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Constitutional Validity of Minimum Wages Act

Labour law reforms were among the more significant promises made by the National Democratic Party (NDA) government led by Prime Minister Narendra Modi. The argument given was that Indian industry is shackled by a number of socialist-era laws that prevent Indian companies from becoming competitive: workers cannot be fired, organization structures are not flexible, transfer policies are not nimble enough, and a high human resource cost prevents companies from growing bigger. More than 45 central laws and at least 100 state-level legislations create confusion, complexity, and chaos. The burden of compliance is huge is the conventional wisdom.- Pradeep Gaur

Introduction
The Universal Declaration of Human Rights has proclaimed that everyone who works has the right to just and favorable remuneration ensuring for himself and his family an existence worthy of human dignity. This should be supplemented by other means of social protection which include not only the traditional five components (i.e., old age, invalidity and death benefit, sickness and maternity benefit, work injury benefit, unemployment benefit and family allowances) but also provision for housing, safe drinking water, sanitation, educational and cultural facilities and above all a minimum wage which can guarantee a worker not only bare subsistence but also the above-mentioned facilities.

The ILO Convention No. 26 provides for fixing of minimum wages in manufacturing and commercial trades or parts of trades where no arrangements exist for the effective regulation of wages by collective agreements or otherwise and where wages are exceptionally low. Convention 131 of the ILO adopted in 1970 requires that every member of the ILO which ratifies the convention should undertake to establish a system of minimum wages that covers all groups of wage earners whose terms of employment are such that coverage would be appropriate.

India's commitment to payment of minimum wages resulted in the enactment of the Minimum Wages Act in 1948. The Act aims to extend the concept of social justice to workers employed in certain scheduled employments by statutorily providing for the minimum rates of wages. It is a piece of social legislation that provides workers protection against exploitation, especially where there is no organized bargaining power and where sweated labor is prevalent. The employments for which the Central and State Governments are required to fix minimum wages are specified in Part I and Part II of the Schedule to the Act.

Though our Government has not ratified the ILO Convention 131 due to its inability to ensure payment of minimum wages to all categories or groups of workers, a large number of employments have been added to the Schedule by the Central and State Governments over the years.

History
The concept of minimum wages first evolved with reference to the remuneration of workers in those industries where the level of wages was substantially low as compared to the wages for similar types of labour in other industries. As far back as 1928, the International Labour Conference of International Labour Organization, at Geneva, adopted a draft convention on minimum wages requiring the member countries to create and maintain a machinery whereby minimum rates of wages can be fixed for workers employed in industries in which no arrangements exist for the effective regulation of wages and where wages are exceptionally low.

Also, at the Preparatory Asian Regional Labour Conference of International Labour Organization held at New Delhi in 1947 and then at the 3rd session of the Asian Regional Labour Conference, it was approved that every effort should be made to improve wage standards in industries and occupations in Asian Countries, where they are still low. Thus, the need of a legislation for fixation of minimum wages in India received an impetus after World War II, on account of the necessity of protecting the interest of demobilized personnel seeking employment in industries.

The justification for statutory fixation of minimum wage is obvious. Such provisions which exist in more advanced countries are even necessary in India, where workers organizations are yet poorly developed and the workers' bargaining power is consequently poor.

To provide for machinery for fixing and revision of minimum wages a draft Bill was prepared and discussed at the 7th session of the Indian Labour Conference in November, 1945. Thereupon the Minimum Wages Bill was introduced in the Central Legislative Assembly. The Minimum Wages Bill having been passed by the Legislature received the assent on 15th March, 1948. It came on the Statute Book as the Minimum Wages Act, 1948.

What does Minimum wage mean:
The ILO defines Minimum wage as:
The minimum amount of remuneration that an employer is required to pay wage earners for the work performed during a given period, which cannot be reduced by collective agreement or an individual contract

The wage structure can be divided into three categories:
  1. The basic ‘minimum wage' which provides bare subsistence and is at poverty line level,
  2. A little above is the ‘fair wage'&
  3. Finally the ‘living wage' which comes at a comfort level.
It is not possible to demarcate these levels of wage structure with any precision.

The principle is that there is a minimum wage which, in any event must be paid, irrespective of the extent of profits, the financial condition of the establishment or the availability of workmen on lower wages. This minimum wage is independent of the kind of industry and applies to all alike big or small. It sets the lowest limit below which wages cannot be allowed to sink in all humanity. Kamani Metals & Alloys v. Their Workmen.

