not paid wages cannot be included in the notification and the fixation of minimum wages for such trainees at 75% was also not valid.
The Hon’ble Supreme Court made it clear that, 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.
The Hon’ble Supreme Court opined that 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”.
The Hon’ble Supreme Court pointed out that a close scrutiny of the definitions of the employer and the employee would bring the workmen employed through the contractors within the purview of the Act. The Court rejected the submission of the Appellants that the contract workmen are not covered under the Act.
According to the Hon’ble Supreme Court, “Wages” as defined in Section 2(h) to mean all remuneration, capable of being expressed in terms of 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 relating 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, the prohibition on segregation of the wages into components under the notification was not a valid exercise of power.
The Hon’ble Supreme Court clarified that the conclusion drawn in respect of some parts of the Notification will not affect the Notifications as such. The part of the Notifications other than that dealt with by the judgment shall continue to be in force.
The Hon’ble Supreme Court also clarified 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 resorting to redressal of other remedies regarding their grievances.
The Hon’ble Supreme Court summarised its conclusion as under:
(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.
Accordingly, the appeal was allowed.