Introduction To Minimum Wages Act

The Minimum Wages Act of 1948 strives to secure the welfare of both skilled and unskilled labourers in India. This act of parliament specified the
minimum wage limit for several occupations. Its main motive was to ensure that employers cannot exploit them with lower rates. The growth of a country
can be measured in terms of the minimum wage rate offered to its workers which can help a country in paving its success story in the long run.

Table of content

1 Introduction

1.1 Browse more Topics under Minimum Wages Act

1.2 Points To Consider In The Minimum Wage Rate

1.3 Exclusions From The Minimum Wages Act

1.4 Penalties & Offences

2 Question on Minimum Wages Act

Introduction
Indian constitution has defined ‘Living wage’ as the level of income which helps the worker in securing a basic standard of living. This further includes
comfort, good health, dignity, education etc.
It also provides for contingencies which might arise all of a sudden. Fair wage helps in maintaining a level of employment. It even tries to increase the same
by considering the industry’s ability to bear this expense.
The Central Advisory Council appointed a Tripartite Committee of Fair Wage during its first session organized in November 1948. This committee devised
the concept of minimum wage for preserving efficiency and guaranteeing bare subsistence which can cater to the requirements of medicine, education, and
comfort.
The minimum wage rate of scheduled employment varies across sectors, regions, states, skillset as well as occupations due to a difference in the capacity of
regional industries to pay, cost of living as well as consumption patterns.
It is impossible to get a uniform rate of the same across India. While the lowest minimum wage rate has been reported as 38 INR/day in Tripura, the highest
is 322 INR/day in Andaman and Nicobar according to 2012 estimates.
Points To Consider In The Minimum Wage Rate
 The total number of hours for which a labourer works in a normal day needs to comprise of at least one or more interval periods.
 One full day leave should be granted to all employees weekly.
 The remaining day’s payment rate should not be below the overtime rate.
 An employees wage rate should include the respective rates of different work performed by him and for the specified number of hours at each task
if he is engaged in two or more scheduled employments.
 The appropriate government will appoint inspectors for examining the matter in detail.
 An employer is liable to maintain records pertaining to the work, wages and receipts of employees.
Exclusions From The Minimum Wages Act
 Wages paid to disabled workers and to the dependent family of the employer.
 Un-scheduled industries.
Penalties & Offences
The Central Act treats all violation of the working hours, minimum wages and similar conditions as an offence. These are punishable by penalties which
can take the shape of 10000 INR fine or five years of imprisonment.
The appropriate government can appoint a labour commissioner, an officer having experience as a Stipendiary Magistrate judge, Commissioner for
Workmen’s Compensation or an officer ranked above a Labour Commissioner for processing the complaints lodged.
Question on Minimum Wages Act
Q1. What is the minimum wages act 1948?
Answer: Minimum Wages Act 1948 gave jurisdiction to both the central and state government in fixing wages. In spite of being non-binding from a legal
perspective, it is statutory in nature. Committees conduct a timely review of the industry’s capacity for paying wages. They are under an obligation of fixing
a minimum wage. This needs to suffice the basic requirements of a family of four members.
Procedure For Fixing And Revising Minimum Wage
The interest of workers was kept in mind while passing the Minimum Wages Act. This legislative protection acts as a protective cushion from the
exploitations of top-level officials. They often subject workers to peanut wages in exchange for hard-core labour.

Table of content

1 Wages Act

1.1 Browse more Topics under Minimum Wages Act

2 Procedure for Fixing and Revising Minimum Wage

2.1 Fixing Of Minimum Rates u/s 3(2)

2.2 Section 5 of Minimum Wages Act – Procedure To Fix Or Revise Minimum Wages

3 Question on Minimum Wages

Wages Act
According to Section 3 of the Minimum wages act, it is the responsibility of the appropriate government to set a specific yardstick.
Apart from fixing the minimum rate, the appropriate government shall also conduct periodic reviews within a span of five years of fixing such rates and
revise the same if felt necessary.
However, according to section 3(1A), the appropriate government shall not take any such initiative in regards to scheduled employment having an
employee count of less than 1000.