Minimum Wages Act 1948
The Act provides for fixation by the appropriate Governments of minimum wages for employment covered by Schedule to the Act. The Central Government is the appropriate Government in respect of 45 scheduled employments in the Central Sphere. The minimum wages fixed for the Central sphere are applicable to the scheduled employment in the establishments under the authority of Central Government, railway administrations, mines, oil-fields, major ports or any corporation established by a Central Act. Employments other than the scheduled employment for Central Sphere come under the purview of the State Government and accordingly State Government wages are applicable in such employments.

Some Salient Features of the Act
The Act is legally not binding but statutory. Wage Boards are set up to review the industry's capacity to pay and fix minimum wages such that they at least cover a family of four requirements of calories, shelter, clothing, education, medical assistance, and entertainment.

Section 3 of the Minimum Wages Act of 1948 states that the Appropriate government must be allowed, in the manner specified in the Act, to set the minimum wage rate. It shall set the wages to be paid under Part I and Part II of the schedule to employees covered.

The Appropriate Government shall be allowed, at intervals deemed appropriate, to review the minimum wage levels and, if applicable, revise the minimum pay. There must be no periods greater than 5 years. Subsection (1-a) stipulates that appropriate Government may refrain from fixing minimum wage levels for any scheduled employment with fewer than a thousand employees in such employment.

Not paying Minimum wages is an offence punishable up to six months' imprisonment or with fine up to Rs. 500 or with both

Minimum Wages Act : Constitutional Validity
A Draft Convention on the question of minimum wages was adopted at the International Labour Conference held in Geneva in 1928. Draft Convention contemplated the creation of a minimum wage fixation machinery only in the case of:
Traders or parts of Trades (and in particular in home working trades) in which no arrangements exist for the effective regulation of wages by collective agreement otherwise and wages are exceptionally low.

India in it's obligation to ratify the International Convention has incorporated a Minimum Wages for the scheduled employments mentioned in the act. But repeatedly the employer class has challenged the validity of the said act in the halls of the supreme court.

The Supreme Court in its rulings has held that non-payment of minimum wages leads to forced labour which is prohibited under Article 23 of the Indian Constitution.
Where a person provides labour or service to another for remuneration which is less than the minimum wages, such labour is forced labour within the meaning of article 23 of the Constitution and thereby entitles the person to invoke article 32 or article 226 of the Constitution of India: Union for Democratic Rights v. Union of India

Article 14
It was said that the provisions of this Act also violates Article 14 of the Constitution which provides for equality before the law.

The court in N.M.Wadia Charitable Hospital vs State of Maharashtra  Fixing different minimum wages for different localities is permitted under the constitution and under labour laws , hence the question that any provisio of the Minimum Wages Act is in any way against the provisio of constitution is wrong

On a careful examination of the various of the Act and the machinery setup by this Act, Section 3(3)(iv) neither contravene Article 19(1) of the constitution nor does it infringe the equal protection clause of the constitution(Art 14) .The Courts have also held that the constitution of the committees and the Advisory Board did not contravene the statutory provisions in that behalf prescribed by the legislature Bhikusa Yamasa Kshatriya vs Sangammar Akola Bidi Kamgar Union

Article 19
The contention of the employers that the said act breaches their right to free trade and profession guaranted under the Art was rejected by the supreme court.Whether the act offends fundamental rights guaranteed under Art. 19(1)(g) byt Minimum Wages Act, 1948 was challenged in the case of BIJAY COTTON MILLS LTD vs THE STATE OF AJMER

It was held that the restrictions imposed upon the freedom of contract by the fixation of minimum rates of wages though they interfere to some extent with the freedom of trade or business guaranteed under Art. 19(1)(g) of the Constitution are not unreasonable and being imposed in the interest of general public and with a view to carry out one of the Directive Principles of State Policy as embodied in Art. 43 which talks about living wages in the Constitution are protected by the terms of clause (6) of Art. 19.

Article 43
It can scarcely be disputed that securing of living wages to labourers which ensure not only bare physical subsistence but also the maintenance of health and decency is conducive to the general interest of the public. This is one of the directive principles of State policy embodied in Article 43 of our Constitution. The employers cannot be heard to complain if they are compelled to pay the minimum wages to their labourers even though the labourers, on account of their poverty and helplessness are willing to work on lesser wages in Bijay Cotton Mills Ltd v/s The State Of Ajmer

Code On Wages, 2019
The Code on Wages, 2019 was introduced in Lok Sabha by the Minister of Labour, Mr. Santosh Gangwar on July 23, 2019. It seeks to regulate wage and bonus payments in all employment where any industry, trade, business, or manufacture is carried out. The landmark Labour Code on Wages Act (henceforth referred to as the Wage Code), enacted in August 2019, has been celebrated for codifying India's four wage related laws, namely:
The Minimum Wages Act, 1948, The Payment of Wages Act, 1936, The Equal Remuneration Act, 1976 and The Payment of Bonus Act, 1965.

