Can Minimum wages as fixed by the State Government or provided under the Minimum Wages Act, 1948 bifurcated under various heads.

(A perspective with reference to Airfreight case)

In Kamani Metals & Alloys Ltd. v. Their Workmen, [1967] 2 SCR463 the Court observed:-"Broadly speaking the first principle is that there is a minimum wage which, in any event, must be paid, irrespective of the extent of profits, the financial condition of the establishment or the availability of workmen on lower wages. This minimum wage is independent of the kind of industry and applies to all alike big or small. It sets the lowest limit below which wages cannot be allowed to sink in all humanity".

So the Question arises, whether Minimum Wage as notified by the State Government or provided under the Minimum Wages Act, 1948 can be split up under various head. 

The judgement of Airfreight is loosely interpreted to argue that the Minimum wages can be split up under various head like “Basic”, “HRA” and “transportation allowance” etc.

Airfreight case (Airfreight Ltd vs State Of Karnataka And Ors on 4 August, 1999) was in relations to:

1. Appellant Companies contention that they are not covered by the Expression “Shops and     establishment “and therefore the Notification under challenge would not be applicable to the appellant company.

2. Appellant company is paying more than the minimum wages, but the COMPANY IS NOT bifurcating the basic wage and dearness allowance, as the Act  it is not required to divide minimum wages into two parts as one as basic wages and the other as Dearness allowance.

and the Apex Court held that “If an employer is paying wages to workers which is equal to or higher than minimum wages (including VDA) as fixed by the State Government or provided under the Minimum Wages Act, 1948, then they are not required to pay VDA separately, it can be paid as one package “Basic+VDA.”

It is also well settled that the role of the court is not to legislate but to interpret the provisions of the statue and to iron out the crease the departure from the literal rule should only be done in very rare cases. Recourse can not be had to principle of interpretation other than literal rule where words of statute are clear and unambiguous. In support of said argument, reliance placed on the judgment by the Apex Court in the case of Southern Petrochemical Industries Co. Ltd., Vs. Electricity Inspector & ETIO and others (2007) 5 SCC 447, that a court would so interpret a provision as would help sustaining the validity of law by applying the doctrine of reasonable construction rather than making it vulnerable and unconstitutional by adopting rule of litralegis. 

So it would be Pertinent to read the Relevant Section of the Minimum Wages Act 1948, to decode the answer;

Section 2 (h) of the Minimum Wages Act, 1948 (Act) defines Wage as “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-- (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;”

Section 3 provides that “The appropriate Government shall, in the manner hereinafter provided, fix the minimum rates of wages payable to employees employed in an employment specified in Part I or Part II of the Schedule and in an employment added to either Part by notification under section 27.”

Section 4 (as interpreted by Apex Court in the Airfreight Case) “Section 4 postulates that minimum wages fixed or revised by the appropriate Government under Section 3 may consist of basic rates of wages and special allowance at a rate to be adjusted at such intervals in such manner as the appropriate Government may direct to accord as nearly as practicable with a variation in the cost of living index number applicable to such workers; alternatively, it permits the fixation of basic rate of wages with or without cost of living allowance and the cash value of the concessions in respect of supplies of essential commodities at concessional rates where so authorised; or in the alternative, it permits an all inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of concessions, if any.”

 The Court further goes on the point out that, “from the aforesaid Sections 3 & 4, it is apparent that what is fixed is total remuneration which should be paid to the employees covered by the Schedule and not for payment of costs of different components which are taken into consideration for fixation of minimum rates of wages.

The Hon’ble further goes on to point out that “Once rates of minimum wages are prescribed under the Act, whether as all inclusive under Section 4(l)(iii) or by combining basic plus dearness allowance under Section 4(1 )(i) are not amenable to split up.” (refer to para  32 of the judgement)

Conclusion:

If an employer is paying wages to workers which is equal to or higher than minimum wages (including VDA) as fixed by the State Government or provided under the Minimum Wages Act, 1948, then they are not required to pay VDA separately, it can be paid as one package “Basic+VDA.

As such it is amply clear reading through the provisions of the Minimum Wages Act, that the Minimum wages cannot be split up, but has to be paid in full, except for “Basic+VDA” can be paid as one package” and any exception would amount to contravention of the mandatory provision of law and dissenting company /employer shall be liable for action under Minimum Wages Act.  

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