CORRECTED Reportable  

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL   No  . 2539   of   2010

Hindustan Sanitaryware and Industries Ltd. &   Others.

....  Appellants    

Versus

The State of Haryana      …. Respondent

WITH  

CIVIL APPEAL   No  . _______   of   2019 (Arising out of Special Leave Petition (Civil) No. 5832 of

2018)

Faridabad Industries Association       ....   Appellant    

Versus

The State of Haryana & Another               …. Respondents

J U D G M E N T

L. NAGESWARA RAO, J.

CIVIL APPEAL   No  . 2539   of   2010  

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1. The  Appellant  filed  a  Writ  Petition  challenging  the

Notification dated 27.06.2007 issued under Section 5 (2)

of the Minimum Wages Act, 1948 (hereinafter, “the Act”).

The said Writ Petition was dismissed by the High Court.

Aggrieved  by  the  judgment  of  the  High  Court,  the

Appellant has approached this Court.   

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 as under:  

 Unskilled  employees  having  10  years’ experience  would  be  deemed  categorized  as semi-skilled “A”.

 After 3 years of experience in semi-skilled “A”, the  employees  would  be  deemed categorized as semi-skilled “B”.

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 After  3 years of  experience in  skilled “A”,  the employees  would  be  deemed  categorized  as skilled “B”.

xxx Note: 1.  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.  1st January  and  1st 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 respectively.   

2. 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 now.

3 The wages of apprentices appointed under the Apprentices  Act,  1961  (52  of  1961),  shall  be regulated under the said Act.  

4. There shall be no difference between the wages for men and women workers.  

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5. 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 Contractor.

6.  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 skill.  

7.  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 days.  

8. The categorization of employment in Brick Kiln is placed at Annexure-A.

9. Above rates are without food.  Wherever food is given customarily, it shall be extra.  

10.  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 year.”    

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3. 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

regarding the impermissibility of classification of workmen

was misconceived and that the trainees would fall within

the purview of the Act.   

Civil Appeal No. _______   of 2019  (Arising out of Special Leave Petition (Civil) No. 5832 of 2018)

Leave granted.  

4. This  Appeal  by  Special  Leave  is  filed  against  the

judgment of the High Court dated 18.08.2017 by which

the  Writ  Petition  filed  by  the  Appellant  questioning  the

Notification dated 21.10.2015 issued under Section 5(2) of

the Act was dismissed.  

5. 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

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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:  

“Unskilled  employees  having  five  years

experience would be deemed categorized as semi

skilled “A”.

After 3 years of experience in semi skilled “A” the

employees would be deemed categorized as semi

skilled “B”.

After  3  years  of  experience  in  skilled  “A”  the

employees  would  be  deemed  categorized  as

skilled “B”

xxx

xxx

Notes:

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

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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 1st January and 1st 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 respectively.   

2. 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 now.   

3. The wages of apprentices appointed under the

Apprentices  Act,  1961  (52  of  1961),  shall  be

regulated under the said Act.   

4. There shall be no difference between the wages

for men and women.  

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5. 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 contractor.  

6.  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 skills.   

7.  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 days.  

8. The categorization of employment in Brik Kiln is

placed above at Annexure-A.

9.  Above  rates  do  not  include  food  charges.

Wherever  food  is  given  customarily,  it  shall  be

extra.

10.  Trainees  shall  be  paid  75%  of  the  wages

applicable to the category, but it shall not be less

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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 year.  

6. It  was submitted on behalf  of  the Appellant before

the  High  Court  that  the  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  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 employments 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

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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 in

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 20071 in support

of its findings.   