The Code proposes to do away with the concept of bringing specific jobs under the Act, and mandates that minimum wages be paid for all types of employment – irrespective of whether they are in the organized or the unorganized sector

Challenges Ahead
An analysis published by S. B. Bajaj and S. P. Bajaj in Administrative Processes of the Minimum Wages Act, 1948: A Study in Delhi observed that in no industry were the rates revised in the first instance, within the stipulated period .The time gap between the fixation and the revision of rates was seven to nine years, and in one case it was even 13 years.What the past has shown us is that history repeats itself from time to time and the trend which the government follows can be termed out to be anti-workers where revision not done for years and years tend to increase the inequality difference between its people.

In India, small and unorganized businesses employ more than 90% of the workforce, an estimated 500 million people. The Code on Wages seeks to cover all employees, just as recommended in the Directive Principles. This is where the major problem with compliance will come up, leading to the threat of harassment from labour officials. In an atmosphere where businesses are reeling under the impact of a hurriedly passed goods and services tax (GST) system, this new requirement will certainly impose higher costs which should be tackled by the government at the first instance.

The Union cabinet when approved the Wage Code Bill,it raised the national minimum to one hundred seventy eight rupees per day, despite the internal labour ministry committee recommending setting the single value of the NMW( national Minimum wage ) for India at ₹ 375 per day (or ₹ 9,750 per month) as of July 2018, irrespective of sectors, skills, occupations and rural-urban locations. This clearly showed the blatant disregard by the politicians refusing to listen to the recommendations made by the brightest minds in our country.

After COVID- 19
Economists have predicated that after the world pandemic Coronavirus/COVID-19 has passed us the world will face a recession which it hasn't faced in the past 100 years. The working class which is suffering even during the lockdown will have face hardships on another level. The government needs to make sure that no employee be subjected to wages which are below the minimum wages set by the government.

Just like in Sanjit Roy Vs. State of Rajasthan, the Supreme Court decided that ‘The Exemption Act in so far as it excluded the applicability of the Minimum Wages Act, 1948 to the workmen employed in famine relief work is clearly violative of Article 23. Thus, even public works ostensibly initiated by the Government for the sole purpose of providing employment are subject to the Minimum Wage Act.

Conclusion
In a November 2018 report, ILO said that around 41% of Indian employees feel they are poorly paid—India stood fourth from the bottom in salary satisfaction among the 22 countries of the Asia-Pacific region, above only Bangladesh, Pakistan and Mongolia.Recently USA has removed India from its list of developing nation and put in the category of developed nation therefore India also needs to move from mindset of minimalism wages to fair wages.

The Minimum Wages Act which has been consolidated into Wage Code of 2019 the challenges tend to still subsist where the fixation and revision of the wages is entirely in the hands of bureaucrats which can in turn lead to lobbying by the big private players in the country. But the research presented in this paper has clearly shown the validity and existence of the Minimum wage in the countries cannot be shaken amd has been protected by judiciary from time to time.

Bibliography
Primary Sources:
  1. Code on Wages, 2019
  2. Constitution of India, 1950
  3. Minimum Wages Act, 1948
  4. Convention on Minimum Wage-Fixing Machinery Convention, 1928
Secondary Sources
  1. S.N. Misra, Labour & Industrial Laws (Central Law Publications, Allahabad, 29th edn., 2019).
  2. Sozhiya, Gayathiri J, Minimum wages in India: A special reference to agricultural sector 120 International Journal of Pure and Applied Mathematics (2018).
  3. International Labour Organisation, India Wage Report: Wage policies for decent work and inclusive growth (2018).
  4. Hartman Dennis. Importance of Wages available at: https://bizfluent.com/info8228392-importance-wages.html. (last visited on March 23rd, 2020).
  5. Press Information Bureau, Minimum Wages, available at: https://pib.gov.in/newsite/PrintRelease.aspx?relid=81227 (last visited on March 23rd , 2020).
  6. D. V. Giri and B. P. Rath The Minimum Wages Act: A Study of Its Workingin Orissa Indian Journal of Industrial Relations, Vol. 33, No. 4 (Apr., 1998), pp.463-478

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