Definition Of Wages Under Minimum Wages Act Cannot Be Used To Calculate Bonus Under Payment Of Bonus Act: Delhi High Court

A single judge bench of the Delhi High Court comprising of Justice Chandra Dhari Singh in the case of Group 4 Securities Guarding Ltd Vs Secretary, Labour, Govt. of NCT of Delhi has held that definition of wages under Minimum Wages Act, 1948 cannot be used to calculate bonus under Payment of Bonus Act, 1965 Background Facts Group 4 Securities Guarding Ltd (Petitioner) was engaged in the business of providing security services and employed security guards for the said purpose. There was a complaint filed before the Government Authorities by Union of the employees (Respondent) in 1999 related to non-payment of bonus. Inspection was carried out and a show cause notice was issued to the Petitioners. The Respondents opted for conciliation but on failure of the same, the dispute was referred to the Industrial Tribunal (Tribunal) for adjudication. The Tribunal passed an award in 2003 and directed the Petitioner to take into account minimum wages for computation of the bonus. Thus, the writ petition was filed against the award of the Tribunal. It was argued by the Petitioner that the definition of “Salary or Wages” in the Payment of Bonus Act, 1965 (Bonus Act) is exhaustive and provides that “Salary or Wages” means the basic salary plus dearness allowance and all other allowances are excluded. For the computation of bonus, only the aforesaid definition of “Salary or Wages” needs to be taken into account. Thus, the Tribunal had wrongfully held that the definition of “Wages” under the Minimum Wages Act, 1948 (MW Act) needs to be considered for calculation of bonus. Section 34 subject to Section 31A of the Bonus Act establish that provisions of Bonus Act prevail over any other legislation and since the MW Act was in existence at the time of enactment of the Bonus Act, it implies a specific intention on the part of the legislature to not compute Bonus on the basis of the definition of “Wages” as given under the MW Act. On the other hand, it was contended by the Respondent that on a conjoint reading of definition of wages as under Section 2(rr) if Industrial Dispute Act, 1947; Section 2(h) of the MW Act and Section 2(21) of the Bonus Act, it is clear that wages includes basic pay, dearness allowance and other allowances. The Petitioner had deceitfully included all allowances in “wages” to show compliance with MW Act but deducted all these allowances for calculating bonus. Findings of the Court The court observed that it was noted by the Tribunal in its award that the Petitioner must consider minimum wages prescribed by the Delhi Government rather than just the basic pay component for the computation of bonus. The Tribunal further held that minimum wages, which include various allowances need to be taken into account for the calculation of bonus. The court observed that courts are not expected to travel to other legislations if the interpretation of a particular term has been provided in the parent legislation. Reliance was placed on the case of Provident Fund Commr. v. G4S Security Services (India) Ltd. wherein it was held by the Supreme Court that once the EPF Act contained a specific provision defining “basic wage”, then the MW Act could not be used to give a different connotation or expansive definition to the term. The court further held that “wages” as under the Bonus Act provides that the same would exclude the HRA, conveyance, bonus and other allowances but the definition of the term under MW Act includes the said allowances. Thus, both the terms have independent meanings and cannot be used interchangeably. The court thus held that: “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” With the aforesaid observations, the court allowed the writ petition. Case No.- W.P.(C) 567/2004 and CM APPL. No.62022/2023 Date of Order- 13th May, 2024 Case Name- Group 4 Securities Guarding Ltd Vs Secretary, Labour, Govt. of NCT of DelhiCitation: 2024 LiveLaw (Del) 703 Counsel for Petitioners- Mr. Amitabh Chaturvedi with Mr. Ankit Monga, Advocates. Counsel for Respondents- Mr.Krishna Chandra Dubey and Mr.Rishav Dubey, Advocates Click Here To Read/Download Order

Definition Of Wages Under Minimum Wages Act Cannot Be Used To Calculate Bonus Under Payment Of Bonus Act: Delhi High Court

Udai Yashvir Singh

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Definition Of Wages Under Minimum Wages Act Cannot Be Used To Calculate Bonus Under Payment Of Bonus Act: Delhi High Court

Udai Yashvir Singh

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