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UNIT – II MINIMUM WAGES ACT
The Remunerative Aspects- Wages- Concept of Wages- Minimum- Fair- Living
Wages- Wage and Industrial Policies- Whitley Commission
Recommendations- Provisions of Payment of Wages Act 1936- Timely Payment
of Wages- Authorised Deductions- Claims-Minimum Wages Act 1948-
Definitions- Types of Wages- Minimum Rates of Wages-Procedure for Fixing
and Revising Minimum Wages- Claims- Remedy.
MINIMUM WAGES ACT – DETAILED EXPLANATION
I. INTRODUCTION
The concept of minimum wages is essential in a welfare state to protect
vulnerable sections of workers against exploitation. The Minimum Wages
Act, 1948 is a crucial socio-economic legislation aimed at fixing minimum
rates of wages in certain employments. It ensures that workers are paid fairly,
even in unorganised sectors.
Objectives:
• To provide statutory fixation of minimum wages.
• To ensure a minimum standard of living for workers.
• To prevent exploitation in unorganised sectors.
II. REMUNERATIVE ASPECTS OF WAGES
Wages are the monetary compensation paid by the employer to the employee
in return for services rendered.
Wages Include:
• Basic pay
• Dearness allowance
• House rent allowance
• Incentives, bonuses
• Overtime pay
Wages exclude:
• Employer's contribution to PF
• Travelling allowances
• Gratuity, retrenchment compensation
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III. CONCEPT OF WAGES
Wages are classified based on the standard and purpose of payment:
1. Minimum Wage:
• The wage sufficient to cover the bare subsistence needs of life.
• Set by the government under the Minimum Wages Act, 1948.
2. Fair Wage:
• Between minimum and living wage.
• Reflects the industry’s capacity to pay.
• Covers minimum wage and a bit more for health, education, etc.
3. Living Wage:
• Highest standard of wage.
• Provides for decent living: food, shelter, education, medical, insurance,
leisure, and social security.
IV. WAGE AND INDUSTRIAL POLICIES
Wages are a critical component of India’s Industrial Policy aimed at:
• Promoting social justice
• Eliminating poverty
• Reducing income inequality
Wage Policy Objectives:
• Uniform wage structure across industries
• Protection against inflation
• Incentives for productivity
• Ensuring industrial peace
Wage policies are influenced by government laws, wage boards, collective
bargaining, and tribunal awards.
V. WHITLEY COMMISSION RECOMMENDATIONS (1931)
The Royal Commission on Labour in India (Whitley Commission) laid the
foundation for labour welfare reforms, including wage fixation.
Key Recommendations:
• Introduction of minimum wages
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• Establishment of Labour Departments
• Labour statistics and inspections
• Legislative protection of working conditions
These recommendations ultimately led to the enactment of the Minimum
Wages Act, 1948.
VI. THE PAYMENT OF WAGES ACT, 1936
This Act ensures timely and full payment of wages without unauthorized
deductions.
Main Provisions:
1. Scope:
o Applies to employees earning up to a prescribed limit (₹24,000
per month as per recent amendments).
2. Time of Payment [Section 5]:
o Before the 7th of the following month (if <1000 workers)
o Before the 10th (if >1000 workers)
3. Mode of Payment:
o In cash, cheque, or direct transfer
4. Deductions Permitted [Section 7]:
o Fines
o Absence from duty
o House accommodation
o Recovery of advances or loans
o PF, ESI, or cooperative dues
o Income tax
5. Prohibition of Unauthorized Deductions:
o No deductions unless authorized by the Act.
6. Claims [Section 15]:
o Workers can file claims before an authority (Labour
Commissioner or Presiding Officer of Labour Court).
VII. MINIMUM WAGES ACT, 1948 – DETAILED STUDY
1. Definitions [Section 2]:
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• Employer [Section 2(e)]: Person who employs, whether directly or
through agency.
• Scheduled Employment [Section 2(g)]: Any employment specified in
the schedule of the Act.
• Wages [Section 2(h)]: All remuneration, including DA, excluding house
rent allowance, gratuity, PF contributions, bonus, etc.
• Employee [Section 2(i)]: Any person employed in a scheduled
employment.
2. Types of Wages Under the Act:
• Minimum Wage
• Fair Wage
• Living Wage
• Basic Wage
• Consolidated Wage (includes allowances)
3. Fixing and Revising Minimum Wages [Sections 3-5]:
Fixation of Minimum Wages [Section 3]:
The appropriate government shall fix:
• Minimum rate of wages for scheduled employments
• Different rates for:
o Different sectors
o Different localities
o Different skill levels (unskilled, skilled, highly skilled)
o Different kinds of work
Review and Revision:
• Compulsory revision every 5 years
• Government may revise earlier if necessary
Modes of Fixation:
• Committee Method: Expert committee recommendations
• Notification Method: Government publishes proposals and invites
objections
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4. Minimum Rates of Wages May Include [Section 4]:
• Basic rate of wages
• Special allowance (Cost of Living Allowance)
• Cash value of concessions (food, housing, etc.)
• Combination of above
5. Working Hours and Rest [Section 13]:
• 9 hours/day, 48 hours/week
• One day of rest/week
• Extra wages for overtime (at double the normal rate)
6. Overtime [Section 14]:
• Overtime must be paid at twice the ordinary rate
VIII. CLAIMS UNDER THE MINIMUM WAGES ACT [Section 20]
• Worker or trade union can file a claim before an authority appointed
by the government (usually Labour Commissioner).
• Claims must be filed within 6 months.
• Compensation up to 10 times the amount due may be awarded.
• Recovery of unpaid wages similar to land revenue recovery.
IX. ENFORCEMENT MACHINERY
1. Inspectors [Section 19]:
o Appointed to ensure compliance, inspect records, investigate
complaints.
2. Advisory Boards [Sections 7 & 8]:
o Central and State Advisory Boards advise on wage fixation and
revision.
3. Penalties [Section 22]:
o Failure to pay minimum wages: Imprisonment up to 6 months or
fine up to ₹500.
o Obstructing inspector: Fine up to ₹500.
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X. CONCLUSION
The Minimum Wages Act, 1948, along with the Payment of Wages Act,
1936, forms the cornerstone of India’s wage policy. It provides legal backing
to the concept of equitable remuneration and is essential in a country with a
large unorganised workforce. The legal framework ensures protection against
exploitation, promotes fair working conditions, and upholds the constitutional
mandate of social justice and dignity of labour.
With new reforms like the Code on Wages, 2019, India is moving towards
simplification and universalisation of wage laws to ensure better compliance
and wider coverage.