7. Mr. Kailash Vasdev, learned Senior Counsel appearing

for  the  Appellants  in  Civil  Appeal  No.  2539  of  2010

submitted  that  the  classification  of  workmen  by  the

1 Apparel Exporters & Manufacturers Association vs. State of Haryana – CWP  No.9942 of 2007 dated 06.09.2007

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Notification dated 27.06.2007 amounts to an interference

with the promotion policy of the Appellant which is beyond

the  jurisdiction  of  the  Government  under  the  Act.   He

stated that the Government does not have the power to

alter  the  conditions  of  service,  contract  or  settlement

between the employer and the employee.  He referred to

a settlement between employees and the employer which

specifies the regulation of wages.  Mr. Vasdev argued that

the  High  Court  erred  in  not  realizing  the  difference

between a fair wage, a living wage, and a minimum wage.

He  relied  upon  a  judgment  of  this  Court  in  Bidi,  Bidi

Leaves and Tobacco Merchants’ Association v. State

of Bombay2  in support of his submission that the power

that is conferred on the Government was only to deal with

fixation and revision of wages and not to interfere with the

contractual rights and obligations.  Mr.  Harvinder Singh,

learned counsel appearing for the Petitioner in Civil Appeal

@  SLP  (Civil)  No.5832  of  2018  submitted  that  the

Petitioner has a grievance only regarding some portions of

the Notification dated 21.10.2015.  His first objection to

the Notification was relating to the revision of minimum

2 1962 Supp (1) SCR 381

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rates  of  wages  for  Security  inspector/  Security  officer/

Supervisor by relying upon the definition of “employee” in

Section  2(i)  of  the  Act.  He  submitted  that  Security

inspector/ Security officer/ Supervisors will not fall within

the  purview  of  the  definition  and  hence,  the  State

Government  did  not  have  the  power  to  fix/  revise  the

minimum wages for  the said  categories.   Similarly,  the

learned  counsel  submitted  that  trainees  cannot  be

brought within the purview of the Act as they also do not

fall within the definition of “employee” under Section 2(i)

of the Act as all the trainees are not employed for hire or

reward.  The learned counsel relied upon a judgment of

this  Court  in  Haryana  Unrecognised  Schools’

Association v.  State of Haryana3 in which it was held

that teachers working in an educational institution cannot

be  held  to  be  discharging  either  skilled  or  unskilled  or

manual  or  clerical  work  and  as  such  they  did  not  fall

within the scope of “employee” under Section 2(i) of the

Act.   Mr.  Singh submitted that  the Government did  not

have  the  power  to  place  a  restriction  on  the  period  of

training  which  according  to  the  Notification  cannot  be

3 (1996) 4 SCC 225

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more  than  one  year.   He  further  argued  that  the

classification of employees was totally impermissible.  He

also  submitted  that  different  minimum  rates  of  wages

cannot be fixed for the same class of work in the same

scheduled employment.  By the deemed categorization of

an unskilled employee as a semi-skilled employee after

five  years  experience,  the  Government  fixed  higher

minimum  rate of wages for a worker who has completed

five years though he continued to work as an unskilled

employee.  This would amount to higher minimum wages

being paid for a worker in the lower category on the basis

of deemed classification.  He further submitted that the

prohibition  of  segregation of  wages  into  components  in

the form of allowances was beyond the competence of the

Government.  By referring to Section 2(h) of the Act which

defines  wages,  the  learned  counsel  for  the  Appellant

submitted  that  the  very  definition  of  wages  means  all

other  remuneration  in  accordance  with  the  terms  of

contract or employment.  According to Mr. Singh, there is

no concept of basic rate of minimum wages.  He further

argued  that  the  concept  of  principal  employer  and

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contractor  is  foreign  to  the  Act  and  the  occupier/the

principal  employer  cannot  be  made responsible  for  the

payment of minimum rate of wages to a contract labour.

Allegations of exploitation of workmen by the employers

cannot be a ground for  issuance of a notification under

Section 5 of the Act if the Government lacks jurisdiction.   

8. Dr. Monika Gusain, learned counsel appearing for the

State of Haryana referred to Article 43 of the Constitution

of India to submit that it is the duty of the State to secure

a  living  wage  to  all  workers.   She  submitted  that  the

Notifications  were  issued  on  the  basis  of

recommendations made by an Advisory Committee after

consultations  with  the  employers  and  the  workmen.

