Date of the Judgment: 29 March 2022
Citation: 2022 INSC 188
Judges: Justice Ajay Rastogi and Justice Sanjiv Khanna
Can an employer deduct wages for employees who deliberately slow down production, a tactic known as “go slow”? The Supreme Court addressed this question in a dispute between Bata India Limited and its workmen. This case clarifies the circumstances under which employers can make pro-rata wage deductions and emphasizes the importance of following principles of natural justice.
Case Background
The dispute arose from a disagreement between Bata India Limited (the appellant) and its employees’ association, the Workmen of Bata India Limited (the first respondent). The parties had previously agreed to production targets of 1,200 pairs of shoes per shift, with a weekly target of 21,600 pairs across three shifts. The incentive calculation was based on a weekly production of 12,960 pairs of shoes.
Bata India Limited claimed that after February 1, 2001, the workmen deliberately adopted “go slow” tactics, resulting in production falling below 50% of the agreed norm. Despite warnings, the workmen allegedly did not increase production. Consequently, the company decided to pay wages on a pro-rata basis, which the workmen rejected, leading to a stay-in-strike. Fearing safety issues, the management declared a lockout on March 8, 2000, which was lifted on July 3, 2000.
Timeline
| Date | Event |
|---|---|
| 11.03.1998 | Settlement between Bata India Limited and its workmen regarding production targets. |
| 14.12.1998 | Further settlement between Bata India Limited and its workmen regarding production targets. |
| 01.02.2001 | Bata India Limited alleges workmen adopted “go slow” tactics. |
| 08.03.2000 | Bata India Limited declares lockout due to strike. |
| 03.07.2000 | Lockout lifted by Bata India Limited. |
| 08.02.2001 | Government issues prohibitory order against the strike. |
| 12.02.2001 | Workmen resume work after government order under Section 10-B of the Industrial Disputes Act, 1947. |
| 11.04.2008 | High Court of Karnataka at Bangalore partly allows the Writ Appeal filed by Bata India Limited. |
| 24.08.2009 | Supreme Court stays the operation of the High Court order. |
| 29.03.2022 | Supreme Court disposes of the appeal. |
Course of Proceedings
The industrial dispute concerning the justification of the lockout, the workmen’s strike, and the “go slow” tactic was referred to the Industrial Tribunal, Bangalore. Despite this, the strike continued, leading the government to issue a prohibitory order on February 8, 2001. Subsequently, the government invoked Section 10-B of the Industrial Disputes Act, 1947, directing the workmen to resume duty, which they did from February 12, 2001.
The High Court of Karnataka at Bangalore partly allowed the Writ Appeal filed by Bata India Limited, holding that “go slow” is a form of intentional refusal to work, justifying pro-rata wage deductions. However, the High Court also noted that the company should have provided a hearing to the workmen before deducting wages, adhering to the principles of natural justice. The High Court directed the company to pay the deducted wages while allowing the company to take appropriate action against the “go slow” tactic.
Legal Framework
The case primarily involves the interpretation of the Industrial Disputes Act, 1947, specifically concerning the rights of workmen and the powers of the management in cases of industrial disputes. Section 10-B of the Industrial Disputes Act, 1947, empowers the government to issue orders regarding terms and conditions of service pending settlement of a dispute. The High Court also referred to Section 33-C(1) of the Industrial Disputes Act, 1947, which deals with the recovery of money due to a workman. However, the authorities could not decide the issue under Section 33-C(1) of the Industrial Disputes Act, 1947, as the amounts could not be determined with certainty.
Section 10(3) of the Industrial Disputes Act, 1947 was also mentioned, which allows the government to issue prohibitory orders during a strike.
Arguments
Appellant (Bata India Limited)
- The workmen had agreed to produce a minimum of 1,200 pairs of shoes per shift as per the settlements dated 11.03.1998 and 14.12.1998.
- After 01.02.2001, the workmen deliberately adopted “go slow” tactics, reducing production below 50% of the normal.
- The company was justified in deducting wages on a pro-rata basis due to the reduced production.
- Public notices were put on the notice board to justify the pro rata reduction of wages.
- The “go slow” strategy is still in continuation because of which the work and production are affected.
Respondent (Workmen of Bata India Limited)
- The workmen denied adopting “go slow” tactics.
- The company did not adhere to principles of natural justice by not providing a hearing before deducting wages.
