Karnataka High Court stays circulars withholding payment of salaries based on revised minimum wages for outsourced and contract employees

The High Court of Karnataka has stayed, till further orders, the operation of the government’s circulars that directed various authorities to withhold the payment of salaries to outsourced, contract, and daily wage employees across the State as per the revised minimum wages, which came into effect from May 22, 2026.

Petitions by unions

Justice H.T. Narendra Prasad passed the interim order on the separate petitions filed by the All India Trade Union Congress, Karnataka Rajya Sarkari Khayametharara Noukarara Okkuta, the All India Central Council of Trade Unions, and others.

The petitioner unions had questioned the circular issued by the Karnataka State Audit and Accounts Department on July 29, asking various departments to withhold payment of salary as per revised minimum wages to outsourced contract and daily wage categories of employees working in various departments.

Following this circular, the departments of Municipal Administration and the Rural Development and Panchayat Raj had issued separate circulars on August 10 and 28, respectively, instructing all the local bodies to withhold payment of salary based on revised minimum wages for these categories of employees and pay the salary that existed before the revision, till further instruction from the government.

‘Oral instructions’

Claiming that the Audit Department’s circular was issued based on “oral instructions” from the Finance Department, the petitioners have contended that such instructions are “wholly without authority of law”. It was pointed out to the court that the authorities had paid the salaries to these categories of employees based on revised minimum wages for a month before the circulars were issued for withholding revised minimum wage.

The petitions state that a notification issued under Section 5 of the Minimum Wages Act, 1948, is subordinate legislation with statutory force and cannot be overridden by executive or administrative instructions/circulars. It further asserts that once a minimum wage is notified, it becomes a “vested right” of the workmen that cannot be deferred or diluted.