Minimum Wages Act does not empower government to alter terms of contract

0
154
government alter employment contract

In the case of Hindustan Sanitaryware and Industries Ltd & Ors v State of Haryana and Faridabad Industries Association v State of Haryana and Ors, the Supreme Court held that the government, in reconsidering minimum wages, should not exceed its jurisdiction and alter the provision of the contract between the employee and the employer. The court further held that fixing the training period and direction for payment of minimum wages to trainees are ultra vires the Minimum Wages Act, 1948 (act).

In the case, Haryana passed two notifications, dated 27 June 2007 and 21 October 2015, issued under section 5 (2) of the act. These were 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 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.

The high court rejected the submission of the appellant with respect to the categorization and held that categorization of employees based on the years of experience is justified. The appellant appealed the high court order and the Supreme Court, after considering the submissions of the parties, held that the prohibition of segregation of wages into components in the form of allowances in the notification is impermissible.

It was also held that trainees, who are employed without payment of any reward, cannot be covered by the notification. The court also held that categorization of unskilled employees as semi-skilled and semi-skilled as skilled on the basis of their experience is ultra vires and fixing the training period for one year is beyond the jurisdiction of the government. However, the court directed employers not to recover any amounts paid, under the notifications, from the employees on the grounds that they have succeeded in the case.

The dispute digest is compiled by Bhasin & Co, a corporate law firm based in New Delhi. The authors can be contacted at [email protected]. Readers should not act on the basis of this information without seeking professional legal advice.