Case Note & Summary
The petitioner, Management of Bharat Earth Movers Ltd. (BEML), a Public Sector Undertaking, challenged the award dated 11.09.2013 passed by the Industrial Tribunal, Bangalore in I.D. No.69/2007. The Tribunal had held that the notice dated 21.07.2006 issued under Section 9A of the Industrial Disputes Act, 1947 was illegal. The dispute arose from the management's decision to change the method of calculating daily wage for vacation leave encashment. Under the 'BEML Encashment of Vacation Leave Rules And Procedure' effective from 18.03.1978, employees were entitled to vacation leave (equivalent to earned leave). The vacation leave was computed by dividing the monthly wage by 30 days to arrive at the wage per day. The management issued a notice under Section 9A proposing to change the divisor from 30 to 26 days. The employees' union challenged the notice, and the matter was referred to the Industrial Tribunal. The Tribunal held that the change in the method of calculation of leave encashment amounted to a change in service conditions requiring notice under Section 9A, and that the notice issued was illegal. The High Court, in its judgment, upheld the Tribunal's award. The court reasoned that the method of calculating daily wage for leave encashment is a condition of service. Changing the divisor from 30 to 26 days alters the quantum of leave encashment and thus requires notice under Section 9A. The management's failure to give proper notice rendered the change illegal. The court dismissed the writ petition, confirming the Tribunal's award.
Headnote
A) Industrial Disputes Act, 1947 - Section 9A - Notice of Change - Change in Service Conditions - The management changed the divisor for calculating daily wage for vacation leave encashment from 30 to 26 days. The Industrial Tribunal held that this change in the method of calculation of leave encashment amounts to a change in service conditions requiring notice under Section 9A. The High Court upheld the award, holding that the change in the method of calculation of leave encashment is a change in the conditions of service and the notice under Section 9A was illegal. (Paras 2-10) B) Industrial Disputes Act, 1947 - Section 9A - Notice of Change - Vacation Leave Encashment - The court held that the method of calculating daily wage for leave encashment is a condition of service. Changing the divisor from 30 to 26 days alters the quantum of leave encashment and thus requires notice under Section 9A. The management's failure to give proper notice rendered the change illegal. (Paras 5-10)
Issue of Consideration
Whether the change in the method of calculating daily wage for vacation leave encashment from dividing monthly wage by 30 days to dividing by 26 days amounts to a change in service conditions requiring notice under Section 9A of the Industrial Disputes Act, 1947.
Final Decision
The High Court dismissed the writ petition, upholding the award of the Industrial Tribunal dated 11.09.2013 in I.D. No.69/2007, which held that the notice dated 21.07.2006 under Section 9A of the Industrial Disputes Act, 1947 was illegal.
Law Points
- Section 9A of the Industrial Disputes Act
- 1947 requires notice of change in service conditions
- change in method of calculating leave encashment is a change in service conditions
- daily wage calculation for leave encashment is a condition of service
