Bombay HC refuses stay on AI salary cut

Carrier had through Jan 2013 notification made 25% cut in salary and allowances on an ad hoc basis

Air India (AI) can’t unilaterally change the service conditions of its employees, the high court here ruled on Monday. The court, however, did not stay the airline’s decision to cut salary and allowances by a fourth, taking into account AI’s poor financials.

Unions representing pilots, engineers, ground staff and other employees had challenged the management’s January 2013 notification on the ad hoc cut till the full implementation of the Dharmadhikari committee recommendations.

The unions’ contention was the decision was unilateral and, thus, violated the Industrial Disputes Act, requiring the employer to serve a notice to the staff before making a change in service conditions.

According to the airline, implementation of the Dharmadhikari recommendation will result in an annual saving of about Rs 320 crore because of the reduction in the wage bill. Savings to the tune of Rs 200 crore would be in respect to licensed category of employees and the balance with respect to non-licensed staff.

In its argument Air India said section 9A of the Industrial Disputess Act,  which requires an employer to serve a notice for changing service conditions, does not apply to the airline and it had not committed any illegality. The court did not accept Air India's argument. 

"Air India can not alter the conditions of the service without following the proper procedure prescribed in Section 9A of the Industrial Disputes Act, 1947,'' a bench of Chief Justice Mohit Shah and M S Sanklecha said in the judgement delivered on Monday.

"Status quo is to be maintained. The judgement is in public interest,'' said M V Kini, counsel for Air India.

"Section 9A of the Industrial Disputes Act is applicable to Air India and we are delighted by this ruling. No further changes can be made in service condition without  giving a notice to unions. The engineers are losing upto Rs 36,000 and pilots are losing Rs 51,000-.2.16 lakh per month due to 25% reduction in salary. There is an exodus of engineers and pilots from the airline because of the salary cut. The unions will study the order and decide whether to appeal against it,'' said Jane Cox, counsel for engineers and pilots union.

Air India in its submissions to the court had said reduction in employee costs was one of the factors for successful implementation of the turn around plan. It said the exercise was being carried out to see that the cost to company in respect to every employee is legitimate and realistic.

The airline submitted that despite reduction in its staff strength its wage bill was increasing. In this background the Dharmadhikari Committee was appointed to examine various issues related to pay parity, wage rationaliation, staff integration etc. The committee submitted its report to the government in January  2012 and amongst other things recommended the abolition of productivity linked allowance to non licenced category of employees in then existing form.