Karnataka HC overturns HAL’s pay revision circular

The Karnataka High Court has set aside Hindustan Aeronautics’ (HAL) circular that sought to re-fix the pay of officers whose salaries were revised in 2017. The decision brings relief to officers who faced potential salary reductions and recoveries.

The ruling follows a petition filed by the Hindustan Aeronautics Officers Guild. The HC confirmed that the current pay structure would remain in effect. It also directed HAL to provide affected employees with a hearing before making any further changes.

On 1 January, 2017, a scheduled pay revision took place for officers in public- sector enterprises. HAL followed the Department of Public Enterprises (DPE) guidelines to revise officers’ salaries. However, a government audit later raised objections about the calculation of dearness allowance or DA.

Following advice from the Ministry of Defence, HAL’s board decided on 16 July, 2021, to re-fix salaries to comply with audit recommendations. A circular was issued on 24 July, 2021, ordering salary adjustments. Employees opposed the move, arguing that the pay cut would cause financial strain.

The HC noted that officers had been receiving the revised pay for four years, from July 2017 to July 2021. Any reduction would significantly impact their financial planning. It highlighted that salaried employees make long-term commitments based on stable income, including investments and loans.

The HC emphasised that HAL, as a government-owned company, had created an expectation of pay stability. Employees had a legitimate right to expect continuity in their salaries. Any reversal of pay revision would have serious consequences and could not be imposed without due process.

The HC ruled that HAL’s circular was invalid as it failed to provide officers with an opportunity to be heard. It stressed that any decision affecting salaries must be preceded by a fair hearing. With this ruling, HAL is required to maintain the existing pay structure unless a new process is undertaken.