'Minimum Wages Not A Static Concept' : Karnataka HC Upholds 487.20% Rise in Doctors' Minimum Wages [Read Order]

"The concept of minimum wages is not a static concept", observed the Karnataka High Court while upholding the wage revisions notified by the government.

The Court was considering, inter alia, the Writ Appeal filed by the Private Hospital and Nursing Homes Association, aggrieved by the Karnataka Government's notification of January 6, 2017 by which the minimum wages for doctors and other personnel in private hospitals and nursing homes have been increased by "487.20%" to bring them at par with the wage of their counterparts covered under the Employees' State Insurance.

"The world has changed very fast during the last decade. The concept of necessities of life has undergone a drastic change. The concept of what is required for subsistence has also changed. The rate of minimum wages must be such that it ensures health and decency which concepts have also undergone a change", the bench led by Chief Justice Abhay S Oka observed.

The bench, also consisting of Justice Mohammad Navaz, said that it cannot sit in appeal over the notifications under the Minimum Wages Act

"If we peruse the submissions made by the employers, it can be said that most of the submissions are made on the footing that this Court is going to act as the Appellate Authority. We will have to examine the challenge by employers, by keeping in mind the changing world and the well settled constraints on the exercise of writ jurisdiction in the matters involving fixation of minimum wages"

Looking to the scheme of the said Act of 1948, the Court observed that the revision of wages was a legislative function, and there was no requirement of giving reasons or giving hearing.

"If we look at Section 5, the exercise of the power by the Appropriate Government of fixing the rates of minimum wages is neither quasi-judicial nor administrative. The Legislature has delegated its power to the Appropriate Government to fix the rates of minimum wages. Hence, fixation of minimum wages is a legislative function...Hence, it follows that the requirement of giving reasons and giving hearing are ruled out"

The bench made a reference to the deliberations in the Karnataka state Minimum Wage Advisory Board (which comprised of representatives of the Appellant-Association) to infer that the members were of the view that for determining the minimum wages of doctors, the wages fixed under the Employees' Insurance Scheme Establishments be taken into consideration.

"It is true that the minimum wages for doctors have been substantially increased. But, it cannot be said that as of 30th December 2017, the rate of minimum wages of doctors fixed as above is arbitrary or unreasonable or capricious", ruled the High Court.

"By the impugned notifications challenged by the employers, the rates of minimum wages were approximately enhanced by Rs.8000/- to Rs.15,000/- per month after the lapse of 4 to 5 years. Only in case of Doctors, the enhancement was more as it was fixed at Rs.40,908.40/- per month with effect from 30th December 2017 which cannot be per se excessive", it proceeded to hold.

"There was a debate in the meeting on the issue of fixing the rates of minimum wages in respect of the industries such as Private Hospitals and Nursing Homes, Road construction and management and maintenance of buildings. It is noted in the minutes that the representatives of the employees who were present in the meeting, with one voice, welcomed the action of fixing minimum wages of Rs.40,000/- to the Doctors, on par with the wages paid by the Employees' State Insurance Scheme (ESI). It is specifically recorded that more number of members present in the meeting have expressed their opinion that minimum wages for Doctors and other personnel of private hospital and nursing home should be on par with the wages paid to the Doctors and other staff in ESI and the representatives of the owners who were present expressed their opposition. Though in the minutes it is recorded that as there was no consensus, the Board recommended to the Government to take suitable decision and issue final notification, the majority view is reflected from the minutes", the bench narrated.

The decision records that "Some criticism has been made that the minimum wage of doctors has been raised to the rate of Rs.40,908.40/- per month, which is applicable from 30th December 2017". It was pointed out that for the Doctors, the earlier minimum wage fixed of Rs.6966.70 which has been increased by 487.20% and whereas in case of other categories, the increase is only 75%.

"...to select and classify persons, objects, transactions, localities or things for special treatment (...) will not be struck down as infringing Article 14 of the Constitution...The fixation of minimum wages depend on the prevailing economic conditions, the cost of living in a place, the nature of the work to be performed and the conditions in which the work is performed...", the bench quoted several Apex Court and High Court authorities to dispel the argument of discrimination amongst different categories of employment.

Also Read : Minimum Wages Act : Karnataka HC Upholds Wage Revisions Notified By Govt In 37 Sectors [Read Judgment]

Submissions on behalf of the Appellant Employers' Assocation

The Senior Counsel for the appellant-Association invited the bench's attention to the impugned notification and, in particular, its clause (11) which provided that wage rates stipulated in the Notification and the applicable rates of dearness allowance from time to time shall be paid. Next, he took the court through the definition of 'wages' in the Act of 1948, submitting that as long as the component of wages paid to the workmen falls within the definition of 'wages' and the aggregate paid is equal to or more than the aggregate of the minimum wages fixed under different heads, it should be taken that there is a sufficient compliance with the provisions of the said Act of 1948. Therefore, he prayed that clause (11) is liable to be quashed.

"He also invited our attention to clause (3) of the impugned Notification which provides that in the event the rate of wage paid at present is higher, the payment at the said rate shall be continued and the increase in dearness allowance from time to time also shall be remitted. He submitted that the first part of clause (3) of the impugned Notification had been quashed by the learned Single Judge. He argued that the portion of clause (3) of the impugned notification which requires the employer to pay increased dearness allowance from time to time, even though the rate of wages paid is higher than the minimum wages, also needs to be quashed", the bench recorded.

It was also argued that the fixation and neutralisation of dearness allowance is contrary to law and the direction to pay four paise per point increase in the State average consumer price index above 5780 point is incorrect. It was submitted that when the impugned notification was issued, the consumer index was 6537 points and therefore, the employer should be asked to neutralise the increase in cost of living allowance at 6537 points.

Further, it was contended on behalf of the Association that even the figure of the cost of house rent taken for arriving at the minimum wages is very high, that 40% of the minimum wage should not have been taken as cost of house rent.

The conclusions of the Court

As regards the figure of the CPI, the bench noted that it does not have the expertise to decide in what manner the CPI should be computed for the fixation of minimum wages and what should be the quantum of the minimum wages- "it is for the persons having expertise in the matter to take a call on that. A writ Court cannot act like an expert in the field and adjudicate on the said issues which should be normally left to the decision making authority which has the benefit of the opinion expressed by the members of the Advisory Board"

As regards the cost of housing (rent), the Court observed that the same has been taken as per the relevant housing scheme for the poor prevailing at that particular point of time. It proceeded to state that in any case, as of December 2017, the aforesaid rates of rent cannot be termed as unreasonable- "If we look at the rates fixed as quoted above, by no stretch of imagination, the rates can be termed as unreasonable which will amount to violation of Article 14 of the Constitution"

"As far as the dearness allowance is concerned, it stands on a different footing, inasmuch as, it has direct nexus with the Consumer Price Index. The ultimate object of fixing or revising the minimum wages is that the employees must survive and therefore, the dearness allowance cannot be equated with the one percent (1%) incentives", reads the judgment.

The bench remarks that there is a direction in Clause (3) of the notification that in the event the rate of wage paid now is higher, the payment at the said rate shall be continued and increase in dearness allowance from time to time also shall be remitted. Noting that the first part of the clause has already been set aside, and the second part is applicable only to the payment of higher wages in terms of the first part, it declared that "the second part must go" and that "To that extent, the appeals by the employers will have to be allowed". "However, the direction regarding payment of 4 paise per day for every point increase in the State average CPI over 5780 points cannot be disturbed", it added. 

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