Minimum Wages Act 1948

Objective

Objective

s of the

s of the

Act

Act



 ToTo provide minimum wages provide minimum wages to the workers to the workers wo

workrkining g in in cecertrtaiain n ememplployoymementntss   (scheduled  (scheduled employment Schedule 1)

employment Schedule 1)



 ToTo stop exploitation stop exploitation of the workers of the workers



 ToTo empower empower  the government to take steps for the government to take steps for fixing

fixing minimum wages and to minimum wages and to revising revising it it in a timely manner

in a timely manner



 ToTo apply this law apply this law on most of  on most of the sections inthe sections in organized sector (scheduled employment)

Schedule Employments

Schedule Employments

•

•

 Mills

 Mills

•

 Stone quarries

 Stone quarries

•

 Weaving

 Weaving

•

 Mines

 Mines

•

Construction or maintenance of r

Construction or

maintenance of roads

oads

•

 Dairy Farming

 Dairy Farming

Case Law

M.P. Miner Industries Association v. Regional Labour Commissioner, 1960

The Act was intended to apply only to industries in which the labour was unorganised to achieve the object of doing social justice to workmen employed in the scheduled employments by prescribing minimum rates of wages

Case Law

• U. Unichoyi v. State of Kerela 1962

The policy of the Act is to prevent employment

of sweated labour on starvation wage in the

interest of general public and so in prescribing

minimum wages rates even the capacity of the

employer need not be considered.

Constitutionality of the Act

•   Securing living wage to the labourers ensures

physical subsistence as well as maintenance of  health and decency as provided by Directive Principles of State Policy under Article 43. Minimum Wages Act is passed to give effect to the resolutions passed in Geneva Convention which were embodied in International Labour Code. So MW Act is not violative of Article 19 (1) (g), it is reasonable and just in the interest of general public and protected by terms of Article 19 (6).

Historical Backdrop

•   The initiative by   Shri K.G.R.Choudhary in

1920: set up   boards   for determination of  wages

• The   International Labour Conference

adopted   Convention 26 and 30   in 1928 relating to wage fixing machinery in trades or parts of trades

• The Committee on Fair Wage was set up in

1948   to provide   guidelines for wage structure

Wages [Sec. 2(h)]

 Minimum wages:  all remuneration capable of  being paid in money terms for work done if  terms of contract were fulfilled

 consist of  Basic + Dearness Allowance (cost of 

living adjustment allowance)   + House Rent Allowance

 Every 5 years, basic rates of every industry are decided by  Minimum Wages Committee

 Dearness Allowance changes every  six months and is decided by Government

Fixing of minimum rate of wages

Section 3

The Appropriate Government:

• Shall fix and review the minimum wages

• Revise the minimum wages after every 5 years

•  May refrain from revising after 5 years if there are less than 1000 employees engaged in Scheduled Employment in a State

Different Minimum Wages May Be

Fixed By The Government For Sec 3(3)

 Different employments (specified in the schedule)  Different classes (e.g. skilled, unskilled, semi skilled,

etc.) of work in the same employments

 Adults, adolescents and children  Different localities

Different Types of Wages

• Living Wage : It includes Salary, pay or remuneration for the work done

• Essential for providing necessities for life such as food, cloth and shelter, maintenance of health, education frugal comforts

• Determined by socio economic conditions of a particular  country

• Sum sufficient for the normal and reasonable needs of an average employee

Fair Wage

•

 Productivity of labour 

 Level of national income

•

Place of industry in the economy of the

country

Minimum Wage

•

A minimum wage must provide not merely for 

the bare sustenance of life but for the

 preservation of the efficiency of the worker 

•

It must provide for education, medical

Minimum Rate of Wages[Section 4]

1. Basic + Special Allowance(Dearness Allowance or cost of  living allowance-varies with the cost of living index

2. Basic with or without cost of living allowance and Cash value of concessional supply of materials like food, clothes, etc

Fixing Minimum Rates of Wages

[Sec. 5]

  Two methods, Appropriate Govt can follow either of the

two

 Publish its proposals in the official gazette asking

comments from the affected parties

Specify a date, not less than two months from the date of  notification

•   Constitute committees/sub committees for the  purpose.

• The committees/sub-committees and advisory  boards constituted by the Government consist of

equal number of members of :  – Employers

 – Employees, and

Case Laws

• Chandra B hawan Boarding and Lodging, Bangalore v. State

of Mysore

Power conferred upon the appropriate Government is neither  arbitrary nor unguided. It does not offend Article 14 of the Constitution

• Arbunda Bhuvan Tea Shop & Others v. State of 

 Maharashtra

In the matter of fixing wages, the economic capacity of the of the industry or trade is irrelevant what is important

nature of work to be performed,

the conditions in which work is performed and cost of living in a place.

