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Minimum Wages ACT 1948 - its a lecture note

Business Management (Mahatma Gandhi University)

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MINIMUM WAGES ACT, 1948

Minimum wage can be defined as the minimum amount of compensation that an employee is
required to receive to fulfil his/her duties and perform work. Usually, the minimum wage is
established by government agreement or legislation. The Constitution of India enjoins the
Government to secure employment which ensures a decent standard of living and full
enjoyment of recreational, social and cultural opportunities as per the Minimum Wages Act,
1948. occupations. The provisions of the Act aim to achieve the objective of social justice for
the workers engaged in scheduled jobs by fixing the minimum rate of wages. Also, the
Payment of Wages Act, 1936 guarantees timely payment of wages except as otherwise
authorized by law. The Minimum Wages Act of 1948 protects workers from exploitation and
ensures that they are paid a living wage that enables them to afford the basic necessities of
life. According to this law, it is illegal to pay an employee less than the minimum wage.
Fluctuations in the rate of the minimum wage are common and vary across the country,
sometimes across states or provinces.
As per provisions of the Act (Sections 3, 4, and 11):
• The minimum wage is required to be fixed at 8time rate9, 8piece rate9,
8guaranteed time rate9, and 8overtime rate9.
• The minimum wage includes the basic wage and an allowance linked to the cost
of living index.
• The minimum wage is required to be paid in cash. Payment of wages wholly or
partly in kind may be allowed in particular cases.
The government can also resort to the following provisions while fixing the minimum wages:
• Fix the number of hours of work.
• Fix a day every week for rest and payment of remuneration in respect of such days of
rest.
• Fix a payment of overtime wages.
• Fix a payment for work on a day of rest at a rate equal to the overtime rate.
Section 2(3) of the Act provides that different rates of minimum wages may be used to fix or
revise the rates of minimum wages. These different rates apply to:
• Different scheduled tasks
• Different types of jobs in the same scheduled job
• Adults, teenagers, children and apprentices
• Different regions
Such minimum wages may be fixed by the hour, day, month, or any other period.

MINIMUM WAGES ACT IN INDIA

India was one of the first developing countries to introduce a minimum wage policy, the
minimum wage legislation was a result of both internal and external factors. Domestic factors
included the increase in the number of factories and wage workers in the first half of the 20th
century, and increasing industrial unrest and strikes by workers who revolted against their

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'starvation wages'. The initiative to regulate minimum wages in India was initiated by KGR.
Chaudhary in 1920 to set up boards for fixing minimum wages in each industry. Article 1 of
Convention No. 26 of 1928 and Recommendation No. 1 relating to machinery for
determining wages in trades or parts of trades. On the recommendation of the Standing Labor
Committee and the Indian Labor Conference, a Labor Investigation Committee was
appointed in 1943 to investigate matters such as wages and housing, social conditions and
employment. The Indian Labor Conference of 1945 considered a draft bill. In 1946, the
Eighth Meeting of the Standing Labor Committee recommended special legislation for the
unorganized sector, including hours of work, minimum wages and holidays with pay. The
Minimum Wages Bill was introduced in the Central Legislature on 11.4.46 to fix minimum
wages in certain occupations. It was passed in 1946 and came into force from 15.3.48
OBJECTIVES OF MINIMUM WAGES ACT, 1948:
The objectives of the Minimum Wages Act, 1948 are as follows:
• Fix and revise minimum wages in certain occupations.
• To prevent exploitation of unorganized workers.
• Prevent employment of sweated labor in public interest.
• Fix the minimum wage rate taking into account the capacity of the employer.
The main objective of the Act is to protect the interest of the workers working in the
unorganized sector. The Act lays down provisions for fixing minimum wages in certain
specified occupations. It acts as a force that compels employers to pay their workers a
minimum wage fixed by law within a specified time frame.
EQUAL MINIMUM RATES OF WAGES FOR MEN AND WOMEN:
A common problem around the world is inequality in pay for equal work for men and
women. This includes the Nordic countries, which boast high overall gender equality and pay
equity.
In India, though the Constitution recognizes the principle of equal pay for equal work for men
and women and the 'right to work' through Articles 39 (d) and 41, the reality is quite
different. In 1976, the Equal Pay Act was introduced; However, working women in India are
everywhere paid less than men for the same work. With modernization and education,
women in India are constantly demanding equal pay in all sectors and industries. The
Constitution of India has described this proposition as one of the propositions under the
Directive Principles of State Policy. Women are paid less than their male counterparts for the
same job due to the following biases prevalent in society:
• Women are physically weaker and unsuitable to work in many industries
• Women are less productive
• High absenteeism in women workers
• Inadequate accounting of the overall work output of women
• Women9s own diffidence in demanding better pay
• Women9s income is supplementary for supporting the family

