Case Note & Summary
The Supreme Court dismissed appeals filed by Union of India challenging High Court judgment which held compensatory allowances must be included in 'ordinary rate of wages' for overtime calculation under Section 59(2) of Factories Act, 1948. The Court examined conflicting government circulars from various ministries and concluded that administrative instructions cannot override statutory provisions. The Court emphasized the Factories Act, 1948 is beneficial legislation requiring liberal interpretation in favor of workmen. All compensatory allowances received by employees as part of their wages must be considered for overtime wage calculations.
Headnote
The Supreme Court considered appeals against High Court judgment dated 30.11.2011 which set aside Central Administrative Tribunal order dated 24.12.2010 -- The core issue involved interpretation of Section 59(2) of Factories Act, 1948 regarding inclusion of compensatory allowances in 'ordinary rate of wages' for overtime calculation -- The appellants argued various government circulars excluded HRA, TA, CWA, and SFA from overtime calculations -- The respondents contended plain language of Section 59(2) included all wages received by workmen -- The Court held compensatory allowances form part of 'ordinary rate of wages' under Section 59(2) -- Government circulars cannot override statutory provisions -- The Factories Act, 1948 being beneficial legislation requires liberal construction in favor of employees -- The High Court judgment was upheld and appeals dismissed
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Issue of Consideration: Whether compensatory allowances such as House Rent Allowance, Transport Allowance, Clothing and Washing Allowance, and Small Family Allowance would fall within the term 'ordinary rate of wages' for calculation of overtime wages under Section 59(2) of Factories Act, 1948
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Final Decision
The Supreme Court dismissed all appeals and upheld the High Court judgment -- Compensatory allowances including HRA, TA, CWA, and SFA form part of 'ordinary rate of wages' under Section 59(2) of Factories Act, 1948 -- Government circulars cannot override statutory provisions