Need based Minimum Wage

•

 Evolved by 15

Indian Labour Conference July,

1957

•

Minimum wage is need based wage and

should ensure the minimum human needs of 

an industrial worker

•   Standard working class family should be taken to

consist of three consumption units for one earner

• Food requirements calculated on net intake of 

2700 calories per day

• Clothing requirements   estimated as per

consumption of 18 yards per annum, average

worker’s _{family of four, total of 72 yards}

• Housing requirements-   rent charged by

Government in any area for houses

•  Fuel, lighting and miscellaneous items- 20% of the

minimum wage

•   Children’s   education, medical requirements,

minimum recreation including festivities,

Workmen v. Reptakos Brett and Co.Ltd,

1992 SCC 271

Wage structure which answers the above six components is nothing more than a minimum wage at subsistence level. The employees are entitled to the minimum wages at all times and under all circumstances. An employer who cannot pay the minimum wage has no right to engage labour and no justification to run the industry

CENTRAL ADVISORY BOARD [SEC.8]

 To advise the Central and State Governments in fixation

and revision of minimum rates of wages

 To co-ordinate the work of the Advisory Boards  Appointed by appropriate government

 To co-ordinate the work of committees and sub

Composition of Committees Section 9

 Each of the committee, sub-committee and the

Advisory Board shall consist of:

a. persons to be nominated   by the appropriate Government

b. representing the employers and employees in the scheduled employments who shall be equal in number and

c. independent persons not exceeding one-third of  its total number of members: one of such independent persons shall be appointed the Chairman by the appropriate Government.

Correction of Errors

[Sec. 10]

 By appropriate Government at any time  By notification in the Official Gazette

 Correct clerical or arithmetical mistakes in fixing or revising

minimum rates of wages

 Errors   arising from and   accidental slip or omission by

 Notification in the Official Gazette

 Every such notification shall be placed before the Advisory

Wages in kind Section 11

•  May be partly paid in kind, if the Government is

of the opinion that it is necessary in the circumstances

• Issue a notification in the Official Gazatte

• Provision is to made for the supply of the

Payment of minimum rate of wages

Section 12

 The Minimum Wages has to be paid   without any

deductions other than Statutory Deductions.

 Payment of   wages less than minimum wages   on the

Somiben Mathurabai v. M/s Lalji Hakku

 The employer’s duty is to pay at the minimum rate to

the employee. Except for that liberty, the contract  between the employee and the employer is left intact. If, for instance, the contact rate of wages is higher, the statutory right and obligation do not come into  play. The statutory right of the employee itself is to receive wages at the rate not lower than the notified minimum rate.

Fixation of hours for a Normal Working Day, Section 13

For an Adult Worker working in Factories:

• Fix the number of hours of work which shall constitute a normal working

day

• Provide for a day of rest in every period of seven days

• Payment of work on a day of rest at a rate not less than the overtime rate

• Number of Working Hours should not exceed 48 Hours in a week 

 The Daily Hours should not exceed more than 9 Hours with 1 Hour

Rest Interval

Wages for a worker who works for less than normal working day Section 15

 Entitled to receive wages on that day as if he had worked for a

full normal working day

 Not entitled if

 Fails to work due to his unwillingness to work and not by omission of

the employer to provide him work

 Where minimum wage is fixed by the hour, day or month, an employee

works on any day in excess of the number of hours consisting a normal working day, the employer shall pay him at the overtime rate fixed under  this act

Wages for two or more classes of

works Section 16

•

  An employee does two or more classes of 

work to each of which a different minimum

wages is applicable

•

Employer shall pay to such employee in

respect of wages fixed in respect of such

different classes

Maintenance of Registers and

Records Section 18

•

The Registers should contain the following

particulars-(i) particulars of employed persons (ii) the work performed by them

(iii) the wages paid to them

Inspectors Section 19

• Appointed by the Appropriate Government •  Wide powers

 – Examine registers and records  – Enter and inspect the premises  – Examine any employee

• Every Inspector will be a Public Servant as under

Authority to hear and decide

Claims Section 20

•  Any Commissioner for Workmen’s Compensation •  Labour Commissioner

• Judge of a Civil Court

• Jyoti Home Industries v. State of Karnataka

 –  Authority constituted under this Act could hear all

claims arising out of payment of less than the minimum rate of wages or in respect of payment of  remuneration for days of rest or for work done on such days or overtime rate

Penalties [Sec. 22]

Offence

Punishment

•Payment of less than

Minimum rate of Wages to employee or

•Less than the amount due to

him

Imprisonment which may extend up to 6 Months or Fine which may extend up to Rs 500/- or Both

Cases

 Executive Engineer, Rural Works Division, Mayurbhanj

vs. Addl. District Magistrate, Mayurbhanj, 2005 LLR 121 (Ori HC), it was held that, under the Minimum Wages Act, it is the liability of principal employer to pay wages to the employees of the contractor.

• Sonu vs. Municipal Corporation of Delhi, 2005 LLR 778

(Del He), it was held that Minimum wages to the safai karamcharis cannot be denied on the ground that they  work on part-time basis.