Employers Not Outsiders But Stakeholders, Must Be Heard While Fixing/Revising Minimum Wage Of Employees: Karnataka High Court

The Karnataka High Court has said that while fixing or revising the Minimum Wages to be paid to employees, employers which is a stakeholder and which will be affected in the exercise, should have their say and the stand before the notification is passed by the Government.A division bench of Chief Justice N V Anjaria and Justice K V Aravind while allowing the appeal filed by employers associations including the Karnataka Employers Association and others, challenging a single judge order dated September 26, 2023 said: “The class of the employers is a stakeholder and a party who would be affected as their obligations would arise as an end result of the exercise of fixing and revising the minimum wages. When it is a question of revising the minimum wages, a variety of factors would govern the ultimate act of issuance of Notification and incorporating the conditions and stipulations therein, in which, it is legitimate to conclude that the employers should have their say and the stand.” The notification was issued by the government on July 28 under Section 3(1)(b) read with Section 5(1)(b) of the Minimum Wages Act, 1948, the minimum rates of wages for the employments in the Foundry-with or without machine shop, came to be revised. The single judge had set aside the notification issued by the government while considering a petition filed by the Trade Unions of the employees namely All India Trade Union Congress (R), Karnataka State Committee, and Engineering & General Works Union and directed the government to redo it. The appellant-employers association said that they were not made a party to the proceedings before the single judge even though they had represented before the advisory board before the notification came to be issued. Challenging the impugned order it was argued by the appellants that in the entire exercise, the employers Association are a necessary stakeholders. They had no opportunity to put forward their case in the writ petition which resulted in setting aside the Notification dated 28th July 2022.Further, it was claimed that the petitioner (before the single judge)-Trade Unions have been asking for a living wage. The living wage or fair wage is a distinct concept and has a different connotation than minimum wage. The respondent employee unions countered the appeal saying that Section 3 and Section 5 of the Act do not make distinction between fixing and revising the wages which are defined in Section 2(h) of the Act. It was submitted that issuance of Notification was a legislative function.Moreover, the notification under Section 5(1) of the Act is a function in legislative nature, therefore giving hearing was not necessary. It was sought to be submitted that natural justice has no room in the process and therefore learned Single Judge could well consider the challenge to the Notification even in absence of the side of employers.The bench noted that even as the Notification under Section 5(1)(b) could be viewed as a piece of subordinate legislation as an ultimate product, the process leading to issuance thereof is a blend of statutory exercise leading to the Notification. The exercise of statutory powers is under Section 5(1)(b) and that has to be in a reasonable manner.Observing that “The Notification in question precedes a statutory process in terms of Section 5(1)(b) of the Act. The principles of natural justice cannot be viewed to be foreign to such statutory exercise.” The bench held “Not giving hearing to the appellants who are the employers and the stakeholders who would suffer the impact of the Notification, will render the exercise and the ultimate result to be unjust and in that sense arbitrary.” It added “The class of the employers could not be excluded from the zone, by any stretch of logic to treat them outsiders. The employers have definite interest in the exercise and giving hearing to them would not only be just and proper, but would also make the statutory exercise just, fair and reasonable. In this view, it has to be observed that the appellants were the necessary parties in the writ petition before the learned Single Judge.” The bench also opined that whether the exercise is administrative, quasi-judicial, judicial or even has a trait of legislative exercise, a decision affecting a party has to precede the right to hearing such a party. All statutory exercises have to be reasonable leading to outcome fair and objective in law. This may be possible only if it has an intake of natural justice. Following which it remitted back the proceedings of the writ petition to the learned Single Judge for his decision afresh in accordance with law. It directed the single judge to hear the appellants before the final decision is rendered in the petition. The entire exercise is to be completed within ten weeks. Case Title: Karnataka Employers Association & Others AND All India Trade Union Congress & OThersCase No: WRIT APPEAL No.23 OF 2024 (L - MW) C/W WRIT APPEAL Nos. 53/2024, 54/2024,...

Employers Not Outsiders But Stakeholders, Must Be Heard While Fixing/Revising Minimum Wage Of Employees: Karnataka High Court

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