Respected All, Please guide me for below mentioned: We have got CLRA license under the central act. The principal employer is asking us to pay minimum wages as per state govt notifications and not as per central govt notifications. We are of the opinion of following central govt notifications.

Is the stand taken by us is correct or not... Kindly advise...

From India, Mumbai
Labour Law & Hr Consultant
Doctor Siva Global Hr
Management Consultancy


The basis for deeming the applicability of Central notified minimum wages is not clear. The nature of your services as well as the industry is also not mentioned so we are unable to verify it too. Labour license from the Central Government does not lead automatically to the application of its notified min. wages. As per the Minimum Wages Act 1921 the appropriate government is Central Government in relation to any scheduled employment carried on by or under the authority of the Central Government or a railway administration, or in relation to a mine, oilfield or major port, or any corporation established by a Central Act whereas in relation to any other scheduled
employment, it is the State Government. So unless the PE fulfills the above requirement your contention will have no force. This situation could lead to many complications as the PE follows the State Govt notified rates and the local Inspector may take action against you for non-compliance as in most cases State notified rates are more than the central wages. My personal experience from a navratna PSU is that for CLRA Act purpose the appropriate Govt is Central Govt but for Min. Wages it is State Govt. Hope this situation will come to an end with the new Labour Code.

From India, Mumbai

Dear Mr.KK!HR,

I am of the view that there cannot be two appropriate Governments to the same establishment, one for the purpose of registration of PE and Licensing of contractors under the CLRA Act,1970 and the other for the compliance and enforcement of minimum wages under the Minimum Wages Act.1948.

Though both are Central Legislations, the concurrent jurisdiction of both the Central & State Governments automatically gets ousted because of the coverage of the PE's establishment under the Central Government.

In the given circumstances of the thread, the question of the applicability of the statutory minimum wages under which rate is a different question if there happens to be absence of parity between the two statutory rates of minimum wages.

Automatically, the Central rates would be applicable, if they are more. If less, paying at higher rates is not a violation. But, if subsequent revision of Central rates is more, automatically those rates have to be adopted.

Besides once the Central Government becomes the appropriate Government, the State enforcement machinery has no jurisdiction over the establishment under both the laws.

Of course, if the Union of contract workmen puts up such a demand in the event of the Central rates of minimum wages constantly remain below the rates of the State for the same employment in the same geographical area, that's a different situation. Even then, compliance of the State rates would be a matter of expediency only and not of a statutory obligation.

Therefore, the poster's view point in the matter as the contractor licensed by the Central enforcement machinery under the CLRA Act, 1970 seems appropriate to me. I would like to be corrected on the basis of any case law in this connection.

A final note of reminder from myself is that the PE may be appraised of the above legal position by the contractor. If the PE still insists his stand, no problem, let the contractor implement the same for the PE has vicarious liability in respect of wages u/s 21(4) of the CLRA Act,1970 in case of any violation by the contractor.

From India, Salem

This question had confounded us, particularly in the wake of Supreme Court judgement in Air India Statutory Corporation Vs. United Labour Union & Ors. decided by the Supreme Court on 06.11.1996. Suddenly the jurisdiction which till then remained with the State Government changed hands to the Central Government and thereafter in the Steel Authority Of India Ltd. & Others vs National Union Water Front decided on 30 August, 2001 the status quo ante was partly restored, in the contract matter too. During this period we had to get the matter legally examined many times. The jurisdiction remained a vexed enigma all along and it changed every time. As the HR man handling the matter it became incumbent to deal with the rival contentions and the whimsical officials who dealt with it.

As per the CLRA Act 1970 the appropriate Government is the same as that of ID Act 1947 so there is congruity between the two. But not so for minimum wages and here it is a restrictive definition.
Section 2 (b) of the Minimum Wages Act 1948 defines the appropriate government to be:
(b) "appropriate Government" means,--
(i) in relation to any scheduled employment carried on by or under the authority of the Central Government or a railway administration, or in relation to a mine, oilfield or major port, or any corporation established by a Central Act, the Central Government, and
(ii) in relation to any other scheduled employment, the State Government;
So, the Appropriate Government is Central Government only if the establishment falls within sub-section (i) and for all others it is State Government. Going by the Golden Rule of interpretation, the sub-section (i) cannot be given an umbrella like scope, indeed it is to the contrary, Central Government jurisdiction is essentially limited to department undertakings like Ordinance Factories, Press Note factories etc. All PSUs cannot be stated to be establishments carried on by or under the Central Government, here the legal principle is that a company is different from its share holder. (Reference Heavy Engineering Mazdoor Union vs The State Of Bihar & Others on 12 March, 1969) This ratio was upheld by the Constitution Bench in SAIL matter. Thus even if the company is a Government Company as defined in the Companies Act 2013, yet it may not be having Central Government as the Appropriate Government.
It is in this background that it was mentioned that the jurisdiction as per the MW Act could be different from CLRA Act.
Today From India, Mumbai

From India, Mumbai

Dear sir,

In addition to my earlier post, please note that our client is one of the reputed company in Oil and Gas industry. They released form III to us for getting the labour licence. We applied on Shram Suvidha Portal for labour licence and also received it. We are of the opinion of following the minimum wages under central govt is based on the fact that they asked us to get labour licence from central govt and not from state govt.


