Union of India & Others Vs Heavy Vehicles Factory Employees Union And Another (Supreme Court of India)
All Allowances Form Part of ‘Ordinary Wages’ for Overtime – Supreme Court Holds HRA, TA Compensatory Allowances Includible Under Factories Act
The Supreme Court dismissed the Union of India’s appeals and upheld the Madras High Court’s ruling that compensatory allowances such as House Rent Allowance (HRA), Transport Allowance (TA), Clothing & Washing Allowance (CWA) and Small Family Allowance (SFA) must be included in the “ordinary rate of wages” for computation of overtime wages under Section 59(2) of the Factories Act, 1948.
Interpreting Section 59(2), the Court held that “ordinary rate of wages” comprises basic wages plus all allowances to which the worker is entitled, except only two statutory exclusions – bonus and overtime wages. Since the statute does not exclude compensatory allowances, executive Office Memoranda issued by various Ministries excluding such allowances had no legal force and could not override the Act. The Court emphasized that the Central Government has no power under the Factories Act to issue clarifications altering the scope of Section 59(2); rule-making and exemption powers vest only with State Governments.
Rejecting the Government’s argument of administrative inconvenience and financial burden, the Court reiterated that the Factories Act is a beneficial legislation intended to prevent exploitation of labour and that overtime must be paid at double the full ordinary wage. Executive instructions curtailing statutory benefits were held impermissible. The Court also disapproved the contrary view of the Kerala High Court and affirmed that different Ministries cannot assign different meanings to the same statutory provision.
Accordingly, overtime wages must be computed by including all allowances forming part of regular remuneration, and the appeals were dismissed.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
