Case: The Burmah-Shell Refineries Limited Vs. Their Workmen

The demand of the workmen was for bonus equivalent to 8 months, total earnings of the year. The company resisted this demand mainly on the ground that there was in existence an agreement between the company and its labour employees - whereby bonus for the year 1956 had been settled at 4.1/2 moths basic wages, that the general practice in awards in the matter of bonus had in the past been to award or grant lesser amounts to clerical employees than to labour, and that in any case, to grant the same rate of bonus to clerical employees and labour employees would be "to encourage or to invite strife and discontent". The Tribunal held that such an agreement as regards bonus for 1956 had been voluntarily entered into on behalf of the workers and was beneficial to them and was of opinion that the bonus to the clerical staff ought to be on the same scale. On the one hand, it rejected the clerical staffs claim for bonus at a higher rate than what the workmen were entitled to, as this "would lead to industrial discontent and strife," and on the other held that there was no reason to grant the clerical staff bonus at a lower rate. Accordingly it awarded bonus at the rates of 9/24ths of the basic wages, to the clerical staff, for the year ending December 31, 1956.

Court's reasoning:
It is true that in the first part of the written statement filed before the Tribunal on behalf of the company a statement was made that "the company craves leave to refer to and rely on, as if incorporated herein,its written statement filed before this Honble Tribunal in Ref. (I. T.) 279 of 1957, and repeats and adopts all the submissions and averments made therein" and that in the written statement filed therein a question that in view of the high wages paid by the company no gap existed between the actual wages and the living wages, was taken. Not only was no independent statement made in the separate written statement which was filed in the present reference, i.e., Ref. No. (I.T.) 106 of 1958 on this question but we find no reference at all in the award made by the Tribunal which heard both the references together to any contention of this nature. No ground that the Tribunal had granted bonus without coming to a conclusion as regards the existence and extent of a gap between the actual wage received by the workmen and the living wage was taken in the petition for special leave to appeal. Even in the statement of case filed on behalf of the appellant no such question had been raised. It is not therefore open to the appellant to urge such a contention nowIt is unnecessary in the present case, to consider, whether, if the premise that there had for many years been such a practice of paying a lesser rate of bonus to clerical staff than to the labour staff, that itself would preclude industrial adjudicators from awarding bonus to both classes of employees at the same rate. For, we find that the above premise has not been established. While it is true that in some years, either by award of Industrial Tribunal or by agreement, clerical staff of petroleum concerns has got bonus at a lower rate, than the labour employees it is equally true that in some years at least, clerical staff and operatives have been given bonus at the same rate. Thus for the year 1951, we find that in disputes between the three oil companiesWe find therefore that there is no basis for the assumption that the uniform or nearly uniform practice in the oil companies has been to pay bonus at a lesser rate to clerical staff than to operatives. There is no substance therefore in the argument that the award of bonus at 9/24ths of basic wages, to the clerical staff, is likely to cause discontent among the labour staff, which has entered into an agreement to receive bonus at the same rateThis argument overlooks the important principle that the payment of bonus is based on the fact of contribution by labour to the profits of the industry, and that it has been held more than once by the court that the contribution to be taken into consideration is the contribution made by the workmen taken together as a class, and that it would not be relevant to enquire which section of the workmen has contributed to what share of profits8. It is true that in the cases mentioned above, the Court was considering the question whether one class of employees could be granted bonus, while another class was being granted none at all; and was not considering the question of propriety of different rates of bonus being paid to different classes. But the basis of the decision that all the workmen, taken as a whole contribute to the profits, is relevant also for the consideration of the question whether different rates of bonus between two different classes of workmen are fair; and it is necessary to remember that it is ordinarily not possible to say that one class of workmen, say clerks, contribute more to the prosperity of the industry than another class like operatives. In the absence of some overriding consideration it would not be fair to make a distinction in the rate of bonus between different classes of workmen9. We do not wish however to lay down an inflexible rule that clerical staff and labour staff must always be paid the same rate of bonus. It may happen in a particular industry that wages of labour staff are extremely low, while the pay scale of the clerical staff is many times higher. If a Tribunal in a case like this, being of opinion, that payment of bonus at the same rate will not be fair, and may cause discontent amongst the workers awards bonus at a lower rate to the clerical staff, then to the labour staff there would be no reason for disturbing the award.The industrial tribunals must have very wide discretion in deciding matters like this; and it is not for this Court to interfere with their exercise of discretion, unless it is plainly arbitrary10. In the present case, the Tribunal fully conscious of the difference in the wage scales of labour and clerical staff has pointed out that the clerical staff came from the middle class whose standard of living is higher, and has stated that this class has suffered perhaps more than the operative class for rise in prices, and has in consideration of these factors, concluded that it would be appropriate not to award a lower rate of bonus of them. Nothing has been shown to us to justify any doubt about the correctness of the premises mentioned by the learned Tribunal; and the conclusion seems eminently reasonableWe find no basis however for the assumption that the living wage of clerical staff is only 80% more than that of operatives. It is true that in connection with the determination of wages a formula which appears to have been initiated first by Mr. Justice Rajadhyaksha when he was enquiring into the cost of living of the non-gazetted employees in the Post and Telegraph Department of multiplying the figures reached on the basis of the requirements of the lower class employees by 180% has often been accepted by the industrial tribunals. Assuming however without deciding that this coefficient of 180% may be properly adopted for arriving at the fair wage requirements of clerical staff from the fair wage requirements of operatives it does not by any means follow that the same coefficient can be usefully applied in calculating the living wage of the clerical staff from the living wage of the operatives12. There is no justification therefore for thinking that the living wage of the clerical staff is only 80% more than the living wage of the operatives and so no conclusion that the gap between the living wage and the actual wage is less in the case of clerks than in the case of operatives can be drawn from a consideration of the comparative wages received by them13. We find nothing that would justify us in interfering with the conclusion of the Tribunal that the clerical staff should be awarded bonus at the same rate as the operatives.