1. Industrial dispute regarding wage structure, bonus, provident fund, and gratuity in catering establishments referred to an industrial tribunal under the Industrial Disputes Act. (Para 1 )
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1962 Supreme(SC) 419
SUPREME COURT OF INDIA
J.C.Shah : K.C.Das Gupta : K.N.Wanchoo : P.B.Gajendragadkar
Management Of Wenger And Company
Versus
Their Workmen
Case No. : 609 , 610 of 1902,622 , 623 of 1962
Date of Decision : 12/11/62
Advocates Appeared: Dadachanji J.B. : Dutta B. : Mathur O.C. : Narain Ravindra : Pathak G.S. : Setalvad M.C. : Sharma Janardan : Vyasa Veda
Advocates:
B.DUTTA, G.S.PATHAK, J.B.DADACHAN, JANARDAN SHARMA, M.C.SETALVAD, O.C.MATHUR, Ravindra Narayan, Veda Vyasa
B.DUTTA, G.S.PATHAK, J.B.DADACHAN, JANARDAN SHARMA, M.C.SETALVAD, O.C.MATHUR, Ravindra Narayan, Veda Vyasa
The court established that unity of ownership, finance, management, and labor determines if multiple units are one industrial establishment. It also ruled that tips received by employees, being incidental to employment, can be pragmatically considered when determining dearness allowance.
Headnote:(A) Industrial Disputes Act, 1947 - Section 17A(4) - Shops and Establishments Act - Section 5 - Industrial Adjudication - Determination of "Establishment" - Whether industrial establishments owned by the same management constitute separate units or one establishment depends on facts of each case - Relevant factors include unity of ownership, unity of finances, unity of management, and unity of labour - Functional integrality is a factor but not the sole determinant; the absence of functional integrality does not necessarily mean units are separate establishments. (Paras 13, 14)
(B) Wage Structure and Dearness Allowance (DA) - Tips received by waiters - Tips are paid by customers and are incidental to employment - While tips are not payments made by the employer and cannot be used to fix basic wages, a pragmatic approach in industrial adjudication allows a reasonable minimum amount of tips to be taken into account when determining the quantum of DA to ensure fairness to the employer. (Paras 21-24)
(C) Gratuity and Provident Fund (PF) - Different objects - The introduction of a PF scheme does not preclude the introduction of a gratuity scheme - Where the financial position of the employer justifies both, employees may be entitled to both benefits. (Para 25)
(D) Jurisdiction of Tribunal - Scope of Reference - A tribunal cannot issue directions for the future distribution of service charges if the reference is specifically limited to whether workmen are entitled to share charges collected previously up to the date of reference. (Para 26) (E) Retrospective Operation of Award - Section 17A(4) - The Industrial Tribunal is authorized to specify the date from which an award comes into operation, including dates prior to the date of the award. (Para 28)
Facts of the case:
An industrial dispute involving multiple catering establishments regarding wage structure, bonus, provident fund, gratuity, and other benefits was referred to a tribunal. The tribunal consolidated references for hotels and restaurants, treating them as a single trade. It determined a minimum wage packet, provided for DA with deductions for amenities, and ordered a gratuity scheme. The employers challenged the grouping of establishments, the treatment of wine shops as part of the restaurants, the non-consideration of tips in DA, and the imposition of a gratuity scheme alongside a PF scheme.
Findings of Court:
The court upheld the grouping of hotels and restaurants as part of the catering trade. It affirmed that wine shops and restaurants under the same management with unity of ownership and finance constitute one establishment. It ruled that hypothetical future prohibition of alcohol cannot affect current wage structures. It modified the DA for waiters by allowing a deduction for minimum tips. It upheld the coexistence of PF and gratuity schemes but modified the gratuity eligibility periods. It set aside the direction for future distribution of service charges as it exceeded the scope of the reference.
Issues: Whether hotels and restaurants can be adjudicated together; whether wine shops and restaurants under one management are a single establishment; whether tips should be deducted from DA; whether PF precludes gratuity; and whether the tribunal could order future distribution of service charges.
Ratio Decidendi: The court emphasized a pragmatic approach in industrial adjudication. Unity of ownership, finance, and management defines a single establishment. Tips, while not employer payments, are incidental to the job and can be factored into DA to avoid injustice. The tribunal's power is strictly limited by the terms of the reference.
Result: Appeals preferred by the employers partially succeed; appeals preferred by the employees fail and are dismissed.