From India, Mumbai

This issue requires deep analysis of the legal position in both the Acts so it would be advisable to obtain Legal Opinion of the Advocate General/Attorney General so as to create a binding effect on the officials concerned.
From India, Mumbai

Dear learned Sirs

In my view, once license is granted Under the CLRA of Central Rules, the rates of MW shall be as per the central Rules. The PE is bound to follow Central Rules only. Though the Labor item falls under the concurrent list, the principle followed is only one Jurisdiction not two jurisdictions will apply. We cannot pick and choose which is beneficial.

In this case, the PE obtained registration under the Central Rules, hence, the rates of MW apply to the Service Provider Employees ( Contract workmen ).

I stand for correction.

From India, Hyderabad

Dear Colleague,

The definition of Appropriate Government is a good term to be analyzed.

As far as any scheduled establishment/the nature of Industry which is covered "Central" as Appropriate Government, hence the appropriate Govt is Central only.

Minimum Wages as stipulated by the Central Government will be appropriate in your case of Oil Sector. More so, the licenses for contractors and RC to Principal Employer are obtained from Central Labour Authorities only.

Hence from Minimum Wages angle, Contract Labour Act angle, Industrial Dispute Act angle, it is right to follow the Central Government Fixed Minimum Wages for the respective scheduled Employment. Within that notification, you may follow different wages for different skill categories depending on the classification given in the notifications based on skill levels as stipulated in the Notifications.

For your reading:

A) The definition of Appropriate Government under the Minimum Wages Act 1948 is as under:

2(b) “appropriate Government” means,— (i) in relation to any scheduled employment carried on by or under the authority of the [Central Government or a railway administration], or in relation to a mine, oilfield or major port, or any corporation established by [a Central Act], the Central Government, and (ii) in relation to any other scheduled employment, the State Government;

B) The definition of Appropriate Govt under the Contract Labour Act is as under:

2. Definitions.-(1) In this Act, unless the context otherwise requires,-(a) 'appropriate Government' means,-(i) in relation to an establishment in respect of which the appropriate Government under the Industrial Disputes Act, 1947 (14 of 1947), is the Central Government; (ii) in relation to any other establishment, the Government of the State in which that other establishment is situated.

C) The definition of Appropriate Govt under Industrial Disputes Act 1947 is as under:

2. Definitions.- In this Act, unless there is anything repugnant in the subject or context,--

(a) "appropriate Government" means-- (i) in relation to any industrial dispute concerning any industry carried on by or under the authority of the Central Government, ................ or the Oil and Natural Gas Commission established under section 3 of the Oil and Natural Gas Commission Act, 1959 (43 of 1959),...................................., the Central Government, and (ii) in relation to any other industrial dispute, the State Government;

Your understanding is very correct that your appropriate Government is Central and you need to follow Central Govt Notified Minimum Wages. In some notifications released by Central they mention that the minimum wages notified by central or state whichever is more has to be followed. Here you need to be little careful and get clarity from the Labour Commissioner and then proceed as it comes as a GO and having administrative powers to enforce but legally can be challenged. On this point just have a discussion with your known Labour Commissioner and then proceed.

From India, Chennai

Dear friends,

I am unable to accept the view of our learned KK!HR that there can be two appropriate Governments for the same Principal Employer's establishment viz., one under the CLRA Act,1970 and the other under the MW Act,1948 based on the Air India Statutory Corporation judgment of the Supreme Court and a further clarification is required in this regard.

I would like to submit that the judgment of the Five-Judge Constitutional Bench of the hon'ble Supreme Court in Steel Authority of India Ltd and Others v. National Union Waterfront Workers and Others [ 2001(4) LLN 365 ] had already over ruled the Air India Statutory Corporation judgment [ 1997 (1) LLN 75 ] with prospective effect and it still holds the Law on the subject matter. The implication is that since the over-ruling of the Air India Statutory Corporation judgment is explicitly declared to be prospective, any direction issued by any industrial adjudicator/any court including High Court for absorption of contract labor pursuant to the over-ruled judgment would hold good and the same should not be set aside, altered or modified in cases where such a direction had been given effect to and become final.

According to the Constitutional Bench that in the case of Central Govt Company/ Undertaking, an instrumentality of Government carrying on an industry, the criterion to determine whether the Central Government is the appropriate Govt within the CLRA Act is that the industry must be carried on by or under the authority of the Central Government and not that the Company/ Undertaking is an instrumentality or agency of the Central Govt for the purposes of Article 12 of the Constitution; such an industry may be conferred either by a Statute or by virtue of principal and agent or delegation of power and this fact to be ascertained on the facts and in the circumstances of each case.

Hence the implication of the above ratio decidendi is that once the particular Govt becomes the appropriate Govt under the CLRA Act,1970, the same would be the appropriate Govt under the MW Act,1948 too.

Therefore, no further clarification is required.

From India, Salem

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