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LABOUR LAW II

SALIANT FEATURES OF THE MINIMUM WAGES ACT, 1948

A PROJECT SUBMITTED TO

Army Institute of Law, Mohali

In partial fulfilment of the requirements for the award of degree of

B.A. LL. B

SUBMITTED TO: SUBMITTED BY:

Dr. KIRANDEEP KAUR. VIDUSHI SHARMA
2141

Punjabi University, Patiala

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DECLARATION

It is certified that the project work presented in this report entitled embodies the results of
works carried out by me. All ideas and references have been duly acknowledged.
Vidushi Sharma
(2141)

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ACKNOWLEDGEMENT

I would like to express my special thanks of gratitude to our Principal- Dr. TEJINDER KAUR as well
as my Labour and Industrial law Professor – Dr. KIRANDEEP KAUR under whose guidance I have
got this golden opportunity to work on this wonderful project.

This has also helped me in doing a lot of research and I have come across many new ideas and
concepts. I would also like to extend a sincere thanks to my Parents who have provided me with every
kind of support required in the completion of this project.

I would like to extend my gratitude to all those who directly and indirectly guided me in writing this
assignment.

Vidushi Sharma

(2141)

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INDEX
Contents
NEED FOR MINIMUM WAGES......................................................................................................5
HISTORY OF MINIMUM WAGES...................................................................................................6
OBJECTIVES OF MINIMUM WAGES ACT, 1948.........................................................................6
APPLICATION OF MINIMUM WAGES ACT, 1948......................................................................7
CONSTITUTIONALITY OF MINIMUM WAGES ACT, 1948.......................................................................11
BIJAY COTTON MILLS LTD. V. STATE OF AJMER (1954)......................................................11
BHIKUSA YAMASA KSHATRIYA V. SANGAMNER AKOLA TALUKA BIDI KAMGAR UNION
(1958)..............................................................................................................................................12
N.M. WADIA CHARITABLE HOSPITAL & ORS. V. STATE OF MAHARASHTRA & ORS.
(1986)..............................................................................................................................................12
RECENT JUDICIAL PRONOUNCEMENTS................................................................................................13
MOHD IMRAN AHMAD V. GOVERNMENT OF NCT OF DELHI & ANR. (2023)..................13
ASSISTANT PROVIDENT FUND COMMISSIONER V. M/S G4S SECURITY SOLUTIONS
(INDIA) LTD. & ANR. (2023)........................................................................................................13
KARNATAKA GENERAL LABOUR UNION V. UNION OF INDIA & ORS. (2023)..................14

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INTRODUCTION

The economic policies and labour laws complement each other in India. To ensure the social
justice and economic well-being of the workers, the Parliament enacted the Minimum Wages
Act, 1948. Enacted to address the growing concerns of worker exploitation and inequality,
the Act has far-reaching implications for both employees and employers. The primary
objective of the Minimum Wages Act, 1948 is to safeguard the interests of the workers by
providing a mechanism for ensuring a bare minimum level of remuneration.

From agriculture and manufacturing to the service industry, the Act plays a pivotal role in
establishing equitable compensation structures. Additionally, there are various challenges in
implementing and adhering to the stipulated minimum wages, considering the dynamic nature
of economic landscapes and the diverse needs of an expanding workforce.

The Act categorises the workers into skilled, semi-skilled and unskilled labourers and
provides the mechanism for fixing separate minimum wages for each class of labour. In this
article, an attempt has been made to analyse the important provisions of the Act, along with
the important judicial pronouncements by various Courts of the country. Further, the
provisions of the Act have been compared with the provisions of the Code on Wages, 2019,
in order to ascertain what changes would be implemented through the new legislation.

NEED FOR MINIMUM WAGES

The exploitation of labourers in India became a norm at one point in history. Be it the Mughal
period or the British rule, the labourers have always suffered economically as well as
socially. To improve the situation of the labourers in the country, the State strives to
eliminate poverty. By fixing the minimum wages for the labourers, the State tries to achieve
the social objective of eradicating poverty of the labourers by guaranteeing a minimum
remuneration for the work done, as well as the economic objective of motivating the workers
to put in maximum efforts for maximum benefits. These benefits include, but are not limited
to, the following:

1. Protecting workers from exploitation – By providing a minimum wage for a fixed

number of hours, the exploitation of the workers shall be reduced to a great extent.

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2. Ensuring a basic income – Minimum wages are fixed and revised based on
adequate living standards. Thus, fixing minimum wages for the workers shall
ensure a basic income for them.

3. Reducing income inequality – The disparity in income can be reduced by fixing

the minimum wages of the workers.

4. Promoting economic stability – Fixing minimum wages for the workers shall
provide a way to promote economic stability by improving the standard of living.

