Workers with a high unemployment rate in developing countries like India can
be exploited by employers because of their existing low bargaining power. In
such a case, the worker will earn salaries that are far below the planned amount
that will result in the workforce being unable to fulfil their everyday needs.
In view of this fact, by enacting laws that forbid the payment of salaries below
the subsistence level of the employee, the legislature stepped in to regulate
the employer's excesses. The minimum wages 1948 Act provides the employer with
the conditions necessary to pay the worker's wages.
The wages that must be received by an employee from the employer must be as
provided in this Act. In this case, the wages are statutory.
Employers found the legality of the Act to have violated their constitutional
rights, as enshrined in Article 19 (g) of the Constitution. The Supreme Court of
India ruled, however, that the Minimum Wages Act of 1948 complied with the
constitution in accordance with the principles of state policy guidelines laid
down in Article 43 of the Constitution.
What Is The Minimum Wages Act 1948?
The Minimum Wages Act 1948 is a legislative labor law that stipulates wages for
both skilled and unskilled laborers in India.
Development Of The Concept Of Minimum Wage
The living wage is specified as a level of income for a worker by the
Constitution of India that can ensure a minimum standard of living that includes
good health , comfort, education, dignity and can cater for any emergency. In
view of the willingness of the employer to pay, the idea of a decent wage has
been introduced into the constitution, which is a standard of wage that is not
only capable of keeping a certain work, but can be improved depending on the
ability of the employer to pay.
The Central Consultative Committee appointed a working committee on fair wages
during its November 1948 session in order to set the concept of fair wages in
motion. To provide the basic needs of the employee and other requirements such
as childcare, medical care and a level of comfort, this committee introduced the
Minimum Wage concept.
In order to give both the central and state governments of India a degree of
competence in the fixing and payment of salaries, the minimum wages Act of 1948
was implemented. Forced labour is any salary by the employee at the mandated
minimum wage rate. Wage boards are responsible for annually evaluating the
minimum salaries so that they can include basic necessities such as food,
housing, schooling, clothes, medical care, and entertainment for the minimum
needs of a family of four.
Objectives Of The Minimum Wages Act
- To ensure that the employee can have the basic
- To ensure that the employee can have the basic physical needs, good
health and a level of comfort.
- To ensure a secure and adequate living wage for all laborers in the
interest of the public.
- To ensure that the employee has enough to provide for his family.
- Ensuring a decent life standard that pertains to the social comfort of
Requirements For Review And Fixation Of Minimum Wage
The requirements for the review and fixation of a minimum wage is under Section
5 of the 1948 minimum wage Act.
The rule provides that:
- Committees and sub-committees shall be appointed by the appropriate
government as it deems fit; to inform it on the possible review and fixation
of the minimum wage rate.
- The government shall notify the persons concerned by making a
publication in one of the national dailies and specify a date not later than
a period of two months from the publication date before the commencement of
the hearing on the matter.
After the government has taken into account the feedback of the
representatives of the persons concerned or the advice of the committee, the
minimum rate shall be reviewed or fixed by means of publication in the official
news media on the basis of each schedule of employment. The control of a
fixation or review shall not exceed three months from the date on which the
fixation or review was written.
The relevant government shall operate in accordance with the minimum wages
Advisory Board when assessing the pay. The analysis is limited to the jobs that
are on the timetable. Section 27 of the Act, however, empowers the required
government to add some jobs to the timetable.
The prevailing economic conditions, cost of living in a place, conditions which
the work is performed and nature of work to be performed shall be used as the
factors to determine the fixation of the minimum wage.
Outstanding Components For Fixing Of Minimum Wage
The government is empowered to fix the minimum wage on the components of:
- Cost of Living Index - the government may fix:
- Minimum time rate which is the time factor on which the minimum wage can
- Minimum piece rate which allows the minimum wage to be fixed based on
the pieces of items manufactured by the industry.
- Guaranteed time rate which is a combination of piece rate and time rate
with reference to time work basis and pieces of items manufactured by the
industry on which the minimum wage is based.
- Overtime rate which is minimum wage fixed based on overtime work
performed by employees, irrespective of the time work or piece rate.
