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Companies must pay minimum wage

Last updated: 10 October 2007

Court :

Brief :
The Bombay High Court has ruled that companies are bound to pay the prescribed minimum wage

Citation :
Sumedha Raikar-Mhatre

The Bombay High Court has ruled that companies are bound to pay the prescribed minimum wage, irrespective of how they calculate the wage components. Quashing an Industrial Court order, Justice A P Shah held that the Harilal Jechand Doshi Ghatkopar Hindu Sabha hospital had not committed an unfair labour practice by not paying the newly fixed basic pay to a clerk. The Maharashtra General Kamgar Union had approached the Industrial Court stating that the clerk was not being paid basic pay as per the latest state government notification issued under the Minimum Wages Act. Since the Industrial Court ordered the charitable hospital to pay the retabulated basic wage rate, the hospital moved the high court. As per the Act, the minimum wage constitutes the basic salary and dearness allowance. Interestingly, the order of the Industrial Court itself noted that the hospital clerk was being paid more than the amount prescribed under the notification. But, the court still maintained that by notpaying the prescribed basic pay component, the hospital was violating the act. However, the hospital's counsel argued in the high court that there was no breach in the employer's duty, as defined in the act. As long as the total package did not fall below the prescribed amount, the composition of the wage did not matter. It was argued that a company in Karnataka was paying more than minimum wages. The question before the court was whether the workers were entitled to variable dearness allowance (VDA) under a new notification. The apex court had then ruled that no provision of the Act necessitates VDA to be split up as a separate component. The Bombay High Court has ruled that since the contract rate of wages were quite high in the Ghatkopar hospital, the statutory minimum wage provisions do not come into play.
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