Case: HINDUSTAN SANITARYWARE AND INDUSTRIES LTD Vs. THE STATE OF HARYANA

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 as1. The minimum rates of wages being fixed/ revised are linked with Haryana State Working Consumer Price Index Number (base year 1972-73=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. 1 st January and 1 st 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 respectively2. 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 now3. The wages of apprentices appointed under the Apprentices Act, 1961 (52 of 1961), shall be regulated under the said Act4. There shall be no difference between the wages for men and women workers5. 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 Contractor6. 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 skill7. 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 days8. The categorization of employment in Brick Kiln is placed at Annexure-A9. Above rates are without food. Wherever food is given customarily, it shall be extra10. 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 year3. 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 relating to classification was misconceived and that the trainees would fall within the purview of the Act5. 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: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 1 st January and 1 st 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 respectively2. 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 now3. The wages of apprentices appointed under the Apprentices Act, 1961 (52 of 1961), shall be regulated under the said Act4. There shall be no difference between the wages for men and women5. 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 contractor7. 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 days8. The categorization of employment in Brik Kiln is placed above at Annexure-A9. Above rates do not include food charges. Wherever food is given customarily, it shall be extra10. 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 year6. It was submitted on behalf of the Appellant before the High Court that 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 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. Inclusion of Domestic Workers and Safai Karamcharis in the list of scheduled employment 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 with 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 2007 (Apparel Exporters & Manufacturers Association vs. State of Haryana – CWP No.9942 of 2007 dated 06.09.2007)

Court's reasoning:
13. 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. 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 semi-skilled 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. (See: Haryana Unrecognized Schools Association (supra)) 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 Appellants 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 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 vires14. 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. (See: Haryana Unrecognized Schools Association (supra) ) 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. We reject the submission made on behalf of the Appellants that the contract workmen are not covered under the Act16. Wages is 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, we are of the opinion that the prohibition on segregation of the wages into components under the notification is not a valid exercise of power17. 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 resorting to redressal of other remedies regarding their grievances.