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Hindustan Sanitaryware and Industries Ltd. & Ors. v. The State of Haryana

Special Leave Petition (Civil) · 2019 INSC 584Decided 29 Apr 2019
Special Leave Petition (Civil) No. 5832 of 2018
Justice L. Nageswara Rao · Justice M.R. Shah

Background

The Haryana government, exercising its power under Section 5(2) of the Minimum Wages Act, issued a notification fixing/revising minimum wages across various scheduled employments, including rules on classifying workers as "unskilled," "semi-skilled," and "skilled" based on years of experience, and fixing a one-year training period for trainees. Hindustan Sanitaryware challenged this notification before the Punjab and Haryana High Court, which dismissed the challenge, holding the classification scheme was not impermissible and that trainees fell within the Act's purview. The company, along with a connected appeal by the Faridabad Industries Association on related aspects of the same (and a later, 2015) wage notification, approached the Supreme Court.

Decision Breakdown

The Supreme Court examined each disputed feature of the notifications against the statutory scheme of the Minimum Wages Act. It held that the government's prohibition on splitting wages into separate components/allowances was not a valid exercise of power, since wages already include components like house rent allowance and employers cannot be forced to pay twice over for the same component. It further held that certain categories, such as security inspectors/officers/supervisors, could not simply be swept into the notification, that unskilled employees could not be automatically re-categorized as semi-skilled purely based on years of experience, and that fixing a mandatory one-year training period was beyond the government's statutory jurisdiction. The Court clarified its findings would not affect the rest of the notifications (which remain in force), and that employers could not claim back amounts already paid to workmen as a result of winning this case; workmen remain free to pursue other legal remedies. The appeals were accordingly allowed on these specific points.

Lesson Learnt

A State government's power to fix minimum wages is not unlimited: it must stay within the Minimum Wages Act's own definitions (e.g., of "wages," "skilled" vs "unskilled") and cannot use a wage notification to recategorize workers or impose training periods beyond what the statute permits; however, workers who already received higher wages under a partly-struck-down notification do not have to refund that money.

Official source (sci.gov.in)View Judgment (PDF)

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