Now SC says Wage Board pay for contract employees too!

Although the judgment has declined to find newspaper managements guilty of contempt, it has settled 4 questions of law which will have far reaching implications for journalists and newspapers in India.
PRASHANT REDDY THIKKAVARAPU explains these

 The Supreme Court, left, Justice Gogoi, right.

 

Earlier this week on June 19, 2017 a Division Bench of the Supreme Court of India headed by Justice Ranjan Gogoi pronounced its judgment on 83 contempt petitions filed by journalists against the management of various newspapers for allegedly not implementing the recommendations of the Majithia Wage Board, which recommendations were upheld by the Supreme Court in a judgment dated February 7, 2014.  Although the recent judgment by Justice Gogoi has declined to find any of the newspaper managements guilty of contempt, it has settled 4 questions of law which will have far reaching implications for journalists and newspapers in India.

It should be mentioned that once a judgment is delivered, it is final in the sense that although it can be appealed, new issues pertaining to the same litigation cannot be agitated before the same court or any other court. This principle of constructive res judicata is meant to ensure the finality of legal proceedings. Thus, the Supreme Court should not have got into these 4 questions of law while dealing with contempt petitions.

 

Background  

Before delving into the judgment it may help to provide a brief legal background to the dispute. The legislation at dispute in this case is The Working Journalists and Other Newspaper Employees (Conditions of Service) and Miscellaneous Provisions Act, 1955. This law was enacted in 1955 to regulate the working conditions of journalists working for newspapers. The legislation delegates to a Wage Board, the task of determining remuneration and pay for newspaper journalists and employees. A Wage Board headed by Justice G.R. Majithia, a retired judge of the Bombay High Court was appointed on March 4, 2009. This Wage Board submitted its recommendations to the Central Government on December 31, 2010 and were accepted by the Central Government on October 25, 2011 and notified as coming into effect on November 11, 2011. The recommendations were promptly challenged by the management of various newspaper managements on various grounds but all the challenges were dismissed by the Supreme Court in a judgment delivered on February 7, 2014. Several newspaper managements are on the record stating that implementation of the Wage Board’s recommendations will financially cripple newspapers. When the newspaper managements did not raise the salaries of their journalists and employees the latter responded by filing 83 contempt petitions.

 

The filing of the contempt petitions

The decision to file 83 contempt petitions is questionable because there is a specified procedure under the law to recover dues from newspapers not complying with the law. As per Section 17, if a newspaper doesn’t comply with the Wage Board’s recommendations, the journalist or employee is required to make an application to the state government which will then start the process to recover the dues in the same manner that it recovers arrears of land revenue. In most states, this would mean proceedings before a Revenue Court. These proceedings are an entirely new set of proceedings which had started after some prodding from the Supreme Court. It is however a long drawn process and it is possible that the 83 petitions were filed to pile pressure on newspaper managements. The Supreme Court predictably did not return a finding of contempt and has directed the journalists towards the procedure laid down in Section 17.  

"The decision to file 83 contempt petitions is questionable because there is a specified procedure under the law to recover dues from newspapers not complying with the law."

 

One of the other reasons the Supreme Court declined to hold the managements guilty for contempt was because the Labour Commissioners had indicated that implementation was stuck on four issues raised by newspaper management and according to the managements the four issues had not been dealt with in the course of the earlier judgment. The Supreme Court, in its earlier judgment was not required to interpret the Wage Board’s recommendations unless the issue had been expressly raised by the management. Hence the bench headed by Justice Gogoi should have simply dismissed the arguments made by the managements asking them to raise the issues for adjudication before the Revenue Courts tasked with recovering the dues. In any case, Justice Gogoi ruled that he would not return a finding of contempt since the four issues weren’t settled conclusively by the Supreme Court. He then proceeds to answer the four issues in the present proceedings. The issues are as follows:   

(i)         The highly contentious Clause 20(j) of the Wage Board recommendations: This clause of the Wage Board recommendations allows all employees to exercise the option for retaining their existing pay scales and existing emoluments rather than be bound by the Wage Board’s recommendations. It appears that several employees were made to sign undertakings as a part of their contracts agreeing to not seek the wages prescribed by the Wage Board.  The employees are now arguing that all such undertakings signed by them were involuntary and that in any case, the wages fixed by the Wage Board should over-rule any such undertakings. The managements, predictably argued in favour of Clause 20(j). The Act isn’t clear on this point. It does provide the option to newspaper employees to opt for higher pay under Section 16 but is silent regarding the situation where an employee agrees to get paid less than the Wage Board recommendations. Justice Gogoi has not adjudicated on this issue and has left it to the appropriate Revenue Courts to decide both, the factual issue of whether the undertaking were involuntary and the legal issue of whether newspaper employees can agree to be paid lower than the prescribed minimum by the Wage Board. The Court does however point the Revenue Courts towards its precedents under the Minimum Wages Act, 1948 (which apply to labourers) wherein it has categorically held that laborers cannot, in any circumstances, be paid less than the notified minimum wages. This interpretation is likely to hold good even in the present dispute because the driving force of social security legislation in the fifties was that the employee could not hold his own in negotiation against the employer and hence the need for the state to intervene and fix rates. To concede that the employee can agree to be paid lower than the notified rate would defeat the very purpose of the legislation.

"It appears that several employees were made to sign undertakings as a part of their contracts agreeing to not seek the wages prescribed by the Wage Board."

 

(ii)       Do the Wage Board recommendations cover even contractual employees as opposed to regular employees: The issue of contractual employee v. regular employee has tortured employment law in India for several years. The reason, this distinction has cropped up in the regular workforce is because managements worried about the costs of providing all the required benefits and salaries under India’s various employment laws and also the difficulty in firing employees, offer short term contracts without any benefits. This is a rather complicated area of employment law but luckily for the journalists, Justice Gogoi comes to the conclusion that “There is nothing either in the provisions of the Act or in the terms of the Wage Board Award which would enable us to hold that the benefits of the Award would be restricted to the regular employees and not contractual employees.” His reasoning is rather sparse given the massive implications of this conclusion for newspapers. Every organisation has a business requirement to engage contractual employees for short term or non-core assignments to deal with periods of increased work. How are management supposed to draw the line between their permanent employees and contractual employees if the Supreme Court is going to give such vague reasoning?  

(iii)     Variable pay: The third sticking point was ‘variable pay’ (performance linked pay). This was introduced by the Wages Board. It is a concept introduced by the 6th Pay Commission for central government employees. The managements are against variable pay. In the earlier round of litigation, the Supreme Court dismissed the challenge to variable pay and had indicated that the managements would have to comply with the Wage Board recommendations. It is not clear what new argument was made by the managements but it clearly didn’t work because Justice Gogoi reiterated the earlier judgment of the Supreme Court on this issue to dismiss the objection against  variable pay. 

(iv)     The extent of financial erosion: The Wage Board in its recommendation had exempted newspapers facing heavy financial losses, for the last three years, from the requirement of paying arrears. Predictably several managements have tried to wiggle out of paying arrears on the grounds that they have suffered financial losses. Again, it is not clear why this issue was re-opened. However Justice Gogoi dismisses even this contention on the grounds that it is a factual issue that will have to be determined by the authority under Section 17 i.e. the Revenue Courts.

Although the Supreme Court has settled the four issues, it should be remembered that there are several factual issues that will now have to be adjudicated upon before the Revenue Courts. Managements are unlikely to concede the point on contractual employees and additionally will claim financial losses. Whether the additional financial pressure created by the Wage Board recommendations will lead to more downsizing at newspapers by managements remains to be seen.     

 

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