Naval Dockyard Workers’ Overtime Pay Must Include HRA Under Supreme Court Ruling; CAT Gives Authorities Two Months To Implement It

In brief

The question

1. Whether HRA must be included in the calculation of overtime allowance payable to the applicants’ Union members

The court held

The Tribunal disposed of the O.A. and directed the respondents to pass appropriate orders implementing the Supreme Court’s decision in respect of the Union’s members within two months of receiving a copy of the order

It also directed

The order did not separately specify the amount of arrears or interest payable; implementation was directed in accordance with law.

Pending miscellaneous applications were also disposed of, with no order as to costs.

01Facts

The applicants, an employees’ union and one of its members, sought inclusion of House Rent Allowance (HRA) in the calculation of overtime allowance for the Union’s members employed at the Naval Dockyard, Visakhapatnam.

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They sought payment of the resulting difference for overtime worked from 2017–18 onwards, with interest, and future recalculation

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The respondents opposed the application on the ground that a similar issue was pending before the Supreme Court.

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During the proceedings, the applicants sought expedited consideration in light of *Union of India v. Heavy Vehicles Factory Employees’ Union*, Civil Appeal Nos. 5185–5192 of 2016, reported as [2026] INSC 74.

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The Supreme Court had dismissed those appeals on 20 January 2026

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02Issues

i.1. Whether HRA must be included in the calculation of overtime allowance payable to the applicants’ Union members

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ii.2. Whether the applicants were entitled to a direction requiring the respondents to implement the Supreme Court’s decision in *Heavy Vehicles Factory Employees’ Union*

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03Law Applied

Section 59(2) of the Factories Act, 1948 defines the “ordinary rate of wages” by reference to basic wages and “such allowances” as the worker is for the time being entitled to.

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In *Union of India v. Heavy Vehicles Factory Employees’ Union*, [2026] INSC 74, the Supreme Court held that, where the statute specifies exclusions for bonus and wages for overtime work, the Executive cannot introduce further exclusions—such as HRA—through an office memorandum; excluding allowances from overtime calculations without statutory authority is contrary to Section 59(2)

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The Supreme Court also held that the contrary view in *V.E. Jossie v. Flag Officer Commanding-in-Chief, Headquarters* did not lay down the correct law

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Provisions in the judgment · 1

Factories Act, 1948 Section 59

04Reasoning

The Tribunal noted that the Supreme Court had already dismissed the Union of India’s appeals on the same issue, making the respondents’ reliance on a pending appeal untenable

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The respondents had not shown that the applicants’ case was distinguishable from *Heavy Vehicles Factory Employees’ Union*.

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Applying that decision, the Tribunal directed the respondents to implement it for the members of the applicants’ Union by passing appropriate orders in accordance with law

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