Can We Take Legal Action Over Stipend Reduction Without Facing Company Backlash?

Stipend Reduction During Apprenticeship

I was engaged as a technician apprentice at a PSU for a one-year apprenticeship in December 2020. I was selected, and for the first three months, I was paid the full amount. However, in March 2020, they revised our stipend based on our call letter. I received a notice from my company stating that my stipend would be decreased as per the new gazette from the apprenticeship board.

According to my call letter, I was promised 90% of semiskilled wages plus a company stipend of 2500, totaling nearly 18000. Now, they have reduced it to 10500. The gazette was issued in September 2020, but I started my engagement in December.

Seeking Advice on Legal Action

I believe that they should provide me with the full stipend as mentioned in my call letter. The company has not been addressing our concerns or responding to our emails. Some of my colleagues are considering filing a case against the company. Is this feasible, or could the company take disciplinary action against us?

Disciplinary action in employment contracts

Disciplinary action is an employment process that comes into play only when there exists a contract of employment between two parties, namely the employer—who provides employment subject to mutually agreed terms and conditions—and the employee, the individual who is hired for remuneration. The apprenticeship contract never establishes such an employment relationship between the organization and the apprentice. In the event of any party violating the terms of the apprenticeship contract, the aggrieved party can terminate the contract. There is no question of one party suing the other.

Since this arrangement appears to be sponsored by your college, the college should take appropriate steps to address the situation by determining if the reduction in the stipend is in accordance with any valid notification from the relevant government authority. Ultimately, it is a conflict between the college and the company only.

No, sir. It is an apprenticeship program that selected us through an exam and interview. As per the notification from the PSU, we were shortlisted on a merit basis with the involvement of my college. I was posted in a Class A city. My question is, can a PSU decrease stipend without informing us or as stated in the call letter? Does the call letter validate this change?

No involvement of college, and can I go to court for my stipend issue? Is it a better way for me? Nearly 1 lakh I need to lose.

In my understanding, a civil action lies, but not before labor authorities or in a labor court, but in a civil court.

Your description of the issue is a bit confusing, particularly the time periods mentioned. Anyhow, as you were taken by a PSU, it is most likely that it is under the Apprenticeship Act, and you are engaged as a Trade Apprentice. As per the Apprentice Act, if so, you are required to be paid 80% of the semi-skilled wages notified for your area as the stipend. The extra amount the company is paying is an additional reward, and since you were paid only from December 19 to March 2020, it cannot be said to be a service condition. So no legal right accrues to you on this count as per labor laws.

As regards civil relief, yes, there is an actionable claim. But before doing that, the contract of Apprenticeship Training is to be seen. As regards taking disciplinary action, if any of the misconducts mentioned in the Standing Orders applicable to your establishment is breached, it can take action, and the ultimate penalty would be the termination of the Contract of Apprenticeship itself, so it is risky to venture into any act that can be a 'misconduct'.

Dear Uday, I am sure that by this time you've understood the undercurrent of all the replies given so far. That's—some discrepancy has developed, unfortunately, in the contract of apprenticeship by the unilateral reduction of the stipend amount by the PSU. Any remedial legal action likely to be taken by any apprentice may end up with the cancellation of his apprenticeship contract by the company—that's all.

Apprenticeship as an Extended Form of Education

Apprenticeship is an extended form of education in the case of technical or professional academic courses. Sometimes, it can be a method of imparting certain designated technical skills to young people with a minimum general educational qualification, and a stipend is the honorarium granted to such apprentices to meet the minimum basic expenses involved. That's why the Apprentices Act, 1961, and provisions under the IE(SO) Act, 1946, exist for the Scheme of Apprenticeship training by the establishments.

Company Apprenticeship and Stipend Revision

I infer from your successive posts that it falls under the category of Company Apprenticeship. If so, it is important to determine whether there is any clause in the contract empowering the company to unilaterally revise the rate of stipend at any time during the course of apprenticeship. If not, well, since it is a PSU, you can move the High Court by a writ petition under Article 226. It's better to file the writ jointly with all other apprentices.