The Bombay High Court has delivered a significant ruling affirming the principle of equal pay for equal work for contract workers engaged by the principal employer through contractors. The Court upheld the Industrial Tribunal's Awards directing payment of wages at the minimum of the pay scale applicable to permanent employees for contract workers performing identical duties. The decision clarifies the statutory obligations of principal employers under the Contract Labour (Regulation and Abolition) Act, 1970 and the Maharashtra Contract Labour Rules, 1971, particularly Rule 25(2)(iv)(b), which mandates equal wages when contract workers perform the same work as regular employees.
Background & Facts
The Genesis
The Petitioner, Maharashtra State Electricity Distribution Company Limited (MSEDCL), is a successor entity to the erstwhile Maharashtra State Electricity Board. The Petitioner is registered under the Contract Labour (Regulation and Abolition) Act, 1970 (CLRA Act) and holds a license to engage contract workers. The Government of Maharashtra had imposed a ban on new recruitment in the establishment, compelling the Petitioner to engage contract workers to meet its manpower requirements.
Key Facts
- The Petitioner issued work orders to various contractors for supply of skilled and unskilled manpower, including technical cadres such as Lineman, Meter Readers, Drivers, and Office Assistants.
- The contract workers performed duties identical to those performed by permanent employees of the Petitioner.
- The Respondent-Union, Bhartiya Kamgar Karmachari Mahasangh, represents 40 + 49 contract workers engaged by the Petitioner through contractors.
- A demand for equal wages was served on the Petitioner on 05 April 2017, followed by conciliation proceedings that failed.
- The Additional Commissioner of Labour made References to the Industrial Tribunal, Thane vide orders dated 16 March 2018 and 18 March 2020, leading to Reference (IT) Nos. 12 of 2018 and 16 of 2020.
- The Respondent-Union led evidence to establish that contract workers performed the same duties as permanent employees.
Procedural History
- 05 April 2017: Demand for equal wages served by Respondent-Union.
- 16 March 2018: Reference (IT) No. 12 of 2018 registered by Additional Commissioner of Labour for 49 workmen.
- 18 March 2020: Reference (IT) No. 16 of 2020 registered for 40 workmen.
- 24 April 2024: Industrial Tribunal, Thane passed Awards in both References, directing payment of wages at the minimum of the pay scale applicable to permanent employees from December 2016 (Reference (IT) No. 12 of 2018) and May 2016 (Reference (IT) No. 16 of 2020).
- 28 March 2025: Writ Petitions (WP No. 3170 of 2025 and WP No. 3172 of 2025) filed before the Bombay High Court challenging the Awards.
The Parties' Positions
For the Petitioner
- Argued that contract workers engaged by contractors cannot be compared to permanent employees of the Petitioner.
- Contended that wages of contract workers are determined by contractors and not the Petitioner.
- Relied on State of Punjab v. Jagjit Singh and Municipal Council, Nandyal Municipality v. K Jayaram to argue that the principle of equal pay for equal work does not apply to contract workers engaged through contractors.
- Submitted that the Industrial Tribunal erroneously relied on Rule 25 of the Maharashtra Contract Labour (Regulation and Abolition) Rules, 1971 (Maharashtra Rules).
For the Respondent-Union
- Argued that contract workers were engaged to perform duties of regular employees due to the recruitment ban.
- Contended that the Petitioner is statutorily obliged under Rule 25(2)(iv)(b) of the Maharashtra Rules to pay contract workers the same wages as permanent employees when performing the same work.
- Relied on State of Punjab v. Jagjit Singh to assert that the principle of equal pay for equal work applies to temporary workers, including contract workers.
- Submitted that the judgment in Municipal Council, Nandyal Municipality is distinguishable as it involved a prayer for regularization and did not consider the statutory framework under the CLRA Act.
Relief Sought
The Petitioner sought quashing of the Awards dated 24 April 2024, directing the Industrial Tribunal to reconsider the matter in light of the submissions made.
The Legal Issue
The central question was whether contract workers engaged by the principal employer through contractors are entitled to receive wages at the minimum of the pay scale applicable to permanent employees when performing the same duties and responsibilities.
Arguments Presented
For the Petitioner
The Petitioner argued that the principle of equal pay for equal work, as laid down in State of Punjab v. Jagjit Singh, applies only to workers directly engaged by the employer and not to those engaged through contractors. It contended that the wages of contract workers are determined by the contractor and not the Petitioner, and that the Petitioner merely pays a lump-sum amount to the contractor based on tender processes. The Petitioner relied on the judgment in Municipal Council, Nandyal Municipality v. K Jayaram to argue that the principle of equal pay for equal work cannot be extended to contract workers engaged through contractors.
