Splitting-up of the Minimum Wages Vs. Basic …

1 Splitting-up of the Minimum Wages Vs. Basic Wages as defined under the Employees Provident Fund and Misc. Provisions Act,1952 ! ""##$% &$" $'$""(#$#( &$" $$%'#$(()# &$" "" % )" ) * ! + ! ,- !. Whether the provident fund contributions under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, (hereinafter referred as the Act , 1952 ), are liable to be remitted to the Fund on not less than the Minimum Wages , prescribed under the Minimum Wages Act, 1948, (hereinafter referred as the Act of 1948)? The Act of 1948, as per its preamble, is, An Act to provide for fixing Minimum rates of Wages in certain employments. The said Act empowers the appropriate Government under section 3 to fix Minimum rates of Wages payable to employees in an employment specified in Part I or Part II of the Schedule and in an employment added to either Part by notification under section 27 and review at such intervals, as it may think fit, such intervals not exceeding five years, the Minimum rates of Wages so fixed and revise the Minimum rates, if necessary.)

2 The definition of Wages is contained in section 2(h) of the Act of 1948 and is in the following words:- Wages under section 2(h) to mean:- all remuneration, capable of being expressed in terms of money, which would, if the terms of the contract of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment and includes house rent allowance, but does not include (i) the value of; (a) any house accommodation, supply of light, water, medical attendance, or (b) any other amenity or any service excluded by general or special order of the appropriate Government; (ii) any contribution paid by the employer to any Pension Fund or Provident Fund or under any scheme of social insurance; (iii) any travelling allowance or the value of any travelling concession; (iv) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or (v) any gratuity payable on discharge.

3 The legislature subsequently enacted the Act of 1952, which as per its preamble, is, An Act to provide for the institution of provident funds, pension fund and deposit-linked insurance fund for employees in factories and other establishments. The Act does not contain any definition of Wages , but provides the definition of Basic Wages under section 2(b) of the Act, 1952, which is as follows:- Basic Wages means all emoluments which are earned by an employee while on duty or on leave or on holidays with Wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him, but does not include (i) the cash value of any food concession; (ii) any dearness allowance (that is to say, all cash payments by whatever name called paid to an employee on account of a rise in cost of living), house rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment.

4 (iii) any presents made by the employer. The section 6 of the Act of 1952 provides for payment of provident fund contribution by the employer, both employer s and employee s share as the requisite percentage of Basic Wages , dearness allowance and retaining allowance, if any, for the time being payable to each of the employees, whether employed by him directly or by or through a contractor. The entire Act of 1952 and the Employees' Provident Funds Scheme, 1952 framed there under , there is no mention whatsoever of Minimum rates of Wages , fixed under the Act of 1948 or of the definition of Wages contained in section 2(h) of the Act of 1948. The provisions of the Act of 1952 make it clear that it is a self-contained and complete code in itself, regarding the subject matter covered under the Act of 1952 and even an employee, covered under the Act of 1952, has to contribute his share of the provident fund contribution to the Fund.

5 The it is a well settled principle of interpretation of statutes that if an Act itself defines a term/expression, which is clear and unambiguous, then for the purpose of interpretation of the such term/expression, resort cannot be legally had to any external source, including another Act or any provisions contained therein. As such, the Act of 1952 having specifically defined the term/expression Basic Wages under section 2(b), which also has certain exclusion clauses and section 6 requiring the employer to pay provident fund contribution only on Basic Wages , dearness allowance and retaining allowance, if any, any Authority, making a determination of moneys due from an employer under section 7-A, can only look into the definition of Basic Wages , as provided under section 2(b) and make determination of provident fund contribution, due from an employer, on the emoluments earned by an employee falling within the definition of Basic Wages as well as on dearness allowance and retaining allowance, if any.

6 The definition of Basic Wages , contained in section 2(b) of the Act of 1952, is clear, unambiguous and capable of one meaning only, therefore, under the guise of the Act of 1952, being a social beneficial one, no other view, which is inconsistent/ contrary to the clear definition of Basic Wages , can be taken by the Authority, which is only a creature of the Act of 1952 and hence, has to faithfully implement the provisions of the Act of 1952 as they are, without seeking to enlarge the scope of definition of Basic Wages , on the basis of its own liberal views. The definition of Basic Wages under section 2(b) of the Act of 1952 has been considered by the Hon'ble Supreme Court in its various judgments, including the judgment in the case of Bridge and Roof Company (India) Ltd. Vs. Union of India, (1963) 3 SCR 978 as also in the case of Manipal Academy of Higher Education Vs.

7 Provident Fund Commissioner, (2008) 5 SCC 428, wherein while holding that leave encashment is not a component of Basic Wages for calculation of provident fund contribution, payable to the provident fund, it has been categorically held in para 13 that Though the statute in question is a beneficial one, the concept of beneficial legislation becomes relevant only when two views are possible. None of the judgments of the Hon'ble Supreme Court has been held that the provident fund contribution, ignoring the definition of Basic Wages , contained in section 2(b) of the Act of 1952, has to be paid by an employer to the Fund on not less than the Minimum Wages , fixed by the appropriate Government under the Act of 1948. The Act of 1948 is not in pari materia with the Act of 1952 and both the Acts have different objects, scope and ambit.

8 Therefore also, the Act of 1948 cannot be taken into consideration for the purpose of enforcement of the Act of 1952. Even otherwise, a bare perusal of the definition of Wages , contained under section 2(h) of the Act of 1948, clearly reveals that house rent allowance is specifically included in the definition and other similar allowances are not specifically excluded, whereas, as per the definition of Basic Wages , contained under section 2(b) of the Act of 1952, house rent allowance and other similar allowances are specifically excluded. Therefore, it is obvious and apparent that both the definitions are separate and the definition of Wages , under the Act of 1948, is broader, then the definition of Basic Wages , under the Act of 1952. That assuming a case of an employee, who is being paid only Minimum Wages , as prescribed under the Act of 1948, including some amounts as house rent allowance and other similar allowances, for the purpose of payment of provident fund contribution regarding such an employee under the Act of 1952, obviously the amounts paid as house rent allowance and other similar allowances would have to be excluded and his provident fund contribution would be on less than the Minimum Wages , prescribed under the Act of 1948.

9 As such, it cannot be validly claimed that in the case of such an employee, despite the specific exclusion clause in the definition of Basic Wages under section 2(b), the amounts paid to him as house rent allowance and other similar allowances should be included for the purpose of provident fund contribution, which also shows that provident fund contribution can be on less than the Minimum Wages under the Act of 1948. The Act of 1948, providing the definition of Wages under section 2(h), had been enacted prior to the Act of 1952 and as such, there is a presumption that the legislature, while enacting the subsequent Act, was aware of the definition of Wages , contained in the Act of 1948, but even then, keeping in view the objective of the Act of 1952, it consciously provided a more restrictive definition of Basic Wages under section 2(b) of the Act of 1952.

10 The will of the legislature, as evident from the clear wording of section 2(b), is binding on the Authorities created under the Act of 1952 and they are bound to respect the same and for the such reason it cannot be validly claimed by them that despite restrictive definition of Basic Wages under section 2(b) read with section 6 of the Act of 1952, the provident fund contribution has to be paid in any case on not less than the Minimum Wages , fixed under the Act of 1948. The Act of 1948 is not applicable to all establishments and as such, in the establishments, to which the Act of 1948 is not applicable, the employer is not required to pay to its employees the Minimum Wages , fixed by the appropriate Government under the Act of 1948 with regard to other covered establishments, as held by the Hon'ble Supreme Court, in the case of Lingegowd Detective & Security Chamber (P) Ltd.