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Minimum Wages Act 1948- Objectives, Components, Case law's

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 the employee.

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:
    1. Minimum time rate which is the time factor on which the minimum wage can be fixed.
    2. Minimum piece rate which allows the minimum wage to be fixed based on the pieces of items manufactured by the industry.
    3. 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.
    4. 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 different:
    1. Scheduled employment
    2. 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 contain:
    1. 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.
    2. 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 agency.

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 the government
  • 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 Government.

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.

Case Laws
  • 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.

Award Winning Article Is Written By: Saif Ali Ansari - Galgotias University, Greater Noida
E-mail: [email protected]

Awarded certificate of Excellence
Authentication No: OT28842887136-14-1020

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