Employer’s financial position determines wage structure:
In a recent landmark ruling, the Supreme Court of India has reaffirmed the critical importance of taking into account the financial capacity of an employer when establishing the wage structure of employees. This landmark ruling overturned a Bombay High Court judgment in an industrial dispute. The High Court’s decision had partially upheld a wage revision award challenged by the employer.
The employer appealed to the Supreme Court, arguing the High Court overstepped its authority by finding facts and ignoring the company’s financial struggles. The Union countered that Article 226 empowers High Courts to decide factual issues.
The Supreme Court acknowledged High Courts’ power to review tribunal awards. However, it emphasized that the employer’s financial health is crucial in wage revisions. The Court stressed the importance of comparing industrial units while considering the employer’s financial capability.
The Court found the High Court should have returned the case to the tribunal for further examination, especially regarding the employer’s contested comparability of certain units. The Supreme Court deemed the High Court’s evaluation flawed and called for a fresh examination.
Consequently, both the tribunal’s award and the High Court judgment were set aside. The Supreme Court instructed the tribunal to re-evaluate the issue within a specific timeframe. This landmark ruling sets a precedent, reaffirming the need to consider employer financial health in determining employee wage structures.
