Does deliberate refusal to work forms a ground for deduction of wages?

Labour law is one of the most important laws that every employer and employee must be aware of. For healthy relationship to be maintained between the employers and the employees, adequate compliance of labour laws must be followed.

The labour laws made their way into the Statue books after the grave effects of the World War I and II led to massive slavery, mistreatment and discrimination of the soldiers as well as the individual public. The International Labour Organisation deserves utmost credit in providing a centralized, international platform for the protection of labour interests and security. Under the Indian scenario, Dr. B. R. Ambedkar must also be considered to be the fore-father who stood for the rights of the labours which ultimately led to the enactment of several legislation governing the employer-employee relationships.

Before 2020, the laws on labour interests, rights and security were scattered into several legislations. Thus, the government decided to consolidate all these legislation into 4 Codes which are:

1. The Code on Wages, 2019,

2. The Occupational Safety, Health and Working Conditions Code, 2020,

3. The Code on Social Security, 2020 and

4. The Industrial Relations Code, 2020.

The Code on Wages, 2019 (hereinafter referred to as the “Code”) defines the process in which the wages, including minimum wages, overtime wages, wages for various classes of work as well as floor wages are to be calculated and distributed. However, Section 18 of the Code prescribes the manner and circumstances under which wages can also be deducted. Sub-Section (2) of Section 18 provides an exhaustive list of circumstances in which the wages can be deducted, however, deliberate refusal to work has not been formulated as one of the grounds for deduction of wages. Thus, in such a case is the employer bound to pay wages to the employee even after he deliberately refuses to work? Or is it a ‘right’ of the employer to deduct wages?

In Bank of India v. T.S. Kelawala; (1990) 4 SCC 744, a Division Bench of the hon’ble Supreme Court had to deal with this conundrum. In that case, the issue before the hon’ble apex Court was whether the employer had a right to deduct the wages of the employees ‘unilaterally’ without holding an enquiry for the period of strike and go-slow on the part of the employees. The case involved two separate appeals.

The first being a case wherein a Bank had issued a circular dated 16.01.1978 to deduct the full-day wages of the employees who had participated in a strike on 29.12.1977 which lasted for only four hours. The employees filed a writ petition before the hon’ble High Court wherein the Court held that deducting full-day the wages of the employees was not just since “strikes and demonstrations were not banned in the country and despite the inconvenience that they may cause, they were recognized as a legitimate form of protest for the workers”. The hon’ble Supreme Court thus stated that legality of strike did not exempt the employees from deduction of wages. It was only a means to immunize themselves from any disciplinary action. The Court stated that prior to the strike, the Bank had warned the employees to not go on a strike during the peak hours of work. In spite of such a warning the employees went on for strike during the peak hours. Thus, the Supreme Court held that:

“The Bank was therefore not liable to pay either the full day’s salary or even the pro rata salary for the hours of work that the employees remained in the Bank premises without doing any work”

Further, the Court also held that: “When the contract, Standing Orders, or the service rules/regulations are silent, but enactment such as the Payment of Wages Act providing for wage cuts for the absence from duty is applicable to the establishment concerned, the wages can be deducted even under the provisions of such enactment.”

In the second case, the matter was not regarding strike but a case where the employees had resorted to an act of ‘go-slow’ by loitering and doing little-to-no-work in order to concede their demands during the month of July, 1984. Thus, the employer-company held that: “since the workers had not worked during all the working hours, they had not earned their wages” and thereby didn’t pay any wages to the employees for the month of July, 1984. Aggrieved by this decision, the employees approached the Industrial Tribunal. The Tribunal however held that the company’s stand regarding ‘go-slow’ was not justified and that it had resorted to an unfair labour practise by refusing to pay the wages for the month of July, 1984 and further ordered the company to pay full-day wages for the month of July, 1984. Thus, the matter came before the hon’ble apex Court.

The hon’ble Supreme Court while stating that “go-slow” was an insidious method of undermining discipline and at the same time a crude device to defy the norms of work held that even though it was proved that the employees had resorted to ‘go-slow’ practises, deducting the full month wages was not a tenable action in law. Thus, the Court held that the Company was only entitled to deduct 5 per cent of the wages of the employees for the month of July, 1984.

Thus, it can be understood that deliberate refusal to work can form a ground for deduction of wages of the employee(s). Merely attending the place of work is not enough; the employees must put-in the work allotted to them. It is for the work and not for the attendance that the wages are paid to them. Thus, the concept of “no work, no pay” is actively enforceable if there is wilful abstention or refusal to work on the part of the employee(s).