Contract Labour - Minimum wages , applicability is basis employer-employee relationship and not the premises where they work?
This article broadly focus on the application of minimum wages and the appropriate zone classification, wherever the contract employee/worker is engaged outside the premises of the empoyer, at other premises. Such other premises may either be connected with the employer/contractor directly or indirectly. The Bombay High Court's intrepretation of the Minimum Wages Act thread-bare demonstrates the object of this beneficial legislation and the relevance of employer, employee and the term employment, in relation to appropriate application of minimum wages (Indian Labour Organisation & Ors. vs D.H. Deshmukh, Presiding ... on 13 August, 1996. Source: Indian Kanoon - reference: http://indiankanoon.org/doc/829140/ 8).
Relevant Extract, including definitions from the judgement
Minmum Wages Act - Key definitions
'employer' means any person who employs whether directly or through another person, or whether
on behalf of himself or any other person, one or more employees in any scheduled employment in
respect of which minimum rates of wages have been fixed under this Act, and includes, except in
sub-section (3) of section 26 :
i) in a factory where there is carried on any scheduled employment in respect of which minimum
rates of wages have been fixed under this Act, any person named under cl. (f) of sub-section (1) of
section 7 of the Factories Act, 1948 (63 of 1948) (as manager of the factory);
ii) in any scheduled employment under the control of any Government in India in respect of which
minimum rates of wages have been fixed under this Act, the person or authority appointed by such
Government for the supervision and control of employees or where no person or authority is so
appointed the head of the department;
iii) in any scheduled employment under any local authority in respect of which minimum rates of
wages have been fixed under this Act, the person appointed by such authority for the supervision
and control of employees or where no person is so appointed the Chief Executive Officer of the local
authority;
iv) in any other case where there is carried on any scheduled employment in respect of which
minimum rates of wages have been fixed under this Act, any person responsible to the owner for the
supervision and control of the employees or for the payment of wages";
Section 2(g) defines scheduled employment as under :
"Scheduled Employment' means an employment specified in the schedule, or any process or branch
or work forming part of such employment".
Section 2(h) defines wages as under :
"'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....
Section 2(j) defines 'employee' as under :
"'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 outworker or in some other
premises not being premises under the control (and management of that other person; and includes
for the purposes of sections 20, 21, 22, 22-A, 22-B, 22-C, and 22-D any person who has been an
employee and who has ceased to be so by reason of superannuation, retirement, dismissal, removal,
discharge, termination of service, or otherwise howsoever) 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".
Section 3 provides that the appropriate Government shall in the manner provided fix the minimum
rates of wages payable to employees employed in an employment specified in Part I of Part II of the
Schedule and in an employment added to either part by notification under section 27. Section 16
provides that where an employee does two or more classes of work to each of which a different
minimum rate of wages is applicable, the employer shall pay to such employee in respect of the
time-respectively occupied in each such class of work, wages at not less than the minimum rate in
force in respect of each such class.
Key Essential Learnings from this landmark Judgement
It is significant that the Act has not defined the word 'employment' but has defined words, employer,
employee as also wages. On a conjoint reading of words employer, scheduled employment, wages, and employee, the Court have no manner of doubt that the word 'employment' used in the Act cannot be understood dehors employer and employee.
In other words one must ask a question as to who is the employer of the employee concerned. Once employer is determined, the employment in which such employer is engaged will determine the issue. If such an employment is one of the scheduled employment, then the employee of such employer, must get the benefit of any notification issued under the relevant item of Schedule Part I to the Minimum Wages Act. Where a workman actually works or the nature of work of the workman concerned, in the Court's opinion will not matter at all. May be under the notification itself Government may prescribe different rates of minimum wages for different classes of workmen in the scheduled employment.
Nevertheless all such workmen will be covered by the scheduled employment and consequently by any notification issued under a relevant item of Schedule Part I of the Minimum Wages Act. Once the employer i.e. Yashmun Engineers Ltd. asserted that the workmen concerned are its employees and once it is an agreed position that undisputedly Yashmun Engineers Ltd. are engaged in the employment in the engineering industry, the workmen concerned must be held to be governed by the notification issued under item 36 of Schedule Part I of the Minimum Wages Act. That they are working on the premises of Tata Electric Companies or that they are doing some work which has nothing to do with the engineering industry, as such in our opinion is irrelevant. The employee must be in the employment of the employer engaged in a particular scheduled employment. The word 'employment' has to be and could be understood only with reference to the relationship of employer and employee and not dehors the same.
In the light of the above, legal status, the hon'ble HC was of the clear opinion that the fact that these workmen were working on the premises of and for Tata Electric Companies is irrelevant for the purpose of deciding as to whether they are working in the schedule employment. Once it is held that the workmen are employees of Yashmun Engineers Ltd. and further that Yashmun Engineers Ltd. is falling under item 36 of Schedule Part I i.e. "employment in engineering industry", the workmen must be held tobe governed by the notification issued by the State Government for employment under item 36 of
Schedule Part I of the Minimum Wages Act.
The hon'ble HC was also not impressed by the submission of Shri Rele that until the issue as to who is the employer of these workmen is finally determined, applications should be held to be premature and
should not be disposed of. If this submission is accepted it would mean that the workmen concerned would not get the benefit as workmen either of Tata Electric Companies or even minimum wages payable to them as workmen of Yashmun Engineers Ltd. Such a result and consequence cannot be countenanced in the interest of justice. When Tata Electric Companies as well as Yashmun Engineers Ltd. have consistently asserted and do not dispute even at this stage the position that the workmen are the workmen of Yashmun Engineers Ltd., the hon'ble HC did not see any good ground why the applications of the workmen should not be determined on the basis of the position accepted by the employer himself.
The hon'ble HC, also saw no good reason that though only 10 out of 15 workmen have individually impleaded themselves as petitioners, why the remaining should not get the same benefit as the issue was pure question of law.
Accordingly the hon'ble HC quashed and set aside the order dated 20th June 1996 by holding that the
applications are maintainable and the learned Judge of the 6th Labour Court shall determine the exact amount payable to each of the workmen on the basis that the workmen are employees of Yashmun Engineers Ltd.
Key Learnings:
- It is the Employer - Employee nexus which determines the empoyent schedule and whatever is the minimum wages prescribed/notified by the minimum wages authorties from time time to
that schedule employment applies to the employees deployed by the employer, be at his place
or outwork, or the Principal Employer's or any designaged field base - While determining the applicablity of zone-wise wages, it is the zone where the employer's establishment is situated and wherefrom the employeers are connected
- If for any reason the employer is deploying his employeers at various zones and he is operating
in one particular zone the wages notified for the particular zone applies to his employees - if the employers wants to apply or classify zone wise his employes basis deputation or deployment, it is necessary that the employer has its establishments in such zone with due compliance process
- It is significant that wherever an employee is travelling or working at difference zones, the zone in which he predominantly works should be applied for determining wages
- Even if the employees are pearmanently deputed to another establishment, it does not matter as the principles have been well established by law, as enunciated by the High Court.
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