Procedure for Fixing and Revising Minimum Wage

Fixing Of Minimum Rates u/s 3(2)
The appropriate government can fix
 A minimum piece rate
 Minimum time rate
 Overtime rate which is the minimum time or piece rate as a substitution of some other rate which would have been otherwise applied for overtime
work performed by employees.
 Guaranteed time rate which is the minimum remuneration rate applicable to employees who had been working on piece rate till now if he is again
employed on time rate.
While revising or freshly fixing the wage rate under the Minimum wages act
 Varying rates of minimum wage shall be fixed for
o Varying classes of work under the same scheduled employment
o Different scheduled employment
o Various localities and
o Apprentices, children, adolescents, and adults
 Minimum wage rate can either be fixed by one or more of these wage periods
o Month
o Day
o Hour
o Any other larger wage-period which is deemed appropriate
Read more about Penalty for Offences under the Act (Section 20) here
Section 4 of the Minimum wages act states that the appropriate government can either fix or revise the wage rate of scheduled employments.
However, the following parts shall come under the purview of the appropriate government in such a case:
 Basic wage rate and special allowance which should be in harmony with the cost of living index of its workers.
 Basic wage rate either along with or without the cost of living allowance as well as the authorized cash value of concessions pertaining to the
supply of essential commodities at subsidized rates.
 A comprehensive wage rate comprising of the cash value of the concessions, cost of living allowance and the basic rate.
Alternatively, a competent authority can calculate the cash value of concessions and cost of living allowance. This has to be done after appropriate intervals
and according to the directions laid down by the appropriate government.
Let us understand more about Deductions from Wages here in detail
Section 5 of Minimum Wages Act – Procedure To Fix Or Revise Minimum Wages
 When the minimum wage rate of scheduled employment is fixed, or revised for the very first time under this act,
o As many committees and sub-committees can be appointed as necessary.
o A notification containing the relevant proposals can be published in the official gazette containing information related to people who might
be affected by the same. A date also needs to be specified within a span of two months from the date of notification within which the
proposals should be considered.
 The appropriate government can issue a notification in the Official Gazette after considering the advice of the committee to fix or revise the
minimum wage rate.
Minimum Wages Act, 1948
Minimum Wages Act 1948 came into force in India when India had recently gained its freedom. Labor laws made by the Britishers were exploitative in
nature. Wages were low and different in every part of the country. There was no such thing as “Minimum Wages” and times were pretty bad for sweat
labor.

Table of content

1 Minimum Wages Act 1948

1.1 Scope and Objective of the Minimum Wages Act

1.2 Criteria for Fixing Minimum Wages

1.2.1 Minimum Wages are fixed according to the following criteria

1.2.2 Wage Committee

1.2.3 Advisory Board

1.2.4 Wages in Kind

1.2.5 Consequences of Non – Compliance

2 Solved Example on Minimum Wages Act 1948
Minimum Wages Act 1948
It came to bring equality and justice to the blue-collar people. Pay fixing experts were guided by the standards recommended by the Fair Wage Committee
in the settlement of issues identifying with wage problems in organized industries.
The Fair Wage committee explained the core of minimum wages, but they didn’t say how to evaluate the minimum wage. The 15th session of the Indian
Labor Conference explained the necessary physical requirements and health maintenance of the labors.
Scope and Objective of the Minimum Wages Act
1. To safeguard that the employee has a basic physical necessity, proper health, and comfort.
2. Ensure that the labor gets fair wages.
3. To ensure that the labor lives a decent life and have a respectable name in society.
Criteria for Fixing Minimum Wages
According to section 3 of the Minimum Wages Act 1948 “The Appropriate Government” will fix minimum wages. Appropriate Government can include
local, State and Central Government. This section sets the rate according to hours, days, months or any other wage period may be prescribed.
The rates to be fixed need not be uniform. Diverse rates can be fixed for various zones or areas. If the wages are fixed according to section 4 of the Payment
of the Wages Act, 1936, the fixing will be done according to the Act.
Minimum Wages are fixed according to the following criteria
1. Time Rate – The minimum rate is fixed according to the duration of the work done by the labor.
2. Piece Rate – Here the minimum wage is fixed by the total number of pieces manufactured in the factory.
3. Overtime Rate – Here the minimum rate is fixed by the overtime done by the labor regardless of the time or piece rate.
Wage Committee
A wage committee shall be formed by the appropriate government, which shall consist of members from both the employer and employee side. Therefore,
an independent person with having no interest in the employment scheme shall be appointed as the chairman of the wage committee. The appointment
process in the Minimum Wages Act is made in this way so that there is no scope of discrimination to the labors.
Advisory Board
Section 7 of the Minimum Wages Act, the Advisory Board, which proposes recommendations and changes to be brought in labor laws. The advisory
board proposes a recommendation to the State and Central Government in fixing the minimum wages.
According to Section 9 of the Act, it talks about the appointment of committees and subcommittees. The included members are:
1. A person appointed by the Appropriate Government.
2. Employers and employees, who belong to the scheduled employment and they shall be equal in number.
3. Independent persons and they shall not exceed one-third of the total number of members. An independent person will be appointed as chairman
of the committee.
Wages in Kind
Section 11 says that the wages shall be paid in cash. If somewhere, the payment is done either wholly or partly and if it is a customary process, then in that
the case, the government through a notification in the official gazette shall enforce the payment partly or wholly.
Consequences of Non – Compliance
Non- compliance of the Minimum wages act, i.e not paying minimum wages is a culpable offense. Hence, violation of fixing hours also attracts the penal
provision.
Imprisonment up to 5 years and a fine up to 10,000 is the maximum punishment that can be awarded. Section 22 of the Act defines the sanctions.
Solved Example on Minimum Wages Act 1948
Question: Who Can be the Chairman of the Works Committee?
a. Member of the Employee Association.
b. Member of the Employer’s Association.
c. Independent Person.
d. None of the Above.
Answer: The correct answer is C. An independent person is appointed as a chairman so that there is no scope of a biased decision. However, the person
who is appointed must be experienced and adept in labor laws