- The Different minimum wage for various industrial areas - Section 3 (3)
(a) of the Act provides that different minimum rates may be fixed for
- Scheduled employment
- classes of work in a schedule of employment
- Locations, Adults, children, adolescent and apprentices have different
rates of wages.
Section 3 of the Minimum Wages Act lays down wage rates on the basis of the
hour, day, month or any other duration of pay that may be prescribed. On the
condition that wages are set by the month or by any period prescribed, the
manner in which wages are measured shall be indicated on the basis of the
period. In the case of wages which are set on the basis of the duration
indicated in Section 4 of the Payment of Wages Act of 1936, the minimum wages
shall be determined in accordance with the provisions of the Act.
- The Minimum rate of wages on the basis of a basic rate of wages featured
in other allowances - Section 4 provides that any minimum rate of wages
revised or fixed based on the scheduled employments under Section 3 may
- A special allowance and a standard salary rate, known as the 'living
allowance cost.' The living allowance cost rate shall be assessed on a
periodic basis in a manner directed by the appropriate government. The fixed
wage is equal to the existing cost of living in the country and to the
number of employees.
- A basic rate of wages that is not only limited to the cost of living
allowance, cash value based on prices of commodities.
- An all-inclusive rate that is based on the cost of living allowance,
and the value of cash.
The cost of living allowance and cash value shall be determined by the approved
body in respect of the basic commodities supplied. The estimate shall be carried
out on the basis of the directives of the relevant government by the competent
Factors Considered As Irrelevant In Fixation Of Minimum Wages
The following factors are irrelevant in fixation of minimum wages:
- The fact that an employer can have business issues.
- The employer 's financial skill.
- Losses that the corporation may have suffered in the intervening year.
- The employer's reluctance to purchase raw materials.
- The industrial values of the area.
Role Of The Wage Committee
The pay committee or sub-committee set up by the responsible government shall
consist of an equal number of members of both workers and employers. The
chairman of the committee shall be rendered an individual citizen with no direct
or indirect participation in the schedule of work. Experience and expertise are
the qualifications for one's committee membership.
The government has the power to consider or ignore the advice of the committee
it has named. The committee's object is to advise; therefore, the government is
not obliged to follow all its recommendations. Irregularities which may have
existed in the committee's constitution would not affect the validity of a
notice which may have been issued by the appropriate government.
The Role Of Advisory Board
Section 7 provides that the appropriate government shall shoulder the
responsibility for inaugurating an advisory board to:
- Coordinate the obligations of committees and sub-committees appointed by
- Inform the appropriate government on matters related to fixing and
reviewing of the minimum wage.
In the Minimum Wage Act, the procedure for the operation of the Advisory Board
is not prescribed. The board will set up its peculiar procedure, however. The
Central Advisory Board shall be formed to advise and advise both the Central and
State Governments on the establishment and review of the minimum wage rates and
the function of the Advisory Boards, as provided for in the Act, by the Central
The Central Government shall designate representatives of both labour and
employers as members of the Board of Directors. Independent board members shall
not exceed one-third of the total members of the board. One of the independent
representatives may be an official of the government and the chairman may come
from this class.
Consequences Of Non-Compliance With The Minimum Wages Act
As a culpable crime, non-payment and underpayment of the minimum wage are
considered. As provided for in Section 22 of the Act, the punishment for a
convict can be up to 5 years imprisonment with a fine of Rs 10000.
Award Winning Article Is Written By: Saif Ali Ansari
- In the case between the State of Madras and P.N. Ram Chander Rao in
1956, the court ruled that any notification not specifying the manner and
what interval special allowance made payable to be adjusted is a defect and
impaired by an apparent error of law.
- In the case between Cashew Manufacturers and Exporters Association
v/s State of Kerala in 1999, the high court ruled that the government is
not bound by the Advisory Board's report.
- In the case between S.D. Basha and the State of Madras, it was held that in a
condition where the members appointed into the committee are bereft of knowledge
and experience, such a committee shall be invalid. A committee with men of no
knowledge and experience is illegal.
- Galgotias University, Greater Noida
E-mail: [email protected]
Authentication No: OT28842887136-14-1020