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CONCEPT OF FIXING OF MINIMUM WAGE AND MINIMUM RATE:

The provisions of the Minimum Wages Act, 1948 empower the central and state governments
to fix, revise and revise the minimum wages of workers. These workers should be employed
in scheduled jobs in their respective jurisdictions. Central and State Governments are
empowered to notify any work in the Schedule to an establishment having 1000 or more
employees. They have the power to fix the minimum wage rate of the employees working in
it. The Act does not recognize discrimination between male and female workers or their
lower wages. All the provisions of the Act apply equally to men and women.
The criteria for fixing and revising the minimum wages of employees are as per the
recommendations laid down in the Indian Labor Conference session held in 1957.
These criteria are as follows:
• Three consumption units for one earner.
• Minimum food requirements of 2700 calories per average Indian adult.
• Clothing requirements of 72 yards per annum per family.
• Rent corresponding to the minimum area provided for under the government9s
Industrial Housing Scheme.
• Fuel, lighting, and other miscellaneous items of expenditure to constitute 20 per
cent of the total minimum wages.
PROCEDURE FOR FIXING AND REVISING MINIMUM WAGES:
Under Section 3 of the Minimum Wages Act, the government is empowered to fix minimum
rates of wages in scheduled occupations. It is mandatory for the government to revise
minimum rates at appropriate intervals. The revision period shall not exceed five years.
Section 5 of the Act highlights two methods of fixing and revising minimum wages, which
are as follows:
Committee Method: According to this method, all inquiries, committees and sub-
committees regarding the fixing and revision of minimum wages constituted by the
appropriate governments should be made and recommendations should be made.
Notification Method: According to this method, all government directives should be
published in official gazette for public. This information needs to be published for potentially
affected individuals. The method also prescribes a date (not less than two months from the
date of notification) on which the proposals will be considered.
OBLIGATION IN PAYMENT OF MINIMUM WAGES:
An employer is bound to pay every employee engaged in his/her employment at a fixed rate,
at least the minimum rate. This minimum wage is fixed and enforced under Section 5 of the
Act in respect of any occupation covered by the Act. According to Section 12 of the Act,
minimum wage is defined as the fixing of minimum rate of wages by a process or by
invoking the authority of the State. It is the duty of employers to pay their employees not less
than the prescribed minimum wage, which is enforced as statutory minimum wage and has
the force of law. The employer's liability is absolute and payment of said wages is mandatory
by law. This law helps employees to get fair and just wages. This eliminates labor

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exploitation by their employers to a large extent. This results in rapid growth and equitable
distribution of national income. The employer's obligation to pay wages to the worker
ensures better development of the national economy. Every employer comes under this Act
and is therefore responsible for payment of all wages to the persons employed by him under
the Payment of Wages Act, 1936.
ENFORCEMENT OF THE ACT:
The implementation of the Minimum Wages Act is at two levels as follows:
At the central level, enforcement is carried out by the inspecting officers of the Chief Labor
Commissioner (Central), generally designated as the Central Industrial Relations Machinery
(CIRM).
At the state level, compliance is ensured through state enforcement machinery. Their duty is
to conduct regular inspections. If they find any case of non-payment of minimum wages or
underpayment of wages, they advise the employers to rectify the deficiency of wages.
Penalties prescribed in the Act are adopted as a relief in case of non-compliance.

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