Taking into account the sky-rocketing rise in prices of essential commodities, the Bombay high court, in a significant verdict, has held that the rise in the pay packet has to keep pace with the rise in prices of essentials so that the lives of workmen is not adversely affected.
“If the rise in the pay packet does not keep pace with the rise in prices of essentials, the purchasing power of the pay packet falls, reducing the real wages and thereby adversely affecting the lives of its workmen,” justice RM Savant of the Nagpur bench said.
The court had recently granted relief to the workers’ union of Hindustan Unilever Limited (HUL), by upholding an industrial court order of April 2011. The industrial court had directed the company to pay Rs3,500 a month to the lower-rung workmen, retrospectively from June 2008 to March 2011, in three equal installments.
Challenging the order, the company had argued that the workmen continue to get a rise in their wages by way of annual hike in basic salaries and variable dearness allowances. The company thus contended that the rate of inflation is neutralised by the hike in payment.
HUL, which manufactures soaps and detergents, personal products, beverages and foods, had entered into a settlement with the workmen in its Kamgaon unit regarding their wages between June 2004 and May 2008.
After the period of settlement had elapsed, Hindustan Lever Kamgar Sangh, the workers’ union, submitted a notice of change of the service conditions and general demands of the workmen. The subsequent negotiations failed and the matter was placed before the industrial court.
After the settlement came to an end in 2008, the union contended that there has been an unprecedented all-round inflation resulting in drastic erosion of the purchasing power of the employees.
The workmen further pointed out that the Consumer Price Index (CPI) in 2004 was around 508 points, and immediately prior to the failure of the negotiations in August 2008, it had jumped to 730 points, resulting in an unprecedented rise of 43.70% in the cost of living.
Even though HUL argued about unhealthy labour practices, which has adversely affected the company’s production, the high court was of the view that since it is not possible to have cent percent neutralisation of the price of cost of living, an upward revision becomes imperative to make up for the ever-widening gap between wages and cost of living.
“There can be no dispute that the workmen depend exclusively on the wages to provide themselves with the three basic requirements in life mainly food, clothing and shelter,” the high court said.
In an email reply to HT, HUL has said that it will appeal against the high court order.