The Workmen v. The Management of Reptakos Brett & Co. Ltd.

FACTS

• In 1959, Reptakos Brett & Co. Ltd. introduced a slab system of Dearness Allowances (DA), which was later modified but continued to be a basic feature of the Company's wage structure for nearly thirty years.

• In 1983, the Management raised a demand for adjudication to the Industrial Tribunal, Madras, specifically seeking the restructuring of the dearness allowance scheme.

• The Tribunal proceeded on the basis that there was over-neutralisation (compensation for cost of living exceeding 100%) and, accordingly, directed the abolition of the slab system and introduced a variable DA to a limited extent.

• The workmen challenged the Tribunal's decision.

ISSUES

• Whether the demand of the management for the restructuring of the dearness allowance scheme was justified, and specifically, whether the Tribunal was justified in abolishing the slab system of DA.

JUDGEMENT

• The apex court allowed the appeal filed by the workmen.

• The Court ruled that the Tribunal's decision to abolish the slab system of DA was unjustified.

• The Tribunal's award and the subsequent judgments of the Single Judge and Division Bench were set aside.

• The Company's reference to restructure the dearness allowance was rejected.

OBSERVATION

1. Compelling Circumstances for Revision

• The Court did not interfere with the lower court's finding that the materials showed the matter of over-neutralisation could not be disputed, meaning the factual basis for seeking revision existed.

• However, the Tribunal and High Court had acted in "total oblivion of the legal position" as propounded by the Supreme Court in various judgments regarding the sanctity of settled wage structures.

2. Sanctity of Settled Wage Structure

• The abolition of a long-standing component of the wage structure like the slab system, which had been consciously accepted by the parties over thirty years, constitutes a fundamental change.

• The Court held that even with proven over-neutralisation, it was a manifest injustice to unilaterally abolish a basic feature of the wage structure that had become a condition of service.

3. Determining Present Wage Value

• The bench observed that the purchasing power of today’s wage cannot be judged by making calculations which are solely based on a 30/40 years old wage structure.

• The only reasonable way to determine the category of the wage structure is to evaluate each component in the light of the prevailing prices. This acknowledgment of the need to protect the real value of wages was key to setting aside the award.