Labour Authority Must Reconsider Whether HRA Counts Toward Minimum Wages

Respondent No. 2 inspected the petitioner’s establishment and alleged that wages paid to its employees were below the prescribed minimum wages.

Following a claim by respondent No. 2, respondent No. 1 directed the petitioner to pay the wage difference, inclusive of penalty.

The petitioner contended that the calculation excluded House Rent Allowance (HRA), and sought an opportunity to submit documents for the relevant period, May to October 2020.

The High Court noted that documents previously produced by the petitioner related to a different period.

Whether HRA paid by the petitioner should be considered when determining whether its employees received the prescribed minimum wages.

Whether the impugned order should be set aside and the claim reconsidered after the petitioner is given an opportunity to produce relevant documents.

Section 2(h) of the Minimum Wages Act, 1948 defines “wages” and excludes specified items, including the value of house accommodation and certain amenities.

The petitioner relied on that definition to argue that HRA should be included in the wage calculation; the Court held that this contention required consideration by the statutory authority, without finally deciding it.

The Court also affirmed that an employer is obliged to pay the minimum wages prescribed under the Act.

The petitioner’s contention that the authority calculated the shortfall using only basic wages and dearness allowance, while excluding HRA, raised an issue requiring determination by respondent No. 1.

Further, the documents before the authority did not relate to the relevant period.

The Court therefore considered it appropriate to allow the petitioner to file relevant documents and additional objections and to have the claim reconsidered.

Because the petitioner remained obliged to pay minimum wages, the Court made setting aside the order conditional on a deposit.

The authority was directed to retain that amount pending its decision and to reconsider respondent No. 2’s claim after giving both sides an opportunity to be heard.

The petitioner was permitted to file additional objections and supporting documents.