Definition Of "Wages‟ In Minimum Wages Act Cannot Be Taken For Purpose Of Calculating Bonus : Delhi HC

The Delhi High Court has clarified that the definition of "wages" under the Minimum Wages (MW) Act, 1948, cannot be used to calculate bonus under the Payment of Bonus Act, 1965.

The Court ruled that the definition of "wages" under the Bonus Act is distinct from that under the MW Act. Specifically, "wages" for the Bonus Act excludes allowances such as HRA, conveyance, and other benefits, whereas the MW Act includes these allowances.

The Single Bench of Justice Chandra Dhari Singh observed: "Therefore, for the purpose of payment of bonus to the employees, the definition of "wages‟ as provided in the Minimum Wages Act, 1948, cannot be taken by the learned Court below as the same would defeat the purpose of the said legislation" 

The Court was hearing a Writ Petition filed by Group 4 Securities Guarding Ltd, which is a company engaged in providing security services and employs numerous security guards. In 1999, a complaint was lodged by the union of employees regarding the non-payment of bonuses. Following this complaint, government authorities conducted an inspection and issued a show cause notice to Group 4 Securities Guarding Ltd. Attempts at conciliation failed, and the dispute was subsequently referred to the Industrial Tribunal for adjudication.

In 2003, the Tribunal had ruled in favor of the employees, directing Group 4 Securities to consider minimum wages, as defined by the Delhi Government, for the purpose of computing bonuses. This led Group 4 Securities to file a Writ Petition challenging the Tribunal's award.

The primary argument from Group 4 Securities Guarding Ltd was that the definition of "Salary or Wages" under the Payment of Bonus Act, 1965 (Bonus Act) is exhaustive and should be used exclusively for bonus calculations. According to the Bonus Act, "Salary or Wages" includes only the basic salary and dearness allowance, excluding all other allowances.

The petitioner contended that the Tribunal had erroneously applied the definition of "Wages" under the Minimum Wages Act, 1948 (MW Act) for calculating the bonus. They argued that the Bonus Act, being a specific legislation on the matter, should prevail over other general laws such as the MW Act. This was further supported by Section 34 of the Bonus Act, which asserts that its provisions prevail over any conflicting legislation.

On the other hand, the respondents argued for a broader interpretation of "wages." They referenced definitions from multiple acts, including Section 2(rr) of the Industrial Dispute Act, 1947, Section 2(h) of the MW Act, and Section 2(21) of the Bonus Act. They claimed that wages should include basic pay, dearness allowance, and other allowances.

The respondents alleged that Group 4 Securities manipulated the definition of "wages" to comply with the MW Act by including allowances but excluded these same allowances when calculating bonuses.

The Single-Judge Bench, after careful examination, noted that the Tribunal had directed Group 4 Securities to use the minimum wages set by the Delhi Government, inclusive of various allowances, for bonus calculations.

However, the Bench emphasized that courts must adhere to the definitions provided within the parent legislation and should not rely on definitions from other laws unless explicitly stated.

The Court referred to the Supreme Court case Provident Fund Commr. v. G4S Security Services (India) Ltd (2023), where it was held that once the Employee Provident Fund Act (EPF Act) provides a specific definition of "basic wage," other laws like the MW Act cannot redefine it expansively.

"In view of the foregoing discussions on facts and law, this Court is of the view that the petitioner has made substantial arguments before this Court in order to seek interference with the impugned award and it is held that the learned Court below erroneously relied upon the definition of the term "wages‟ as provided under the Minimum Wages Act, 1948. In view of the above, the present petition is allowed and the impugned award dated 1st October, 2003, passed by the learned Industrial Tribunal, Karkardooma, New Delhi in case bearing I.D. No. 102/99 is set aside," the Court said. 

The Court concluded, "Therefore, for the purpose of payment of bonus to the employees, the definition of "wages‟ as provided in the Minimum Wages Act, 1948, cannot be taken by the learned Court below as the same would defeat the purpose of the said legislation." Accordingly, the Court disposed of the Writ Petition. 

Cause Title: Group 4 Securities Guarding Ltd. v. Secretary, Labour, Govt. of NCT of Delhi [Neutral Citation: 2024: DHC: 4057]

Appearance:-

Petitioner: Advocates Amitabh Chaturvedi, Ankit Monga

Respondent: Advocates Krishna Chandra Dubey, Rishav Dubey

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