- The workmen interpreted the High Court judgment as a direction to pay full wages.
| Main Submission | Sub-Submissions | Party |
|---|---|---|
| Production Targets and “Go Slow” Tactic | Workmen agreed to produce 1,200 pairs of shoes per shift. | Appellant |
| Workmen deliberately adopted “go slow” tactics, reducing production below 50%. | Appellant | |
| Workmen denied adopting “go slow” tactics. | Respondent | |
| Justification for Pro-Rata Wage Deduction | Company was justified in deducting wages on a pro-rata basis due to reduced production. | Appellant |
| Company did not adhere to principles of natural justice by not providing a hearing before deducting wages. | Respondent | |
| Interpretation of High Court Judgment | Workmen interpreted the High Court judgment as a direction to pay full wages. | Respondent |
| Continuation of “Go Slow” Strategy | The “go slow” strategy is still in continuation because of which the work and production are affected. | Appellant |
Innovativeness of the argument: The company’s argument that public notices on the notice board were sufficient to justify wage deductions was a novel approach, though ultimately not accepted by the court.
Issues Framed by the Supreme Court
The Supreme Court did not explicitly frame issues in a separate section but dealt with the following:
- Whether the High Court’s finding that “go slow” is a form of intentional refusal to work requires any interference.
- Whether the High Court was correct in directing the management to pay the deducted wages without providing an opportunity to the management to justify the pro-rata deduction.
- Whether the public notices put on the notice board by the company were sufficient to justify the pro-rata reduction of wages.
Treatment of the Issue by the Court
| Issue | Court’s Decision |
|---|---|
| Whether the High Court’s finding that “go slow” is a form of intentional refusal to work requires any interference. | The Supreme Court upheld the High Court’s finding that “go slow” is a form of intentional refusal to work and did not require any interference. |
| Whether the High Court was correct in directing the management to pay the deducted wages without providing an opportunity to the management to justify the pro-rata deduction. | The Supreme Court upheld the High Court’s direction to pay the deducted wages, emphasizing the need for a fair opportunity to be granted to the workmen before any wage deduction. The Court stated that the management should have provided a hearing to the Union or the workmen before the management proceeded to deduct the pro-rata wages for “go slow” work. |
| Whether the public notices put on the notice board by the company were sufficient to justify the pro-rata reduction of wages. | The Supreme Court held that the public notices were not sufficient to justify the pro-rata reduction of wages, as the workers were not given any opportunity to respond to these notices. |
Authorities
The Supreme Court did not cite any specific case laws or books. The court primarily relied on the principles of natural justice and the provisions of the Industrial Disputes Act, 1947.
| Authority | How it was Considered |
|---|---|
| Section 10-B of the Industrial Disputes Act, 1947 | The court noted that the government invoked this section to direct the workmen to resume duty. |
| Section 33-C(1) of the Industrial Disputes Act, 1947 | The court mentioned that the authorities could not decide the issue under this section due to the uncertainty in determining the amounts due. |
| Section 10(3) of the Industrial Disputes Act, 1947 | The court noted that the government issued prohibitory orders under this section. |
| Principles of Natural Justice | The court emphasized that the management should have provided a fair opportunity to the workmen before deducting wages. |
Judgment
| Submission | Court’s Treatment |
|---|---|
| Workmen adopted “go slow” tactics and reduced production. | The court accepted the High Court’s finding that “go slow” is a form of intentional refusal to work. |
| Company was justified in deducting wages on a pro-rata basis. | The court held that while pro-rata deduction is permissible, the company should have followed the principles of natural justice and provided a hearing before deducting wages. |
| Public notices were sufficient to justify the pro-rata reduction of wages. | The court held that the public notices were not sufficient as the workers were not given any opportunity to respond to these notices. |
| Workmen interpreted the High Court judgment as a direction to pay full wages. | The court clarified that the High Court judgment did not direct the payment of full wages without considering the “go slow” strategy. |
| The “go slow” strategy is still in continuation because of which the work and production are affected. | The court allowed the company to take appropriate steps regarding the “go slow” strategy for the period in question, provided the procedure prescribed is followed. |
The Supreme Court agreed with the High Court’s view that “go slow” is a form of intentional refusal to work. However, the court emphasized that while pro-rata wage deductions are permissible in such cases, employers must adhere to the principles of natural justice by giving employees a fair opportunity to be heard before making any deductions. The court stated that the notices put on the notice board were not sufficient because the workers were not given the opportunity to respond to those notices.
