(Inclusion of Compensatory Allowances in Overtime Wages)
The Factories Act, 1948 Section 59(2), concerning the definition of "ordinary rate of wages" for calculating overtime pay. It also references Sections 64, 65, 112, 113 of the Factories Act, 1948, and Section 3, Clause 60 of the General Clauses Act, 1897.
The Union of India (appellant) challenged a High Court judgment, arguing that compensatory allowances such as House Rent Allowance (HRA), Transport Allowance (TA), Clothing and Washing Allowance (CWA), and Small Family Allowance (SFA) should not be included in overtime wage calculation. They relied on various Office Memorandums and letters issued by Ministries of Defence, Labour, and Finance, which generally specified that overtime is payable only on basic pay and dearness allowance, excluding other allowances.
The respondent (employee unions) contended that Section 59(2) plainly defines "ordinary rate of wages" as basic wages plus "such allowances," explicitly excluding only bonus and wages for overtime work.