5. Setting labour standards – By reducing the exploitation of workers, the standard of

work would improve to a great extent.

6. Addressing poverty – Fixing minimum wages of the employees paves the way for
poverty eradication by encouraging more people to undertake work of any kind.

HISTORY OF MINIMUM WAGES

With the onset of the Industrial Revolution, the gap between the rich and the poor became
wider. The poor were forced to work in factories and establishments to sustain themselves.
This was the period when the need to have a law to protect the workers was felt. The
Industrial Revolution in India arrived as late as 1854 when India was still a colony of the
British. The first discussion in India regarding minimum wages followed its international
counterpart, i.e., the Draft Convention adopted at the International Labour Conference, 1928,
in the form of the Royal Commission on Labour. The Commission pointed out the need to
adopt a structured wage system for the labourers. The question of wage-fixing machinery was
again raised at the third and fourth meetings of the Standing Labour Committee held in 1943
and 1944 respectively. Lastly, the Minimum Wages Bill was introduced in 1946 and enacted
in 1948.

OBJECTIVES OF MINIMUM WAGES ACT, 1948

The main objectives of the Minimum Wages Act, 1948 are as follows:

1. To fix and revise the minimum wages to be paid by the employer to the employees
in certain employments;

2. To fix an adequate minimum wage for all employees in the interest of the public;

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3. To fix the daily working hours of an employee according to the employment type;

4. To prevent exploitation of the workers;

5. To resolve any issues pertaining to the non-payment or less payment of wages;

6. To establish and provide the powers and duties of inspectors;

7. To establish and provide the powers and duties of labour commissioners and other
important labour officers;

8. To provide the powers to make rules to the appropriate government.

APPLICATION OF MINIMUM WAGES ACT, 1948

The Minimum Wages Act, 1948, is applicable to the whole of India as provided
under Section 1 of the Act. The appropriate government may fix minimum wages for
scheduled employment if more than one thousand employees are employed in the given
industry in the whole State, as provided under Section 1A of the Act. However, it is pertinent
to note that this is not a mandatory condition for the application of the Act. The appropriate
government may fix and revise minimum rates of wages for employment wherein less than
one thousand employees are employed.

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FEATURES OF THE ACT

1. FIXING OF MINIMUM RATES OF WAGES.

Section 3 of the Act provides for fixing minimum wages in certain employments
where labour is ignorant or less organised and is vulnerable to exploitation. It aims to
prevent "sweated labour and exploitation of the labour." Wage rates under this act are
fixed and notified by the Central and State Governments in their respective spheres.

The Government may review the minimum rates of wages and revise the minimum
rates at intervals not exceeding five years.

The appropriate Government may fix a minimum rate of wages for time and for piece
rate. However different wage rates may be fixed for different scheduled employments,
different classes of work in the same scheduled employment, for adults, adolescents,
children and apprentices and for different localities and for any one or adults,
adolescents, children and apprentices and for different localities and for any one or
more of the wage periods, viz., by the hour or by the day or by the month or by such
larger period.

2. MINIMUM RATE OF WAGES.

This Act provides for the fixation of-

a. a minimum time rate of wages;

b. a minimum piece rate;

c. a guarantee time rate; and

d. an overtime rate, for different occupations, localities or classes of work and for
adults, adolescents, children and apprentices.

Any minimum rate of wages, fixed or revised, may consist of-

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a. a basic rate of wages and a special allowance.
b. a basic wage rate with or without cost of living allowances and the cash value
of concessions in respect of supplies of essential commodities at concessional
rates.
c. an all inclusive rate allowing for the basic rate, the cost of living allowance and
the cash value of concessions.

These provisions have been made under section 4 of the Minimum Wages Act, 1948.

3. WAGES IN CASH OR KIND.

Minimum wages payable under this Act are to be paid in cash, as provided under
section 11(1). The payment of minimum wages can be made wholly or partly in kind
by notification in the official Gazette if it is customary to pay wages wholly or partly
in kind. Hence, there is provision under section 11 for appropriate government to
allow the payment of wages in kind in particular cases.

4. ADVISORY BOARD FOR FIXING AND REVISING OF MINIMUM WAGES.

The appropriate Government may appoint an advisory Board for advising it, generally
in the matter of fixing and revising minimum rates of wages under section 7 of the
Act.

The Central Government may appoint a Central Advisory Board for the purpose of
advising the Central and State Governments in the matters of the fixation and revision
of minimum rates of wages. The Central Advisory Board may consist of persons to be
nominated by the Central Government representing employers and employees in the
scheduled employments, in equal number and independent persons not exceeding one
third of its total number of members. One of such independent persons would be
appointed chairman of the Board by the Central Government.