Legal Category Hierarchy
-
labour law
- industrial disputes
- industrial establishments
- industrial adjudication
Table of Contents
2. Employers challenged the grouping of hotels and restaurants, the treatment of wine shops as part of the establishment, and the award of dearness allowance despite tips. (Para 10 , 12 , 19 )
3. The court emphasized a pragmatic approach to industrial adjudication, considering unity of ownership for establishments and the incidental nature of tips in determining wages. (Para 11 , 14 , 23 )
4. Unity of ownership, finance, and management determines a single industrial establishment; tips may be considered for adjusting dearness allowance but not basic wages. (Para 14 , 23 )
5. Employers' appeals partially allowed to modify dearness allowance, gratuity schemes, and service charge distributions; employees' appeals dismissed. (Para 29 )
6. Can hotels and restaurants be grouped together for a single industrial adjudication?
Yes, if they belong to the same trade and operate in the same locality, as uniformity in service conditions promotes industrial peace and prevents labor migration. (Para 11 )
7. When do multiple units under the same management constitute a single industrial establishment?
Determination depends on facts of each case, focusing on unity of ownership, finances, management, and labor, as well as registration status under relevant shops and establishments legislation. (Para 13 , 14 )
8. Should tips received by employees be considered when determining dearness allowance?
Yes, a pragmatic approach allows for a reasonable minimum deduction from dearness allowance because tips are incidental to employment, though they cannot be used to reduce the basic wage. (Para 21 , 23 , 24 )
9. Does the existence of a Provident Fund scheme preclude the introduction of a Gratuity scheme?
No, as the two schemes serve different objects; both can be provided if the employer's financial position justifies the practical burden. (Para 25 )
10. Can an industrial award be given retrospective effect?
Yes, under Section 17A(4) of the Industrial Disputes Act, a tribunal may specify the date of operation, including dates prior to the date of reference. (Para 28 )
P.B.GAJENDRAGADKAR, J.
(1) AN industrial dispute arising out of ten demands made by the employees against 13 Hotel and Restaurant institutions in New Delhi, was referred by the Chief Commissioner, Delhi to the Industrial tribunal for adjudication. Reference in Ii. D. No. 581 of 1959 which was made on 9/09/1959, included two Hotels-Claridges Hotel and Nirula Hotel-, whereas reference in I. D. No. 620/1959 which related to United Coffee House was made on 12/12/1959. These two references were consolidated by the tribunal and were heard together. Out of the demands made by the employees, three demands were rejected by the tribunal ; they were demands Nos. 4, 9 and 10. Demand No. 4 was in regard to medical treatment, No. 9 was in regard to the revision of the hours of work of Chowkidars and No. 10 was in regard to the recognition or appointment of central Negotiating Committee on Association or Union level. The other demands have been partially allowed. The principal amongst these demands were a claim for a wage structure with adequate provision for increment in scales, provision for Provident Fund and Gratuity and Bonus for the years 1956-57, 57-58 and 58-59. There were, other subsidiary demands to which reference would be made later. The award pronounced by the tribunal in these two references has given rise to four appeals by special leave before this court. Appeals Nos. 609-610,/1962 have been preferred by the employers, whereas appeals Nos. 622 and 623/1962 have been filed by the employees.
(2) IT would be convenient to set out briefly the broad features of the directions issued by the tribunal in respect of the employees claims. The tribunal has examined the employees claim with regard to bonus for the three years in question. It took the claim for bonus in respect of each one of the employers, it examined the financial position of the employer for the respective years and determined the question as to the available surplus by the application of the full bench Formula in each individual case. Claims made by the employers for deduction of certain items were examined in the light of the comments made by the employees in respect of them. The usual prior charges were taken into account, and on determining the available surplus, directions were issued for the payment of bonus for the three respective years. In some cases, the employer has been asked to pay bonus for all the three years, while in some others the employer has been asked to pay bonus for one or two years according as the available surplus justified or did not justify the award of bonus for the particular year.
(3) THE tribunal then proceeded to deal with the other demands made by the employees. The claim made by the employees for suitable uniforms and other apparel according to the nature of the duties of individual workman was, in substance, rejected by the tribunal. It has, however, ordered that all the managements, with the exception of Delhi Restaurant, should give winter uniforms consisting of a woollen coat and a pair of woollen trousers to Waiters, Bearers, Page Boys, Lift Boys, Peons and Chowkidars and Butlers once in three years. Similarly, the managements have been asked to give to Masalchis, Sweepers and Malis a woollen jersy once in three years.
(4) THE tribunal then examined the claim for additional leave facilities and held that there was no justification for granting separately sick leave as such. Three national holidays were allowed by the employers on the January 26, August 15, and October 2. The tribunal has held that three more holidays should be allowed, one for Holi, one for Dussehra and one for Diwali.
(5) ON the question of the introduction of Provi. dent Fund Scheme and the, Cratuity Scheme, the tribunal noticed the fact that the P. F. Scheme had been introduced by the employers in accordance with the requirements of the relevant statute. The employers case that in view of the fact that a P.F. Scheme