The Concepts of Wages | Labor Law

1) Introduction -
Wage is a remuneration to labor for the work done for the service rendered by it to the employer. There are different theories on the concept of
wages as enunciated by economists and sociologists, which explain various aspects of wage problems. However, these theories are not applicable in all
circumstances.

2) Meaning and Definition of Wage

According to Section 2(h) of the Minimum wages Act, 1948 the term "wages" means all remuneration capable of being expressed in terms of money
which would if the terms of the contract of employment express or implied were fulfilled be payable to a person employed in respect of his employment
or of work done in such employment and includes house rent allowance but does not include –

(i) the value of –

(a) any house accommodation supply of light water medical attendance or

(b) any other amenity or any service excluded by general or special order of the appropriate government;

(ii) any contribution paid by the employer to any person fund or provident fund or under any scheme of social insurance;
(iii) any traveling allowance or the value of any traveling concession;

(iv) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or

(v) any gratuity payable on discharge;

3) Concepts of Wages

Broadly Speaking, the wages can be classified into the following categories:

(a) Living Wage

(b) Fair Wage

(c) minimum Wage

(a) Living Wage -

The concept of "Living wage" is the wage rate which prevails in most of the economically advanced Countries. The term Living Wage has not been
defined under the Minimum wages Act, 1948. South Australian Act of 1912 defines it as 'Living Wage means a sum sufficient for the normal and
reasonable needs of the average employee living in a locality, where the work under consideration is done or is to be done.
Justice Higgins of the Australian Commonwealth Court of Conciliation defined the living wage as one appropriate for the normal needs of the
average employee, regarded as a human being living in a civilized society. The living wage must provide not merely for absolutely essentials such as
food, shelter, and clothing but for condition of frugal comfort, estimated by current human standard.
Living wages are wages without which working people cannot live and perform their duties as a citizen. It varies from country to country depending
upon the price level of necessaries of life, and it is determined by the socio-economic conditions of a particular country.
The living wage should enable the wage earner to provide for himself and his family not merely the bare essentials of food, clothing and shelter but
the measure of frugal comfort including education for the children protection against ill health, requirements for essential social needs and a measure of
insurance against the more important misfortune ilcluding old age.
In India, there is no statutory definition for the term 'living wage'. According to Article 43 of the Indian Constitution, the State shall endeavor to
Secure to all workers living wages, conditions of ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities.

(b) Fair Wage -

Fair wage is a mean between the living wage and the minimum wage. A fair wage is related to fair work-load and the earning capacity. It can say
that it is more than minimum wage but less than the living wage. It may roughly be said to approximate to the need based minimum, in the sense of the
wage which is adequate to cover the normal needs of the average employee regarded as a human being in a civilized society. Fair wage is fixed, taking
into consideration, the present economic position and further prospects of the Industry.

Between these two limits (Living Wage and the Minimum Wage) actual wage would depend upon a consideration of certain factors namely -

i) the productivity of Labor.

ii) the prevailing rates of wages in the same industry for similar occupations in the same or similar occupations in the same or neighboring localities;

iii) the level of national income and its distribution; and

iv) the place of the industry in the economy of the country.