Splitting  of  the  minimum  wages  into  components  is

permissible as  there is  no prohibition in  the Act.    She

contended  that  the  deemed  promotion  of  an  unskilled

worker to a semi-skilled worker, based on experience, is

only for the purpose of entitling them to the next grade of

minimum wages which cannot be construed as a deemed

promotion or classification.  Dr. Gusain stated that it has

come to the notice of the Government that trainees were

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not being paid even the minimum wages applicable to an

unskilled workman for which reason it was decided that

trainees should be protected.  The learned counsel for the

State  of  Haryana  defended  the  Notifications  dated

27.06.2007 and 21.10.2015 on the ground that they were

issued to protect the fundamental rights of the workers.

She also argued that the Appellants have not produced

any  material  to  show  the  loss  caused  to  them  by  the

Notifications, and hence, the judgment of the High Court

does not warrant interference.   

9. At this stage, it is necessary to refer to the relevant

provisions  of  the  Act.   “Wages”  and  “Employee”  have

been defined in Sections 2(h) and 2(i)  of  the Act which

reads as under:

“2(h) “wages” means all remuneration, capable of being expressed in terms of money, which would, if  the  terms  of  the  contract  of  employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment, [and includes house rent allowance], but does not include—

(i) the value of—

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(a)  any  house-accommodation,  supply  of  light, water, medical attendance, or

(b) any other amenity or any service excluded by general  or  special  order  of  the  appropriate Government;

(ii) any contribution paid by the employer to any Pension  Fund  or  Provident  Fund  or  under  any scheme of social insurance;

(iii)  any travelling allowance or the value of any travelling concession;

(iv)  any  sum  paid  to  the  person  employed  to defray  special  expenses  entailed on  him by the nature of his employment; or (v) any gratuity payable on discharge;

2(i)  “employee”  means  any  person  who  is employed for hire or reward to do any work, skilled or  unskilled,  manual  or  clerical,  in  a  scheduled employment in respect of which minimum rates of wages  have  been  fixed;  and  includes  an  out- worker to whom any articles or materials are given out by another  person to be made up,  cleaned, washed,  altered,  ornamented,  finished,  repaired, adapted or  otherwise processed for  sale  for  the purposes  of  the  trade or  business  of  that  other person  where  the  process  is  to  be  carried  out either in the home of the out-worker or in some other  premises  not  being  premises  under  the

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control and management of that other person; and also  includes  an  employee  declared  to  be  an employee  by  the  appropriate  Government;  but does not include any member of the Armed Forces of the  [Union].”

10. The  appropriate  government  is  empowered  by

Section 3 of the Act to fix the minimum rates of wages

payable to  the employees  employed in  an employment

specified in Part I and Part I (b) of the Schedule.  Section 4

of the Act provides that the minimum rate of wages fixed

or revised under Section 3 may contain:

“(i) a basic rate of wages and a special allowance at a rate to be adjusted, at such intervals and in such manner as the appropriate Government may direct, to accord as nearly as practicable with the variation  in  the  cost  of  living  index  number applicable to such workers (hereinafter referred to as the “cost of living allowance”); or

(ii) a basic rate of wages with or without the cost of  living  allowance,  and  the  cash  value  of  the concessions  in  respect  of  supplies  of  essential commodities  at  concession  rates,  where  so authorised; or

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(iii) an all-inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of the concessions, if any.”

11. The  procedure  for  fixing  or  revising  the  minimum

rates of wages is dealt with under Section 5 of the Act.

