Money-back scams, wrongful termination among ways used to cheat workers of wage
A sturdy home guard pushed the door open for 36-year-old Jagannath Ram and three of his former colleagues—Prabhu Narayan (48), Inderjit (42) and Mohan Prasad (54)—to enter the court room at west Delhi’s Karampura. All four of them, employed through a third-party service providing agency, were housekeeping staffers at the Delhi-based corporate office of a prominent MNC. They were sacked on March 26, 2019, five months after the Supreme Court issued an interim order asking employers in Delhi to pay revised minimum wages in accordance with a March 2017 notification by the Delhi government.
“We were sacked because we told the management that getting minimum wage was our basic right. But the employer said he could only retain us if we accepted the old wage even though, on paper, it would reflect that we were receiving the revised minimum wage. We said it was unfair. Five months is the time the contractor took to sack us. We did not even get the revised minimum wage for those months,” said Prasad, one of the 28 employees sacked from the corporate office.
Operations at the corporate office carried on unhindered as the same service providing company engaged a fresh set of workers. “It is obvious that those hired are the people who agreed to work for less than the notified minimum wages under an ‘informal’ arrangement,” said Prasad, who along with Inderjit, is eking out a living as a daily wager. Ram and Narayan landed work at factories.
MONEY-BACK SCAMS
The “informal arrangement” is a system under which contractors pay minimum wages through bank transfers to make sure they adhere to the rules on paper, senior officials in the labour court said, adding that the employees are instructed to immediately return a certain amount of their wage to the employer after it is credited to their bank account.
In numerous cases, the employers are known to have confiscated the workers’ ATM cards and withdrawn a fixed sum every month, the court officials said.
During one of the two, week-long inspection drives carried out after the Lok Sabha elections, Delhi labour minister Gopal Rai himself caught a contractor, who was servicing a government hospital. “With time, many such cases surfaced and six separate FIRs were registered,” Rai said.
Government records showed that in the two special drives by the labour department between June and August, around 100 cases of labour law violations related directly or indirectly with minimum wage law were reported in labour courts.
“Cases of cheating, in which the employers pay minimum wage on paper but then take away a certain part from workers are rampant across sectors. Most such cases go unreported because workers are vulnerable and the job market is in very bad shape,” Animesh Das, a trade union leader who was a member of the 36-member committee, said.
In the case involving Ram, Narayan, Inderjit and Prasad, the service providing agency, with whom they had signed a contract, used to pay them ₹8,352 per month, but the agency itself would receive around ₹15,000 from the principal employer as wage for each employee, the case documents showed.
“Paying them the revised minimum wage would mean the third-party contractor would have to compromise on his own margin,” the investigating officer said.
VIOLATION STRATEGIES
According to Ramendra Kumar, another trade union leader who was part of the 36-member committee, most employers or contractors stick to the rules on paper because it helps them escape the strict punishment for direct violation of the minimum wage law.
“In dispute situations, contractors would rather indulge in wrongful terminations and employ fresh people who readily agree to compromise on minimum pay. Even if found guilty for the wrongful termination, which too is violation of labour laws, they will be free after paying a monetary penalty,” Kumar said.
In August 2017, the Delhi assembly passed amendments in the The Minimum Wages (Delhi) Act to make the punishment stricter for employers found violating the minimum wage rules (see box).
Gopal Rai admitted that a lot of cases of wrongful termination were reported after the government increased the minimum wages. “That prompted the labour department to issue an order in February this year making it mandatory for employers to inform the government in case they terminate 10% or more of its total workforce,” the labour minister said.
IMPLEMENTATION WOES
Even as the Supreme Court allowed the Delhi Government to notify the minimum wages for workers—an increase of 37% in the monthly and daily allowance—as recommended by a 36-member committee, union leaders and experts said the biggest problem would remain implementation.
“The bigger problem is implementation. The government will have to make sure that workers receive the notified wage,” said Animesh Das, a trade union leader who was a member of the 36-member committee.
Even after the Delhi government notified the revised wages and despite top court’s intervention in 2018, hundreds of cases of minimum wage violations surfaced between March 2017 and September 2019, senior government officials said. The violators ranged from small factory owners to big contractors associated with multinationals and even government agencies, they added.
While the Delhi government data shows that it prosecuted as many as 1,373 third-party contractors and agencies associated with government establishments for violation of the minimum wage law, no such data could be availed for action-taken against private enterprises or contractors associated with private enterprises in the corresponding period.