5. FIXING HOURS FOR NORMAL WORKING DAY

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In regard to any scheduled employment, minimum rates of wages in respect of which
have been fixed under this Act, the appropriate Government may-

a. fix the number of hours of work which shall constitute a normal working day
inclusive of one or more specified intervals.
b. employees or to any specified class of employees and for the payment of
remuneration in respect of such days of rest.
c. Provide for payment for work on a day of rest at a rate not less than the overtime
rate.

6. PROVISION OF OVERTIME.

If any employee whose minimum rate of wages is fixed under the Act works on any
day in excess of the number of hours constituting normal working day, then under
section 14, the employer is required to pay him at the overtime rate fixed under this
Act or under any law of the appropriate Government for the time being in force
whichever is higher.

7. WAGES FOR TWO OR MORE DIFFERENT CLASSES OF WORK.

If an employee does two or more classes of work to each of which a different rate of
wages is applicable, the employer is required to pay to such employee in respect of
the time respectively occupied in each such class of work, wages at not less than the
minimum time rate in respect of each class.

8. MAINTENANCE OF RECORDS.

Every employer is required to maintain such registers and records giving particulars
of employees, the work performed by them, the wages paid to them, the receipts given
by them and any other required particulars, as under section 18.

9. CLAIMS.

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The appropriate Government may appoint Labour commissioner or any other officer
with experience as a judge of a civil court or as a stipendiary Magistrate to hear and
decide for any specified areas, all claims arising out of the payment of less than the
minimum rates of wages as well as payment for days of rest or for work done."

10. PENALTIES

Any employer who contravenes any provision of this Act shall be punishable with
imprisonment for a term, which may extend to six months or with fine, which may
extend to five hundred rupees or with both."

CONSTITUTIONALITY OF MINIMUM WAGES ACT, 1948

The constitutionality of the act has been challenged on the grounds of violation of article
14 and article 19 of the constitution in the following cases:

BIJAY COTTON MILLS LTD. V. STATE OF AJMER (1954)1

In this case, there was an industrial dispute between the employers and employees of the mill
regarding the enhancement of wages. The dispute was taken to the Industrial Tribunal, which
dismissed the petition of the employees, stating that the financial capacity of the mill
precludes the enhancement of wages for the workers. An appeal was preferred before the
Appellate Tribunal. Meanwhile, the Government of Ajmer implemented the provisions of the
Act and prescribed the minimum wages for industries in Ajmer. The Appellate Tribunal
remanded the case and the final award of the Industrial Tribunal was passed, wherein the
basis on which the minimum wages were fixed was rejected by the Tribunal. The minimum
wages fixed by the Commissioner were challenged by various industries on the ground that
the Act itself was violative of Article 19(1)(g) of the Constitution, as the employers were
unable to carry out their businesses due to the condition of paying the minimum wages.

The Hon’ble Supreme Court of India, rejecting the contention of the employers, held that the
Minimum Wages Act, 1948, is not violative of the right to freedom of trade, as it has been
implemented as a part of the Directive Principles of State Policy, specifically under Article

1
Bijay Cotton Mills Ltd. v. State of Ajmer, (1954) 2 SCC 439

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43 of the Constitution. While it may be difficult for certain employers to start their business
while complying with the payment of minimum wages, the provisions of the Act have been
adopted keeping the larger interests of people in mind. Thus, the Act was held to be
constitutional.

BHIKUSA YAMASA KSHATRIYA V. SANGAMNER AKOLA TALUKA BIDI KAMGAR

UNION (1958)2

In this case, the validity of the Minimum Wages Act, 1948, was again challenged before the
Hon’ble Bombay High Court. There were various claims under Section 20 of the Act on the
applicability of minimum rates of wages in certain districts of the State of Bombay. Inter
alia other contentions, the employers challenged the validity of the Act on the grounds that it
was violative of Article 14 and Article 19(1)(g) of the Constitution and that the State of
Bombay did not follow the requisite procedure for determining the minimum rates of wages.

Rejecting the contentions of the employers, the Court held that the petitioners failed to
establish that the requisite procedure was not followed by the State of Bombay while
determining and revising the minimum wages and that the provisions of the Act were
violative of Article 14 or Article 19(1)(g) of the Constitution.

N.M. WADIA CHARITABLE HOSPITAL & ORS. V. STATE OF MAHARASHTRA &

ORS. (1986)3

In this case, the State of Maharashtra appointed a committee to advise on the matter of the
revision of the minimum wages payable to hospital employees. However, the government did
not adopt the rates of wages recommended by the committee in its report but rather adopted a
higher rate of minimum wages. The notification was challenged by the petitioners on the
ground that there was no application of mind by the government.

It was held by the Court that fixing different rates of minimum wages for different localities
was permissible under the Act and did not violate any provisions of the Constitution.

