Introduction

In a very significant development, the Hon’ble High Court of Kerala (“Kerala HC”) in its recent judgement titled Korambayil Hospital & Diagnostics Centre (P) Ltd. & Anr. v. State of Kerala & Ors.[1] has ruled that a principal employer has the obligation to make the payment of minimum wages to the workers engaged through contractors. The Kerala HC reaffirmed the principle of “equal work equal pay” and has held that an employer cannot dilute the entitlement of minimum wages for the workers by shifting its liability on the contractor.

Brief Facts

Korambayil Hospital (“Principal Employer”) being a private hospital had entered into an agreement with a facility management company (“Contractor”) for the purpose of providing housekeeping services in its hospital. The Contractor provided 34 workers to the Principal Employer under the contract. As per the terms of the contractor, the Contractor was responsible for maintaining cleanliness, hygiene, and orderly housekeeping operations, including training and supervision of the workers deployed.

The Assistant Labour Officer (“Officer”), Malappuram, conducted an inspection of the premises of the Principal Employer and, noted major non-compliance with the Minimum Wages Act, 1948 (“Minimum Wages Act”). As a result of this finding, the officer initiated proceedings against the Principal Employer under the Minimum Wages Act.

In furtherance to this inspection, it was observed  that the workers provided by the contractor were performing duties similar to that of a “housekeeper” in a hospital setting and the Officer was of the view that the workers were entitled to the minimum wages as notified from time to time. As a result of these findings, the Officer directed the Principal Employer & Contractor to pay wage arrears and compensation totalling to around INR 14 lakhs to all the workers for the period from October 2015 to March 2016. This order of the Officer was contested by the Principal employer and the Contractor before the Kerala HC.

Issues Raised before the Keral HC:

  • Whether the workers engaged through the Contractor are entitled to minimum wages under the specific notification applicable to the workers of a private hospitals; and
  •  Whether the Principal Employer could be held liable for ensuring payment of minimum wages to workers who are not directly on its payroll but engaged through the Contractor for identical duties in a scheduled employment under the Minimum Wages Act.

Contentions by the Principal Employer and the Contractor (“Petitioners”)

The Petitioners primarily contended that the ‘sweeping and cleaning’ category under which the workers were engaged was not included in the notification released by the government and in reality the minimum wages for the workers was governed through the Government Notification bearing G.O.(MS) No. 48/ 2010/LBR dated 19.04.2010 (“Notification 2”). The Petitioners submitted that they were already paying the workers more than the minimum wages prescribed under Notification 2.

The Petitioners extended their argument by submitting that the Officer, while issuing the notice, failed to properly consider the counter-statements and documents submitted by them, and passed the order without appreciating the actual nature of the work of the workers. Further, it was argued by the Principal Employer that they could not be held responsible for the worker’s wages as they were formally employed by the Contractor.

Contentions by the Officer

The Officer submitted that although the workers were referred to as “cleaners” under the agreement, their work extended beyond basic cleaning and could be squarely fit under the definition of ‘hospital housekeeping’. The workers were rightfully entitled to the minimum wages under notification that dealt with the hospital housekeeping workers and not under Notification 2 which deals with the general sweeping/cleaning work.

The Officer further cited Section 2(e) of the Minimum Wages Act, and the Hon’ble Supreme Court’s observation in Hindustan Sanitaryware and Industries Ltd. and Ors. Others v. State of Haryana[2], to highlight that the Minimum Wages Act does not distinguish between an employee hired by the principal employer and an employee hired by a contractor and the principal employer and the contractor both are jointly liable for ensuring compliance with the Minimum Wages Act. The principal employer cannot escape its responsibility by outsourcing employment.

Another important argument invoked by the Officer was that the Petitioner’s act of giving low wages to contract housekeeping staff performing the same duties as regular staff was discriminatory as per the principle of “equal pay for equal work” as laid down in the State of Punjab vs. Jagjit Singh[3].

Observations by the Kerala HC

The Kerala HC while examining this matter observed that the 34 workers engaged by Principal Employer were actually not merely performing the basic cleaning tasks that was provided under their contract but they were, in fact, rendering comprehensive housekeeping services that were integral to the operations of Principal Employer.

The Kerala HC further observed that the contract also referred to the engagement of the workers as trained and supervised housekeeping staff responsible for maintaining the hygiene across the sensitive areas such as operation theatres and ICUs, and squarely fell within the scope of the notification which was applicable to the workers of a private hospital.

The Keral HC negated the contention of the Petitioners that the workers were engaged as cleaners and covered under Notification 2 by observing that the classification of workers as “cleaners” in the contract cannot override the substance of the work actually performed by them. Furthermore, the Keral HC held that the Principal Employer, could not evade its liability by outsourcing labour through the Contractor. Relying on the Section 2(e) of the Minimum wages Act and the Supreme Court’s judgment in Hindustan Sanitaryware and Industries Ltd. vs. State of Haryana, the Keral HC affirmed that any person employing workers whether directly or indirectly is responsible for ensuring compliance with the minimum wage limits. The employer cannot pay less wages to the workers performing similar duties merely because of their contractual status.

Additionally, the Kerala HC affirmed the principle of equal work equal pay as established by the Apex Court in State of Punjab vs. Jagjit Singh and observed that any disparity in paying the minimum wages constitutes a breach of human dignity and fairness. In light of these findings, the Keral HC found no reason to interfere with the order of the Officer and dismissed the writ petition by directing that any amount already deposited by the Petitioners shall be duly adjusted against their final liability.

Conclusion

The ruling of the Kerala HC in Korambayil Hospital & Diagnostics Centre (P) Ltd. & Anr. v. State of Kerala & Ors. is significant as it affirms the right of workers irrespective of their nature of employment or mode of employment. The Court has set a clear principle that contractual arrangements cannot be misused by an employer to circumvent the obligation to pay the minimum wages to the workers. These observations underscore the accountability of principal employer and protect the contract workers from underpayment and exploitation.

Key Takeaways:

  • Principal employers are responsible for ensuring the payment of minimum wages, even when workers are hired through contractors.
  • Employers must uphold the principle of “equal pay for equal work”, which is enforceable under Indian law regardless of the nature or terms of the employment contract. The actual duties performed by employees—not the designation or contractual terms—determine the applicability of this principle.

[1] 2025:KER:42042

[2] (2019) 15 SCC 774

[3] (2017) 1 SCC 148

Authors:

Gyanendra Mishra, Partner

Maruti Nandan, Associate

Disclaimer: The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.