For the Respondent-Union
The Respondent-Union argued that the Petitioner is statutorily obliged under Rule 25(2)(iv)(b) of the Maharashtra Rules to pay contract workers the same wages as permanent employees when performing the same work. It contended that the Petitioner has admitted that contract workers are engaged to perform duties of regular employees due to the recruitment ban. The Respondent-Union relied on State of Punjab v. Jagjit Singh to assert that the principle of equal pay for equal work applies to temporary workers, including contract workers, and that the Petitioner cannot distinguish between contract workers and permanent employees in the matter of payment of wages.
The Court's Analysis
The Court examined the statutory framework under the CLRA Act and the Maharashtra Rules, particularly Rule 25(2)(iv)(b), which mandates that where contract workers perform the same kind of work as workmen directly employed by the principal employer, the rates of wages payable to the contract workers shall be the rates payable to the workmen directly employed by the principal employer doing the same kind of work.
The Court observed that the judgment in State of Punjab v. Jagjit Singh establishes that the principle of equal pay for equal work applies to temporary workers, including contract workers, and that such workers are entitled to wages at the minimum of the pay scale applicable to regular employees holding the same post. The Court noted that the Apex Court in Sabha Shanker Dube v. Divisional Forest Officer reiterated this principle.
However, the Court acknowledged the distinction drawn in Municipal Council, Nandyal Municipality v. K Jayaram between workers directly engaged by the employer and those engaged through contractors. The Court observed that the judgment in Municipal Council, Nandyal Municipality was rendered in peculiar facts and circumstances, where the prayer was for regularization and the Apex Court did not consider the statutory framework under the CLRA Act.
The Court held that in the present case, the Petitioner is registered under the CLRA Act and is statutorily obliged under Rule 25(2)(iv)(b) of the Maharashtra Rules to pay contract workers the same wages as permanent employees when performing the same work. The Court noted that the Industrial Tribunal had recorded findings of fact that the contract workers performed the same duties as permanent employees, and that the Petitioner had admitted that contract workers were engaged to perform duties of regular employees due to the recruitment ban.
The Court also addressed the issue of limitation, holding that the direction for payment of difference of wages from May 2016/December 2016 was unsustainable. The Court modified the Awards to direct payment of difference of wages from the dates of the References, i.e., 16 March 2018 for Reference (IT) No. 12 of 2018 and 18 March 2020 for Reference (IT) No. 16 of 2020.
"Thus, there is a statutory duty to pay equal wages to the contract workers as are paid to the regular employees when contract workers perform same work. Under the provisions of CLRA Act if the contractor fails to pay wages payable under Act or the Rules to its workers, it becomes the responsibility of the principal employer to pay the same."
The Verdict
The Court partly allowed the petitions. The impugned Awards were upheld to the extent of the declaration that contract workers performing the same duties as permanent employees are entitled to wages at the minimum of the pay scale applicable to permanent employees. However, the direction for payment of difference of wages from May 2016/December 2016 was modified to direct payment from 16 March 2018 for Reference (IT) No. 12 of 2018 and from 18 March 2020 for Reference (IT) No. 16 of 2020. The difference of wages shall be payable only till the time the contract workers remain/remained employed by the contractors with the Petitioner.
What This Means For Similar Cases
Statutory Obligation Under CLRA Act Trumps Contractual Arrangements
- Principal employers registered under the CLRA Act are statutorily obliged under Rule 25(2)(iv)(b) of the Maharashtra Rules to pay contract workers the same wages as permanent employees when performing the same work.
- The Court's ruling clarifies that the statutory obligation under the CLRA Act overrides contractual arrangements between the principal employer and the contractor.
Equal Pay for Equal Work Applies to Contract Workers Performing Identical Duties
- The principle of equal pay for equal work, as laid down in State of Punjab v. Jagjit Singh, applies to contract workers performing the same duties as permanent employees.
- Contract workers are entitled to wages at the minimum of the pay scale applicable to permanent employees holding the same post.
Limitation Applies to Claims for Arrears of Wages
- The Court clarified that while the cause of action for underpayment is continuous, the relief of payment of arrears is subject to limitation.
- The Court modified the Awards to restrict the payment of difference of wages from the dates of the References to the Industrial Tribunal, i.e., 16 March 2018 and 18 March 2020, rather than from May 2016/December 2016.
