Supreme Court Issues Notice On SLPs Against Kerala High Court Judgment On Minimum Wages Rules

The Supreme Court on Friday issued notices on two special leave petitions filed against a judgment of the Kerala High Court dealing with amendments brought to the Kerala Minimum Wages Rules.

The SLPs were filed by the State of Kerala and Tata Consultancy Services Ltd.

The High Court had struck down an amendment brought to the Rules which mandated the payment of wages electronically through bank accounts.

However, the High Court rejected the challenge made by several private employers against other amendments brought through the Kerala Minimum Wages (Amendment) Rules 2015 regarding the maintenance of electronic records relating to the wage information of employees and uploading of the same through the 'Wage Payment System" developed by the state department.

While the State Government filed approached the Supreme Court to the extent the High Court struck down the rule regarding electronic payment of wages, the TCS challenged the HC judgment to the extent it upheld the other amendments.

Senior Advocates Jaideep Gupta and JP Cama, appearing for the State and the TCS respectively, submitted before a bench headed by Justice Sanjay Kishan Kaul that both the parties were aggrieved with the judgment for different reasons.

"Both of you seem to be upset with the judgment. If both parties are unhappy, it is likely that justice has been done", Justice Kaul remarked in a lighter vein.

The bench then issued notices on both the SLPs and posted the cases after eight weeks.

High Court judgment

In the High Court, a single bench had upheld the amendments completely.

In the appeals filed by various private employers, a division bench comprising Justices K Vinod Chandran and V G Arun struck down the provision regarding e-payment of wages and upheld the other impugned provisions.

In the judgment delivered on January 23, the division bench observed that it "broadly agreed" with the findings of the single bench, except on the issue of e-payment of wages.

The division bench held that Rule 21A(2), which mandated e-payment of wages through bank accounts of the employees, was contrary to Section 11(1) of the Minimum Wages Act 1948 which mandated payment in cash.

The Court noted that while the Parliament has amended the Payment of Wages Act in 2017 to facilitate payment through bank account, no such amendment has been made to the MW Act.

"Viewed in this manner, we have to find that the prescription made by sub-rule (2) of Rule 21A, that the employers of the scheduled employments should pay and disburse the wages to the employees only through individual Bank accounts would be in violation of the specific statutory mandate", the bench observed.

The bench observed that "there can be no insistence that the minimum wages will be paid through the bank accounts or through the WPS system of the Department."

However, the Court clarified that if the employer voluntarily makes payment through bank with the consent of employees, there will be no violation of Section 11(1) of the Minimum Wages Act.

The High Court however rejected the arguments of the employers against the provisions regarding maintenance of records.

"There can be no ground taken of the maintenance of records digitally being against the provisions of the Act, since Sections 6 & 7 of the Information Technology Act, 2000 validates digital maintenance of documents, records or information which are to be maintained under any law and deems it to be a proper maintenance as per that enactment.

It cannot also be alleged that there is a cumbersome procedure, since what has been earlier mandated to be physically recorded in Registers has now been directed to be recorded in the electronic media", the bench observed.

Rejecting the argument on infringement of privacy, the bench said that the information was secured by password, ensuring no unauthorized third party access. Also, these details were even otherwise accessible to officers under the Act through physical inspection of records.

Another contention raised by the appellants was on the alleged discrimination as the Amendment covered six scheduled employments.

Discarding this, the court observed,

"The State, in its wisdom, has picked certain industries for initial coverage under the Amended Rules, which has been introduced for the first time. On looking at the industries specified, we presume; no other specific ground of discrimination having been raised, that the State first picked up those industries wherein the employees are evidently unorganized and the number of employees far less than other establishments."

While partly allowing the appeal, the court directed the employers of the scheduled employments to be granted three months time to commence uploading of Form XVI in WPS of the employee without the account number if not voluntarily provided.

The Minimum Wages (Amendment) Rules 2015 introduced IT-based 'Wage Payment System' in 6 scheduled employments - private hospitals, dispensaries, para medical institutions, star hotels, security services, computer software and private educational institutions (non-teaching).