Financial Capacity Of Employer Is Relevant To Determine Wages, SC Holds

The Supreme Court of India recently held that the financial capacity of an employer will be a relevant factor to determine wages.

Bench comprising Justice Aniruddha Bose and Justice Sanjay Kumar heard appeals on wage revisions pertaining to the workmen of VVF India Limited.

The union of workers had raised demands. Some of these demands were met by the Tribunal ordering in favour of the employees represented by the union. Both employer and employees challenged the award of the Tribunal by way of separate writ petitions before the Delhi High Court.

The union, in its writ petition, argued that the Tribunal had failed to consider the plea of the workmen for parity with similarly situated units in the vicinity as well as its claim for overtime allowances. 

The High Court dismissed the employer’s writ petition and held that there was no serious anomaly in the demands of the union allowed by the Tribunal.

The employer has assailed the judgment questioning the jurisdiction of the Writ Court in entering into fact-finding exercise while testing legality of an award.

The Court further held that for revision of wages and other facilities, the standard criteria which is followed by the industrial adjudicator is to apply industry-cum-region test, which in substance implies that the prevailing pay and other allowances should be compared with equally placed or similarly situated industrial units in the same region.

"To determine comparability of units applying the industry-cum-region test, inter alia, the financial capacity of the employer would be a strong factor," the Supreme Court held.

The Supreme Court set aside the judgment of the High Court and remanded the matter back to the Tribunal to re-examine the issues at hand.

2024 INSC 293