Minimum Wages Act 1948

Objectivess of the Act Objective To provide To provide minimum wages to wages to the workers work workin ing g in cert certai ain n empl employ oyme ment nts s   (scheduled employment Schedule 1)

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To stop To stop exploitation of exploitation of the workers

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To empower To  empower  the government to take steps for fixing minimum fixing minimum wages and to revising to revising it  it in a timely manner

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To apply To apply this law on law  on most of the sections in organized sector (scheduled employment)

Schedule Employments •

 Mills

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 Stone quarries

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 Weaving

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 Mines

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Construction or maintenance of roads roads

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 Dairy Farming

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 Agriculture

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 •

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Bijoy Cotton Mills Ltd. V. State of Ajmer 1955

  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 •

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  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 

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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

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Fixing of minimum rate of wages Section 3 The Appropriate Government:

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Shall fix and review the minimum wages

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Revise the minimum wages after every 5 years

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 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)

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Different classes (e.g. skilled, unskilled, semi skilled, etc.) of work in the same employments

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Adults, adolescents and children

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Different localities

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Different wages for time and piece work 

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

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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 

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 Level of national income

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Place of industry in the economy of the country  Financial position of an industry

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 

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It

must

provide

for

education,

requirements and amenities

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

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 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

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  Constitute committees/sub committees for the  purpose.

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The committees/sub-committees and advisory  boards constituted by the Government consist of equal number of members of :  –

 Employers

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 Employees, and

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 Independent persons

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 &  Maharashtra

Others v. State of 

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 15th Indian Labour Conference July, 1957

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Minimum wage is need based wage and should ensure the minimum human needs of  an industrial worker

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 Following norms recommended

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  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 medical requirements,   Children’s   education, minimum recreation including festivities, ceremonies, marriage, provision of old age- 25%

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

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 Appointed by appropriate government To co-ordinate the work of committees and sub committees appointed under Section 5

CENTRAL ADVISORY BOARD [SEC.8] 

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 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

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

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By notification in the Official Gazette

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 Correct clerical or arithmetical mistakes  in fixing or revising minimum rates of wages

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 Errors   arising from and   accidental slip or omission by

 Notification in the Official Gazette 

 Every such notification shall be placed before the Advisory Board for information.

Wages in kind Section 11 •

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Minimum wages shall be paid in cash  May be partly paid in kind, if the Government is of the opinion that it is necessary in the circumstances

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Issue a notification in the Official Gazatte

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Provision is to made for the supply of the essential commodities at the concessional rates

Payment of minimum rate of wages Section 12 

The Minimum Wages has to be paid   without any deductions other than Statutory Deductions.

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Payment of   wages less than minimum wages   on the ground of less performance or output is  illegal

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

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

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

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

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

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Provision of Compensatory Holiday/ Overtime Wages if working on

Overtime wages Section 14 

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

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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

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

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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

(iv) the receipts given by them

Inspectors Section 19 •

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Appointed by the Appropriate Government  Wide powers  –

 Examine registers and records

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 Enter and inspect the premises

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 Examine any employee

Every Inspector will be a Public Servant as under Section 21 IPC

Authority to hear and decide Claims Section 20 •

 Any Commissioner for  Workmen’s Compensation

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 Labour Commissioner

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Judge of a Civil Court

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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

Payment

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of

less

Punishment

than Imprisonment

which

may

Minimum rate of Wages to extend up to 6 Months or Fine employee or

which may extend up to Rs

Less than the amount due to 500/- or Both

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him

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.

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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.