Whether the management has right to enter into amendment in wage settlement already in operation

Dear Experts,

The management has entered into Long Term wage settlement under section 18(1) of the ID Act with the Union, which is in force. By arriving at wage settlement every time, a considerable increase in each component of wages occurs. The senior employees would get higher wages due to their long stint of service. However, there are some grievances among the senior employees. They feel that with each wage settlement entered at intervals, the increases in wage components also apply to newly confirmed employees who are much junior. This situation causes grudges among the senior employees as there is not much difference in wages drawn between them and the newly confirmed employees.

In view of the differentiation between junior and senior employees, the management would prefer to amend the current settlement to differentiate between the two groups.

1) Can the management make amendments to the Long Term settlement to modify the wage structure while ensuring compliance with MW Act requirements?

2) If the Union agrees with the management's decision to amend the LTS to satisfy senior employees, is such an amendment legally valid?

3) Would this amendment not lead to discrimination in wages payable to junior employees?

Please advise.

Thanks & regards,

V. Sridhar

1. Many organizations have a pay factor called service weightage, which is a slab arrangement. In this system, as the employee progresses from one slab to another based on completing a fixed number of years, the Service Weightage amount also increases. For example, an employee who has completed 9 years of service may start receiving a Service Weightage Sum of X+, whereas they were receiving Rs. X previously. A table can be created to show the enhancement of Service weightage after completing each bandwidth of service, such as 0-5, 5-10, 10-15, etc.

2. Parties to an agreement can mutually amend any clause of the agreement at any time. By entering into a fresh agreement with this clause, it should be explicitly stated that all other clauses of the original agreement will remain valid and in force. Since there is only a wage increase and no prejudice is caused, it will not constitute a breach of the agreement even in the absence of a formal agreement. This adjustment can also be a unilateral announcement by the management without involving the unions.

3. It is a natural phenomenon for employees with longer years of service to receive higher pay, even within the same pay grade. This is not a form of discrimination that would be disapproved of by the courts.