MINIMUM WAGES ACT,1948 minimum-wages-act-1948



In a labour surplus economy like India wages couldn’t be left to be determined entirely by forces of demand and supply as it would lead to the fixation of wages at a very low level resulting in exploitation of less privileged class. Keeping this in view, the Government of India enacted the Minimum Wages Act, 1948. The purpose of the Act is to provide that no employer shall pay to workers in certain categories of employments wages at a rate less than the minimum wage prescribed by notification under the Act. In fact the sole purpose of this act is to prevent exploitation of sweeted and unorganised labour, working in compititive market.

The Act provides for fixation / periodic revision of minimum wages in employments where the labour is vulnerable to exploitation. Under the Act, the appropriate Government, both Central and State can fix / revise the minimum wages in such scheduled employments falling in their respective jurisdiction.

The term ‘Minimum Wage Fixation’ implies the fixation of the rate or rates of minimum wages by a process or by invoking the authority of the State. Minimum wage consists of a basic wage and an allowance linked to the cost of living index and is to be paid in cash, though payment of wages fully in kind or partly in kind may be allowed in certain cases. The statutory minimum wages has the force of law and it becomes obligatory on the part of the employers not to pay below the prescribed minimum wage to its employees. The obligation of the employer to pay the said wage is absolute. The process helps the employees in getting fair and reasonable wages more particularly in the unorganised sector and eliminates exploitation of labour to a large extent. This ensures rapid growth and equitable distribution of the national income thereby ensuring sound development of the national economy.

It has been the constant endeavour of the Government to ensure minimum rates of wages to the workers in the sweated industries and which has been sought to be achieved through the fixation of minimum wages, which is to be the only solution to this problem.


II Concepts

II(a)Minimum Wage

The Act under section 2(h) defines wages, but does not define “minimum wages”. As it is not possible to bring down a uniform minimum wage for all the industries throughout the country.

Section 2(h)”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;

II(a)(i)Essential Ingredient

  1. Wage should be by way of remuneration
  2. It should be capable of being expressed in terms of
  3. It should be payable to a person employed in respect of his employment or of work done in such employment.
  4. It should be payable to a
  5. It should be payable if the terms of employment, express or implied, are fulfilled.
  6. It includes house rent allowance.
  7. It does not include house accommodation, supply of light, water, medical attendance, traveling allowance, contribution of employer towards provident fund, gratuity , any scheme of social insurance etc.

II(b)Classification of Wages

The Supreme Court has classified “Wages” into three categories. They are:

  1. The Living Wage ( highest standard of wage)
  2. The Fair Wage (between living and minimum wage)
  3. The Minimum Wage.( it is the lowest standard of wage)

The living and fair wages are acquired by workers with their “collective bargaining”. When the workers have no unions and who have no capacity of collective bargain could not demand  the employers for their just and genuine wage. The State come to rescue them through such legislations.

III Main provisions under the Act

  1. Fixing of minimum rates of wages Section 3
    1. The appropriate Government may fix the minimum rates of wages payable to employees employed in an employment specified in Part – I or Part – II of the Schedule and in an employment subsequently added to the Schedule. The Government may review the minimum rates of wages and revise the minimum rates at intervals not exceeding five years.
    2. The appropriate Government may refrain from fixing minimum wages in respect of any scheduled employment in which there are in the whole State  less than one thousand employees engaged in such employment.
    3. The appropriate Government may fix separate minimum rates of wages for time rate and for piece rate. Different wage rates may be fixed for different scheduled employments, different classes of work in the same scheduled employment, for adults, adolescents, children and apprentices and for different localities and for any one or more of the wage periods, viz., by the hour or by the day or by the month or by such larger wage period as may be prescribed.
  1. Minimum rate of wages (Section 4)

Any minimum rate of wages fixed or revised may consist of

  1. a basic rate of wages and a special allowance ; or
  2. a basic rate of wages with or without cost of living allowance and the cash value of concessions in respect of supplies of essential commodities at concessional rates; or
  3. an all inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of concessions, if any.

3     Procedure for fixing and revising minimum wages (section 5)

The appropriate Government is required to appoint an Advisory Board for advising it, generally in the matter of fixing and revising minimum rates of wages.

The Central Government appoints a Central Advisory Board for the purpose of advising the Central and State Governments in the matters of the fixation and revision of minimum rates of wages as well as for co-ordinating the work of Advisory Boards.

The Central Advisory Board consists of persons to be nominated by the Central Government representing employers and employees in the scheduled employments, in equal number and independent persons not exceeding one third of its total number of members. One of such independent persons is to be appointed the Chairman of the Board by the Central Government.

4      Wages in kind (section 11)

Minimum wages payable under this Act are to be paid in cash. However, the payment of minimum wages can be made wholly or partly in kind, by notifying in the official Gazette, where it is customary to pay wages either wholly or partly in kind.

5    Payment of minimum rate of wages (Section 12)

The employer is required to pay to every employee, engaged in a scheduled employment under him, wages at a rate not less than the minimum rate of wages notified for that class of employees without any deduction except as may be authorised.( see the Payment of Wages Act 1936 (4 of 1936) for permissible deduction)

  1. Fixing hours for normal working day (section 13)

In regard to any scheduled employment, minimum rates of wages in respect of which have been fixed under this Act, the appropriate Government may

  1. fix the number of hours of work which shall constitute a normal working day, inclusive of one or more specified intervals;
  2. provide for a day of rest in every period of seven days which shall be allowed to all employees or to any specified class of employees and for the payment of remuneration in respect of such days of rest;
  3. provide for payment for work on a day of rest at a rate not less than the overtime rate.
  4. Overtime (Section 14)

If any employee whose minimum rate of wages is fixed under the Act works on any day in excess of the number of hours constituting normal working day, the employer is required to pay him for excess hours at the overtime rate fixed under this Act or under any law of the appropriate Government for the time being in force, whichever is higher.

  1. Wages for two or more classes of work (Section 16)

If an employee does two or more classes of work, to each of which a different rate of wages is applicable, the employer is required to pay to such employee in respect of the time respectively occupied in each such class of work, wages at not less than the minimum rate in force in respect of each such class.

  1. Maintenance of registers and records(Section 18)

Every employer is required to maintain registers and records giving particulars of employees, the work performed by them, the wages paid to them, the receipts given by them and any other required particulars.

10     Inspections(Section 19)

The appropriate Government may, by notification in the official Gazette, appoint inspectors for the purpose of this Act and define the local limits for their functions.

  1. Claims (Section 20)

The appropriate Government may, by notification in the official Gazette, appoint Labour Commissioner or Commissioner for Workmen’s Compensation or any officer not below the rank of Labour Commissioner or any other officer with experience as a judge of a civil court or as a Stipendiary Magistrate, to hear and decide for any specified area, all claims arising out of the payment of less than the minimum rates of wages as well as payment for days of rest or for work done.

  1. Penalties for Offences(Section 22)

Any employer who contravenes any provision of this Act shall be punishable with imprisonment for a term, which may extend to six months or with fine, which may extend to five hundred rupees or with both.

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