After following the procedure prescribed under Section 5,

the appropriate government can fix/revise the minimum

rates of wages and issue a notification to that effect.  An

obligation is imposed on the employer by Section 12 of

the Act to pay to every employee engaged in a scheduled

employment wages at a rate not less than the minimum

rates  of  wages  fixed  by  the  notification  issued  under

Section  5  of  the  Act.   The  authority  conferred  on  the

Government  in  fixing  or  revising  the  minimum rates  of

wages under the relevant provisions of the Act was dealt

with  by this  Court  in  Bidi,  Bidi  Leaves and Tobacco

Merchants’ Association (supra).  This Court held:

“What is the extent of the authority conferred on the respondent in fixing or revising minimum rates  of  wages  under  the  relevant  provisions  of the  Act?  In  dealing  with  this  question  we  must necessarily bear in mind the definition of the term “wages” prescribed by Section 2(h).  As we have

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already  seen  the  term  “wages”  includes remuneration  which  would,  if  the  terms  of  the contract of employment, express or implied, were fulfilled,  be  payable  to  a  person  employed  in respect  of  his  employment.  In  other  words,  the term “wages” refers  to remuneration payable to the  employee  as  a  result  of  the  terms  of employment. What would be the amount to which the employee is entitled if the other terms of the contract  are  performed?  That  is  the  question which has to  be  asked in  determining  what  the term “wages” means under Section 2(h). No doubt Sections  3,  4  and  5  authorise  the  appropriate Government to fix the minimum rates of wages. In other  words,  if  the  wages  fixed  by  a  contract which is either express or implied are found to be low,  authority  is  conferred  on  the  appropriate Government to increase them so as to bring them to the level of what the said Government regards as the minimum wages in the particular scheduled employment in the particular area concerned. This means that power is conferred on the appropriate Government to  modify one term of  the contract express or implied between the employer and the employee and that is a term which has reference to the payment of wages. If for a certain piece of work  done  by  the  employee  the  employer  has agreed  to  pay  him  either  expressly  or  by

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implication  a  certain  amount  of  wages  the appropriate  Government  can  issue a  notification and prescribe that for the said work done under the contract the employer must pay his employee a much higher rate of wages and the higher rate of wages thus prescribed would be deemed to be the minimum rate of wages between the parties.

It would, however, be noticed that in defining “wages” clause 2(h) postulates that they would be payable  if  the  other  terms  of  the  contract  of employment  are  fulfilled.  That  is  to  say,  in authorising  the  fixation  of  minimum  rates  of wages  the  other  terms  of  the  contract  of employment  have  always  to  be  fulfilled.  The fulfilment of the others terms of the contract is a condition precedent for the payment of wages as defined under Section 2(h) and it continues to be such a condition precedent even for the payment of  the  minimum  rates  of  wages  fixed  and prescribed  by  the  appropriate  Government.  The significance of the definition contained in Section 2(h) lies in the fact that the rate of wages may be increased but no change can be made in the other terms  of  the  contract.  In  other  words,  the  Act operated on the wages and does not operate on the  other  terms  of  the  contract  between  the employer  and  the  employee.  That  is  the  basic approach which must be adopted in determining

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the scope and effect of the powers conferred on the  appropriate  Government  by  the  relevant provisions of the statute authorising it to prescribe minimum rates of wages or to revise them. What the appropriate Government is authorised to do is to prescribe,  fix or  revise wages and wages are defined  to  be  remuneration  payable  to  the employees  if  the  terms  of  the  contract  of employment,  express  or  implied,  were  fulfilled. This definition runs, as it inevitably must, through the  material  provisions  of  the  Act  and  its importance cannot therefore be ignored.”

12. The learned counsel for the Government of Haryana

argued that the workmen are exploited by the employers

and the notifications were issued after taking into account

the recommendations of the expert body to protect the

interests  of  the  workmen.   The  point  raised  by  the

Appellants pertains to the jurisdiction of the Government

in the issuance of the notification.  The grievances of the

workmen can be redressed by the fora constituted under

the Industrial Disputes Act, 1948 if the Government does

not have the competence to deal with certain issues in a

notification  under  the  Act.   In  Bidi,  Bidi  Leaves  and

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Tobacco  Merchants’  Association  (supra),  Justice

