In Brief
This case addressed how overtime wages should be calculated under the Factories Act, 1948. Defence factory workers claimed that compensatory allowances—including house rent allowance, transport allowance, clothing allowance, and small family allowance—must be included in the "ordinary rate of wages" when computing overtime pay. The Union of India relied on various office memorandums excluding these allowances. The Supreme Court unanimously held that these compensatory allowances must be included, as the statute explicitly defines "ordinary rate of wages" to include all allowances except bonus and overtime wages. Executive instructions cannot override clear statutory language, and beneficial labour legislation must be interpreted to protect workers' rights.
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