Crown Aluminum Works Ltd. v. Workmen

FACTS

• The appellant, Crown Aluminum Works Ltd., faced financial setbacks and proposed severe economic measures to its workmen starting in 1952.

• These measures included:

  • Reduction of factory hours.

  • Reduction of facility bonus and a 10% reduction in temporary dearness allowance.

  • Discharge of 52 workers and retrenchment of 227 workers.

• The workers' Union opposed these changes, and the dispute was referred for industrial adjudication.

• The management's pay structure consisted of five items, including basic wage, dearness allowance, special bonus, facility bonus, and food concession, suggesting the payments in question were part of the total wage structure.

ISSUES

1. Whether the revision of a wage structure fixed to the prejudice of the workman is permitted, and if so, under what circumstances.

2. Whether the Labour Appellate Tribunal was justified in establishing two wage structures—one for existing employees and one for new entrants.

JUDGEMENT

• The apex court dismissed the appeal, upholding the Labour Appellate Tribunal's award.

• The Court effectively ruled that the management could not challenge the modifications made to existing workers (who were protected from a wage cut).

• The Tribunal's decision to maintain the wage structure for existing workmen was affirmed.

OBSERVATION & WAGE STRUCTURE PRINCIPLES

The Court's observation in this case provides fundamental principles for industrial adjudication regarding wage structure revision:

1. Right to Exist and Minimum Wage

• The Principle: There is one principle that admits no exceptions: "No industry has a right to exist unless it is able to pay its workman at least a bare minimum wage; no employment of labour below the minimum wage is to be encouraged or favoured."

• State Assumption: The state assumes that every employer must pay the minimum wages for the employee’s labour.

2. Revision to the Prejudice of Workmen

• Considered in the abstract, a wage structure fixed in an industry can be revised to the prejudice of the workman.

• Crucial Caveat: However, no wage structure should be so revised if the structure in question falls in the category of bare subsistence or minimum wage. If the wages are above the minimum wage, a revision to the prejudice of the workman might be permitted only under compelling circumstances, such as genuine financial inability of the industry to pay.

3. Components of Wage Structure

• The Court noted that additional payments like "facility bonus" and "special bonus" were considered by the workmen as part of the total wage structure, giving considerable support to their case that the proposed cuts were indeed a reduction in wages.

4. Dual Wage Structure

• The Tribunal's establishment of two wage structures (one protecting the existing high wages of current workmen, and a lower one for new entrants) was an attempt to settle the dispute and secure industrial peace without forcing the industry into financial ruin. The Court upheld the protection given to the existing workmen's wages.