2
Bhikusa Yamasa Kshatriya v. Sangamner Akola Taluka Bidi Kamgar Union, 1963 Supp (1)
SCR 524
3
N.M. Wadia Charitable Hospital v. State of Maharashtra, 1986 SCC OnLine Bom 392

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RECENT JUDICIAL PRONOUNCEMENTS

MOHD IMRAN AHMAD V. GOVERNMENT OF NCT OF DELHI & ANR. (2023)4

In this case, the petitioner filed a Public Interest Litigation (PIL) against the Government of
NCT of Delhi under Article 226 of the Constitution, praying for the issue of a writ of
mandamus. The Government of Delhi maintains a job portal where several vacancies are
posted. It was the case of the petitioner that the jobs posted under the portal were not in
compliance with the provisions of the Minimum Wages Act, 1948, as well as notifications
fixing minimum wages notified by the Government of Delhi. The portal allowed employers
to post advertisements regarding vacancies.

The Court directed the Government of the NCT of Delhi to not allow any advertisements that
are not in compliance with the provisions of the Minimum Wages Act, 1948.

ASSISTANT PROVIDENT FUND COMMISSIONER V. M/S G4S SECURITY

SOLUTIONS (INDIA) LTD. & ANR. (2023)5

In this case, the Assistant Provident Fund Commissioner preferred an appeal against the order
passed by the Hon’ble Punjab and Haryana High Court which stated that the basic wages
under the Employee Provident Fund Act, 1952, are not required to comply with the minimum
wages fixed under the Minimum Wages Act, 1948. The appellant contended that for the
purpose of determining the liability of the employer towards the employee’s provident fund,
the employers have deliberately reduced the basic wages below the minimum wage so as to
evade liability.

However, the Hon’ble Supreme Court rejected this contention and upheld the order of the
Hon’ble High Court, stating that there is no need to equate the basic wages under the EPF Act
with the minimum wages under Section 4 of the Minimum Wages Act, 1948.

4
Mohd. Imran v. State (NCT of Delhi), 2022 SCC OnLine Del 855
5
Provident Fund Commr. v. Group 4 Security Guarding Ltd., 2023 SCC OnLine Del 6616

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KARNATAKA GENERAL LABOUR UNION V. UNION OF INDIA & ORS. (2023)6

In this case, the Labour Union was seeking relief against the retrenchment of contractual
employees as well as non-payment of wages. Several cases were filed under the Minimum
Wages Act, 1948, to obtain relief through conciliation. In the conciliation proceedings, the
conciliator directed the respondent to maintain the status quo. As the respondent refused to
do so, the conciliation proceedings failed. The case was presented before the Hon’ble
Karnataka High Court.
The Labour Union contended that the respondents were bound by the undertaking given to
the conciliator, and violation of the same must not be tolerated. On the other hand, the
respondents claimed that the Labour Union misrepresented themselves as permanent
employees of the respondents, and hence the case must be dismissed.

While remanding the case to conciliation proceedings, the Court highlighted the importance
of conciliation proceedings in industrial disputes. The Court also directed the conciliator to
settle the issue regarding the payment of minimum wages to the workers.

6
WP 9465/2022 (Karnataka HC)

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CONCLUSION

The Minimum Wages Act, 1948, is a pivotal piece of legislation under the labour laws of
India. It provides a guarantee of minimum remuneration for the work done by the employee.
Both the Central Government and the State Governments are appropriate governments under
the Act, as labour law is a subject under the Concurrent List. Accordingly, both governments
can fix and revise minimum wages according to the requirements of the employees falling
thereunder. Moreover, the State Governments can also make amendments to the Act for
application in their respective States.

Apart from providing provisions for minimum wages, the Act also contains provisions
relating to the fixation of work hours, providing a day off after six days of work, provision
for minimum wages for overtime, etc. This ensures that not only the economic interests but
also the social interests of the labourers are protected.

The Parliament has enacted the Code on Wages, 2019, which shall repeal and replace the
Minimum Wages Act, 1948, to consolidate all the laws related to wages into one code.
However, the Code has not been enforced yet. The Code will bring along certain important
changes, as has been discussed in the article. The implementation of the Code is expected to
overcome the lacunae and inconsistencies in all the labour legislations relating to wages.

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BIBLIOGRAPHY

1. Introduction to Labour and Industrial Laws, Avtar Singh (4th ed., 2017)

2. Handbook on Labour Wage Code, Saurabh Munjal, Vaibhav Munjal (1st ed., 2021)

3. Labour and Industrial Laws, S.N. Mishra (29th ed., 2019)

4. Labour and Industrial Laws, K.M. Pillai (16th ed., 2015)

5. Textbook on Labour and Industrial Laws, Dr. H.K. Saharay (7th ed., 2017)
6. Ipleaders

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