Gajendragadkar, observed :-

“It  is  well  settled  that  industrial  adjudication under the provisions of the Industrial Disputes Act 14 of 1947 is given wide powers and jurisdiction to make appropriate awards in determining industrial disputes brought before it. An award made in an industrial  adjudication  may  impose  new obligations  on  the  employer  in  the  interest  of social justice and with a view to secure peace and harmony between the employer and his workmen and  full  co-operation  between  them.  Such  an award may even alter the terms of employment if it is thought fit and necessary to do so. In deciding industrial disputes the jurisdiction of the tribunal is not  confined  to  the  administration  of  justice  in accordance  with  the  law  of  contract.  As Mukherjea,  J.,  as  he  then  was,  has  observed in Bharat  Bank  Ltd.,  Delhi v. Employees  of  the Bharat  Bank  Ltd.,  Delhi the  tribunal  “can  confer rights  and  privileges  on  either  party  which  it considers  reasonable  and  proper,  though  they may  not  be  within  the  terms  of  any  existing agreement. It has not merely to interpret or give effect  to  the  contractual  rights  and  obligations between  them  which  it  considers  essential  for keeping  industrial  peace”.  Since  the  decision  of the  Federal  Court  in Western  India  Automobile

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Association v. Industrial  Tribunal,  Bombay ,  it  has been  repeatedly  held  that  the  jurisdiction  of Industrial  Tribunals  is  much  wider  and  can  be reasonably  exercised  in  deciding  industrial disputes  with  the  object  of  keeping  industrial peace  and  progress  (Vide: Rohtas  Industries, Ltd. v. Brijnandan  Pandey, Patna  Electric  Supply Co.  Ltd.,  Patna v. Patna  Electric  Supply  Workers' Union). Indeed, during the last ten years and more industrial adjudication in this country has made so much progress in determining industrial disputes arising between industries of different kinds and their employees that the jurisdiction and authority of Industrial Tribunals to deal with such disputes with  the  object  of  ensuring  social  justice  is  no longer seriously disputed.”

13. There is no power vested in the Government by the

Act  to  make  alterations  to  the  terms  of  a  contract.

Jurisdiction is conferred by the Act on the Government to

fix/revise  the  minimum  rates  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- 23

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.4  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 Appellant’s 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

4 See: Haryana Unrecognized Schools’ Association (supra)   24

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 vires.   

14. 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”.5

A close scrutiny of the definitions of the employer and the

5 Section 2(e), Minimum Wages Act, 1948  

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employee would show that  workmen employed through

the  contractors  fall  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 Act.

15. The  other  point  that  remains  to  be  considered  is

regarding the segregation of  wages into components  in

the  form  of  allowances.  It  is  useful  to  refer  to  the

judgment  of  this  Court  in  Airfreight  Ltd. v.  State of

Karnataka6 in which this Court observed:  

“20. … … … Once rates of minimum wages are prescribed under the Act, whether as all-inclusive under Section 4(1)(iii) or by combining basic plus dearness allowance under Section 4(1)(i), are not amenable  to  split  up.  It  is  one  pay  package. Neither the scheme nor any provision of the Act provides that the rates of minimum wages are to be split up on the basis of the cost of each of the necessities taken into consideration for fixing the same.”

16. “Wages”  is  defined  in  Section  2(h)  to  mean  all

remuneration,  capable  of  being  expressed  in  terms  of

6 (1999) 6 SCC 567

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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 of wages which

pertain  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 dated

21.10.2015 is not a valid exercise of power.   

17. 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

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case.  As the findings recorded in this judgment pertain to

the  jurisdiction  of  the  Government  under  the  Act,  the

workmen are not precluded from seeking redressal of their

grievances  by  resorting  to  other  remedies  available  to

them under law.

18. The upshot of the above discussion is :

(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 semi-

skilled on the basis of their experience is ultra vires the

Act; (e) Fixing the training period to a period of one year

is beyond the jurisdiction of the Government.  

19. For  the  aforementioned  reasons,  the  appeals  are

allowed.    

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                          .................................J.

             [L. NAGESWARA RAO]

 ..................................J.               [M.R.SHAH]

New Delhi, April 29th, 2019.   

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