Supreme Court Upholds Committee Constitution under Minimum Wages Act: Kerala Private Hospital Association vs. State of Kerala (2017)

The Supreme Court of India addressed the question of whether an employee of a private hospital can represent the employer on a committee constituted under the Minimum Wages Act, 1948. The Court ruled that such representation is valid. This judgment clarifies the scope of employer representation in minimum wage committees.

Citation: (2017) INSC 929

Judges: R.K. Agrawal, J., Abhay Manohar Sapre, J.

The judgment was authored by Justice Abhay Manohar Sapre.

Case Background

The Government of Kerala, through its Labour & Skills Department, formed a committee on October 28, 2016. This “Private Hospital Industrial Relation Committee” was established to revise minimum wages for employees in private hospitals and related institutions. The committee was formed under Section 5 read with Section 9 of the Minimum Wages Act, 1948.

The committee included an equal number of employer and employee representatives. The employer representatives included 13 individuals from private hospitals, medical colleges, and associations. The employee side also had 13 representatives from various trade unions.

Several private hospitals challenged the committee’s constitution. They argued that some employer representatives were actually employees of the hospitals, not the employers themselves. These hospitals contended that the committee did not properly represent the employers’ interests as required by Section 9 of the Minimum Wages Act, 1948.

Timeline

Course of Proceedings

The private hospitals first challenged the committee’s formation through a writ petition in the High Court of Kerala. The Single Judge dismissed the petition, upholding the committee’s constitution. The hospitals then filed an intra-court appeal, which was also dismissed by the Division Bench of the High Court.

The Kerala Private Hospital Association, representing the employers, then appealed to the Supreme Court. They argued that the High Court had erred in upholding the committee’s constitution. The Supreme Court granted the association permission to file a special leave petition.

Legal Framework

The core legal provision in this case is Section 9 of the Minimum Wages Act, 1948. This section outlines the composition of committees formed under the Act. It states that committees should have equal representation of employers and employees. It also allows for the inclusion of independent members, not exceeding one-third of the total members.

Section 9 of the Minimum Wages Act, 1948 states:

“9. Composition of Committees, etc.—Each of the committees, sub-committees and the Advisory Board shall consist of persons to be nominated by the appropriate Government representing employers and employees in the scheduled employments, who shall be equal in number, and independent persons not exceeding one-third of its total number of members; one of such independent persons shall be appointed the Chairman by the appropriate Government.”

The Minimum Wages (Central) Rules, 1950, provide additional guidelines. These rules cover the term of office, nomination of substitute members, eligibility for re-nomination, resignation, and disqualification of committee members. However, these rules do not specify who can be nominated as an employer’s representative.

Arguments

The appellant, Kerala Private Hospital Association, argued that the committee’s constitution was flawed. They contended that the nominated employer representatives were employees of the hospitals and not the employers themselves.

The appellant submitted that an employee nominated to represent the employer would prioritize their own financial interests. This would compromise the employer’s interests during wage revision recommendations. They argued that only the actual employers should be nominated to protect their interests effectively.

The State of Kerala defended the committee’s constitution. They argued that the nominations were compliant with Section 9 of the Minimum Wages Act, 1948. They maintained that the nominated employees could adequately represent their employers’ interests.

Issues Framed by the Supreme Court

The Supreme Court considered the following issue:

1. Whether the constitution of the Committee by the State of Kerala under Section 9 of the Minimum Wages Act, 1948, was proper and in accordance with law.

Treatment of the Issue by the Court

Authorities

The Supreme Court relied on the following case:

• Ministry of Labour & Rehabilitation & Anr. vs. Tiffin’s Barytes Asbestos & Paints Ltd. and Anr., AIR 1985 SC 1391: The Court cited this case to emphasize that a person representing employers need not be an employer. A nexus between the representative and the employment concerned is sufficient. The Court also noted that notifications fixing minimum wages should not be easily interfered with on technicalities.

Judgment

The Court considered the following authorities:

What weighed in the mind of the Court?

The Supreme Court focused on the representative nature of the committee members. The Court emphasized that a nominee, even if an employee, acts in the interest of their employer, not in their individual capacity. The Court also highlighted the importance of not interfering with notifications fixing minimum wages on technical grounds.

The Court stated:

“A person, who is nominated to represent the interest of his employer, in our considered opinion, need not necessarily be the employer himself.”

“It is for the reason that such nominee once nominated would defend his employer’s interest and not individual interest as an employee in the Committee.”

“A representation, by way of nomination, is a well accepted phenomenon.”

The Court found that there was no flaw in the constitution of the Committee. Equal representation was given to both employers and employees. The nominated employees, holding positions like Head of Human Resources, were deemed well-versed in the subject.

The Court upheld the decisions of the Single Judge and the Division Bench of the High Court.

Key Takeaways

• An employee can represent the employer’s interest on a committee formed under the Minimum Wages Act, 1948.
• The focus is on the representative capacity of the nominee, not their individual status as an employee.
• Courts are hesitant to interfere with minimum wage notifications on technical grounds.

Directions

No specific directions were given by the Supreme Court in this case.

Development of Law

The ratio decidendi of this case is that an employee can represent the employer’s interest on a committee formed under the Minimum Wages Act, 1948. This clarifies the scope of employer representation and reinforces the principle that a nominee acts in the interest of their nominator, not in their individual capacity. This judgment does not change the previous position of law, but rather reinforces it.

Conclusion

The Supreme Court dismissed the appeals, upholding the constitution of the committee formed by the State of Kerala. The Court clarified that an employee can represent the employer’s interest on such committees. The judgment emphasizes the representative nature of the committee and the importance of not interfering with minimum wage notifications on technicalities.