Categorisation of Unskilled employees as Semi Skilled and Semi Skilled as Skilled on the basis of their experience is ultra vires to the Minimum Wages Act.

The Supreme Court held that the Government while reconsidering the minimum wages ought not cross its jurisdiction and alter the provision of the contract between the employee and the employer. The Court further held that Fixing training period and direction for payment of minimum wages to trainees are ultra vires to the Act.

The above ratio was passed by a common judgment dated 29.04.2019 in the case of Hindustan Sanitaryware and Industries Ltd. & Ors. Vs. State of Haryana and Faridabad Industries Association Vs. State of Haryana and Ors. bearing Civil Appeal No. 2539 of 2010 and 4454 of 2019 respectively.

Challenge:

The State of Haryana passed two notification dated 27.06.2007 and 21.10.2015 issued under Section 5 (2) of the Minimum Wages Act, 1948. The Appellants in the two appeals bearing Civil Appeal No. 2539 of 2010 and 4454 of 2019 challenged the respective notifications wherein both the notifications categorized the employees as skilled, unskilled and Semi-skilled based on the years of experience that they hold. They further directed the employers to pay 75% of minimum wages applicable to the category and also that the training should not be for more than one year.  Notification of 2015 further read that even in case of workmen engaged through contractor, the employer shall be personally liable to the payment of minimum wages by the contractor. It also notified that the rates of wages of Security Inspector/ Security Officer/ Supervisors be revised.

The Appellant argued that fixation of time period of trainees and payment of 75% of wages us ultra-vires the act. It was further argued that categorisation of the employees as skilled, semi-skilled or unskilled employees is beyond the jurisdiction of the government.

The High Court rejected the submission of Appellant with respect to the categorisation and held that categorisation of workmen based on years of experience is justified as workmen were continued with their grades for long resulting in stagnation.

Aggrieved by the decision of the High Court, the Appellant moved before the Supreme Court wherein it was argued that categorisation of workmen is interference with the promotion policy of the Appellant which is out of jurisdiction of the Government under the Act. It was also argued that Security Inspector/ Security Officer/ Supervisors do not fall in the definition of the ‘employees’ and therefore their rate of wages ought not be revised. The Counsel for State argued that the notification was issued for the welfare of the workmen.

Held

The Court after considering the submissions of the parties held that argument of the Respondent that trainees are directed to be paid during the training period is with the objective to protect their interest, is not a valid argument as grievances of workmen can be redressed by the fora constituted under Industrial Disputes Act, 1948 therefore this reason is not valid. The Court, allowing the appeal, held the following:

  1. The prohibition of segregation of wages into components in the form of allowances in the Notification is impermissible;
  2. The security inspector/ security officer/ security supervisor cannot be included in the Notification;
  3. Trainees who are employed without payment of any reward cannot be covered by the Notification;
  4. Categorization of unskilled employees as semiskilled and semi-skilled as skilled on the basis of their experience is ultra vires.
  5. Fixing the training period for one year is beyond the jurisdiction of the Government