Employers cannot deny Minimum Wages basis capacity to pay - Supreme Court

The Supreme Court ruled in Hindustan Hosiery Industries Vs. F. H. Lala And Another that in fixing wage, the Industrial Tribunal will have to consider the position from workers’ point of view but the capacity of employers to pay such a wage is irrelevant.

In this case there was a reference made by Mill Mazdoor Sabha, Bombay to the Industrial Court , Maharashtra under Section 13 of the Bombay Industrial Relations Act 1946. The Mill Mazdoor Sabha, Bombay demanded revised basic wages for the time-rated workers of several categories and also rise of 50% in the wage of the piece rate workers in the Consumer price index bucket 621-630 and dearness allowance of 10 paise per day for every rise of 10 points or part thereof above the said slab.

The Industrial Court found that :

the wages provided for the workmen of the factory were inadequate and low and such wages have to be raised.

The Industrial Court further held that although the business was started by the appellant in 1967, it had earned profits 8 months. The Court, therefore, held that the appellant-company is financially sound and can take the burden of the revision of pay scales and dearness allowance.

Thus, the Industrial Court raised the Minimum Wages and dearness allowance.

Against the order,  appeal by special leave came before the Supreme Court. The appellant Industry  argued that:

The Tribunal awarding rise in wages ignored the difference between minimum wage and fair wage.

the Tribunal ignored the aspect of the capacity of the appellant to bear the burden of the additional rise in wages.

There is no justification for allowing the present rise of wages without following any principle and even higher than the statutory minimum wage fixed in respect of other industries in the state.

The Supreme Court dismissed the appeal and held that:

The Industrial Court was considering the case from the point of view of granting something higher than the subsistence or bare minimum wage bordering on fair wage.

The floor level wage is the bare minimum wage or subsistence wage.

The fair wage also must take note of economic reality of the situation an the minimum needs of the worker having a family with an eye to preservation of his efficiency as a worker.

The Industrial Court has taken into account the prevailing minimum wage rates in the region, and the capacity of the appellant to bear the burden of the increased wages. Again appellant could not show to us that the wage rates fixed by the Industrial Court are unfair for the appellant or that it cannot bear the load of increased wages.

So the appeal was dismissed and the decision of the Industrial Court prevailed.

Employers cannot deny Minimum Wages basis capacity to pay - Supreme Court