The Concept of fair wages, therefore, involves a rate sufficiently high to enable the worker to provide a standard family with food, shelter, clothing,
medical care and education for children appropriate to his status in life but not at a rate exceeding the wage-earning capacity of the class of
establishment concerned. As time passed and prices rise even the fair wage fixed for the time being tends to sag downwards and then revision becomes
necessary.

(c) Minimum Wage -

The term 'Minimum Wage' has not been defined in the said Act ( Minimum Wages Act, 1948) The minimum wage is the lowest wage in the scale
below which the efficiency of a worker is likely to be inspired. The minimum wage includes not only the bare physical necessities but also a modicum of
comfort otherwise known as conventional necessities. The Minimum wages must, therefore, provide not merely for the bare subsistence of life but also
for the preservation of the efficiency of the worker. For this purpose, the minimum wage must also provide for the same measure of education, medical
requirements, and amenities. Therefore any employer who is unable to pay this minimum wage to workers has no right to exist. Where a person
provides labor or service to another for remuneration which is less than the minimum wages, such labor is 'forced labor' within the meaning of Article
23 of the Indian Constitution and thereby entitles the person to invoke Article 32 or Article 226 of the Constitution of India.

The Concept of fair wages was to be dynamic. There is no reason to assume that fair wages fixed years ago should continue to be fair wages for al time,
and any fixation of minimum wages, should be taken not as minimum wages but as fair wages because it is above the fair wages once fixed.

Constituents or Components of Minimum Wage -

According to Section 4 of the said Act, (Minimum Wages Act, 1948) consists of the following :

(1) Any minimum rate of wages fixed or revised by the appropriate government in respect of scheduled employments under section 3 may consist
of –

(i) a basic rate of wages and a special allowance at a rate to be adjusted at such intervals and in such manner as the appropriate government may
direct to accord as nearly as practicable with the variation in the cost of living index number applicable to such workers;
 (ii) a basic rate of wages with or without the cost of living allowance and the cash value of the concessions in respect of suppliers of essential
commodities at concession rates where so authorized; or

(iii) an all-inclusive rate allowing for the basic rate the cost of living allowance and the cash value of the concessions if any.

(2) The cost of living allowance and the cash value of the concessions in respect of supplies of essential commodities at concession rate shall be
computed by the competent authority at such intervals and in accordance with such directions as may be specified or given by the appropriate
government.

Distinction/ Difference Between Minimum Wages and Fair Wages

No. Minimum Wages Fair Wages

1) The Term “Minimum wage” Literally Fair Wage is more than minimum wage
Means “The minimum payment, an but less than the living wage.
employer has to give to an employee
for a particular work, i.e, the lowest
limit, below which wages cannot be
allowed to sink”

2) Section 3 of the Minimum wages Act Fair wage is fixed, taking into
provides for different minimum rates of consideration, the present economic
minimum wages for different localities. position and further prospects of the
Industry.

3)
Components/ Constituents of Minimum To Determine fair wage, Following
Wages - factors are taken into Consideration -

(i) a basic rate of wages and a special 1) The Productivity of Labour

allowance at a rate to be adjusted at
such intervals and in such manner as
the appropriate government may direct
2) The Prevailing rates of wages in the
to accord as nearly as practicable with
same industry for similar occupation in
the variation in the cost of living index
the same neighboring locality
number applicable to such workers
(hereinafter referred to as the "cost of
living allowance"); or
3) the Level of national income and its
distribution; and

(ii) a basic rate of wages with or

 without the cost of living allowance and
the cash value of the concessions in
respect of suppliers of essential 4) The place of Industry in the economy
commodities at concession rates where of the Country
so authorized; or

(iii) an all-inclusive rate allowing for the

basic rate the cost of living allowance
and the cash value of the concessions
if any.

(Section 4 of Minimum Wages Act)

4) The Minimum Wage must, therefore, The Concept of fair wages, therefore,
provide not merely for the bare involves a rate sufficiently high enable
substance of life but also for the the worker to provide a standard family
preservation of the efficiency of a with food, shelter, clothing, medical care
worker. For this purpose, the minimum and education for children appropriate to
wage must also provide for the same his status in life but not at a rate
measure of education, medical exceeding the wage-earning capacity of
requirement, and amenities. the class of establishment concerned.