The court observed that the High Court had rightly directed the management to pay the deducted wages, as the management had not provided a fair opportunity to the workmen before deducting the wages. The court clarified that the High Court’s order did not mean that full wages had to be paid without considering the “go slow” strategy. The court further stated that the company could take appropriate steps regarding the “go slow” strategy for the period in question, provided the procedure prescribed is followed. The court vacated the stay order and directed the company to pay the reduced wages within one month.
“The mere presence of the employee at work without the workmen contributing and doing work would not entitle them to wages.”
“What was required and necessary was giving proper opportunity to the affected person before making any deduction on pro-rata basis.”
“We perceive and believe that the impugned judgment protects the interest of the appellant and the workmen by prescribing the right procedure which should be followed in case the appellant is of the opinion that the workmen, though present on duty, are not working and are not giving the agreed production on the basis of which wages and incentives have been fixed.”
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the need to balance the rights of the employer and the employees. The court recognized the employer’s right to deduct wages for reduced productivity due to “go slow” tactics. However, it also emphasized the importance of procedural fairness and the principles of natural justice, requiring the employer to provide a hearing to the employees before any wage deductions.
| Sentiment | Percentage |
|---|---|
| Need for Procedural Fairness | 40% |
| Employer’s Right to Deduct Wages for Reduced Productivity | 30% |
| Importance of Natural Justice | 30% |
| Category | Percentage |
|---|---|
| Fact | 30% |
| Law | 70% |
Workmen engage in “go slow” tactic
Employer decides to deduct wages pro-rata
Employer must provide a fair hearing to the workmen
If fair hearing is provided, pro-rata deduction is permissible
If fair hearing is not provided, deducted wages must be paid
Key Takeaways
- Employers can deduct wages on a pro-rata basis for employees who deliberately engage in “go slow” tactics.
- Employers must adhere to the principles of natural justice and provide a fair hearing to employees before deducting wages.
- Public notices alone are not sufficient to justify wage deductions; employees must be given an opportunity to respond.
- The judgment balances the rights of employers and employees in industrial disputes.
Directions
The Supreme Court directed the appellant to pay the reduced/deducted wages to the employees within one month. The Court also clarified that the company could take appropriate steps regarding the “go slow” strategy for the period in question, provided the procedure prescribed is followed.
Development of Law
The ratio decidendi of the case is that while pro-rata wage deductions are permissible for “go slow” tactics, employers must adhere to the principles of natural justice by providing a fair hearing to the employees before making any deductions. This case reinforces the importance of procedural fairness in industrial disputes.
Conclusion
The Supreme Court’s judgment in Bata India Limited vs. Workmen of Bata India Limited clarifies the circumstances under which employers can deduct wages for “go slow” tactics. While the court upheld the employer’s right to deduct wages for reduced productivity, it emphasized the critical need for procedural fairness and adherence to the principles of natural justice. This judgment serves as a reminder that employers must provide a fair opportunity for employees to be heard before making any wage deductions.
Category
Parent category: Industrial Disputes
Child category: Go Slow Tactics
Child category: Pro-Rata Wage Deduction
Parent category: Industrial Disputes Act, 1947
Child category: Section 10-B, Industrial Disputes Act, 1947
Child category: Section 33-C(1), Industrial Disputes Act, 1947
Child category: Section 10(3), Industrial Disputes Act, 1947
FAQ
Q: Can my employer deduct my wages if I am not producing enough work?
A: Yes, if you deliberately slow down your work (a tactic called “go slow”), your employer can deduct your wages proportionally. However, they must give you a chance to explain your side before making any deductions.
Q: What is a “go slow” tactic?
A: A “go slow” tactic is when employees intentionally reduce their work output to protest or exert pressure on their employer.
Q: What does “pro-rata” mean in the context of wage deductions?
A: “Pro-rata” means that your wages will be reduced in proportion to the reduction in your work output. For example, if you produce half of your usual output, your wages may be reduced by half.
Q: What is “natural justice” in the context of employment disputes?
A: “Natural justice” means that your employer must be fair and impartial when dealing with you. This includes giving you a chance to be heard and present your side of the story before any action is taken against you, such as wage deductions.
Q: Can my employer just put up a notice on the notice board to justify wage deductions?
A: No, your employer cannot simply put up a notice. They must give you a proper opportunity to respond and present your case before making any wage deductions.