MINIMUM

WAGES ACT
1948
 GROUP 14
1. Ekagrata Katyal 5383
2. Srishant Singh 5384
3. Daksh Koul 5387
4. Dhruv Gupta 5390
5. Nidhish Sharma 5391
6. Sapna Arya 5396
 INTRODUCTION

The Minimum Wages Act of 1948 is a cornerstone of India’s

labor laws, aimed at protecting workers from exploitation
by ensuring fair wages. Enacted soon after independence, it
empowers governments to set and revise minimum wage
rates across various sectors, ensuring a basic standard of
living for all workers. Covering both organized and
unorganized sectors, the Act promotes economic justice,
industrial harmony, and social equity, making it vital for
safeguarding the rights and dignity of labor in India.
 DEFINITON
The Minimum Wages Act, 1948 is a legislative framework designed to
safeguard workers by mandating the lowest permissible wage rates across
various industries and sectors. It defines "minimum wage" as the statutory
baseline remuneration that employers must pay, encompassing basic pay and
any applicable allowances.
 ENSURE MINIMUM
LACK OF CLARITY
OBJECTIVES OF THE ACT WAGE

PREVENT
The Minimum Wages Act, 1948 was initially inspired by the LACK OF CLARITY
EXPLOITATION
findings of the “Royal Commission on Labour” in the 1930s,
which highlighted the severe economic disparity faced by
workers in India. This historical commission laid the LIVING
groundwork for wage regulation by revealing the need for LACK OF CLARITY
STANDARDS
legal minimum wages to improve workers' living conditions,
making the Act a direct response to the social and economic
issues identified decades earlier.
REDUCE WAGE
LACK OF CLARITY
INEQUALITY
 SCOPE AND APPLICABILITY
SCOPE :
Prevents worker exploitation by setting minimum wages for certain employments.
Applies to all sectors listed by Central and State Governments (e.g., agriculture,
manufacturing, construction).
Covers all types of workers: skilled, unskilled, manual, clerical, in public and private
sectors.

APPLICABILITY :
Applicable nationwide to employees in scheduled employments.
Minimum wages are set and revised regularly based on factors like work type, hours, and
location.
State Governments can set different wages based on local conditions.
 WAGE FIXATION PROCESS UNDER THE
WAGE FIXATION PROCESS MINIMUM WAGES ACT, 1948

Government appoints committees or NOTIFICATION

Proposed wage rates are published for
APPOINTMENT OF
advisory boards AND OBJECTIONS: public objections or suggestions.
COMMITTEES:

After considering feedback, the

FACTORS Cost of living, standard of living are
FINAL
government finalizes and notifies the
CONSIDERED: evaluated to determine wages.
minimum wages.
DECISION:

Wages are set for different employment

Wages are reviewed and revised at
CLASSIFICATION: categories (skilled unskilled, semi-skilled) PERIODIC intervals not exceeding five years.
sectors. REVIEW:
WAGE BOARD AND COMMITTEES :

Advisory Boards and Committees: Composition of Wage

Advisory Boards: These are established by both the Central and Committees:
State governments. Their main function is to advise the
government on matters related to fixing and revising minimum
wages.
Committees usually consist of an equal number of
Committees/Sub-committees: The government may also form representatives from the employer and employee sides.
specific committees or sub-committees for different sectors to The government appoints independent members to chair
recommend wage rates based on various criteria. These may the committee and ensure impartiality.
include different kinds of workers and industries.

Fixing and Revising Minimum Wages: Criteria for Fixing

Wages are fixed either by a committee method or a Minimum Wages:
notification method.
Committee Method: A committee is set up, consisting of Cost of living
representatives from employers, employees, and Sector-specific conditions
independent persons. This committee conducts studies, Skills and responsibilities
collects data, and recommends wage levels. Geographical considerations
Notification Method: The government may directly fix
wages and issue a notification specifying the rates.
 Penalties for specific offenses:
Non-payment of minimum wages: Employers who pay employees less than the minimum rates fixed for their
class of work or the amount due under the Act can be punished with imprisonment of up to six months, a fine
of up to five hundred rupees, or both.
Contravening rules or orders: Employers who violate any rule or order made under Section 13 of the Act can
also be punished with imprisonment or a fine, or both.
other offenses: For any other violation of the Act or its rules, employers can be punished with a fine of up to
five hundred rupees.

Additional considerations:
Compensation: In addition to the penalties, employers may be required to pay compensation to affected
employees.
Cognizance of offenses: Certain offenses under the Act are cognizable, meaning the police can arrest an
offender without a warrant.
Offenses by companies: If a company commits an offense under the Act, the company as well as its officers
who are in charge of its affairs can be held liable.
 Impact on Workers:
Increased Income: The most direct benefit for workers is a higher income. This can improve their standard of living,
allowing them to afford necessities like food, housing, and healthcare.
Reduced Exploitation: Minimum wages help protect workers from exploitation by ensuring that they are paid a fair
wage for their labor.
Improved Job Satisfaction: Workers may experience increased job satisfaction when they feel their work is valued and
compensated fairly.
Increased Consumer Spending: Higher wages can lead to increased consumer spending, which can boost the overall
economy.

Impact on Employers:
Increased Labor Costs: The most significant impact on employers is increased labor costs. This can reduce profits,
especially for businesses with low margins.
Reduced Employment Opportunities: Some studies suggest that higher minimum wages can lead to reduced
employment opportunities, particularly for low-skilled workers. However, the evidence on this is mixed.
Increased Productivity: Higher wages can motivate workers to be more productive, which can offset some of the
increased labor costs.
Improved Employee Morale: Paying workers a fair wage can improve employee morale and reduce turnover costs.
 ENFORCEMENT MECHANISM

Inspection & Audits

Payment of Back
Wages

Complaints and
Complaints Grievanc
Grievances

Penalties for Non-

Legal Proceedings
Compliance
 CHALLENGES
Addressing Disputes: Employers should establish grievance redressal mechanisms to address
employee complaints related to wages. This helps in resolving disputes amicably and
ensuring fair treatment.

Awareness and Education: Both employers and employees must be aware of the provisions of
minimum wage laws and their implications. Regular training and communication can help in
better understanding and compliance.

Ensuring Compliance: Employers should review their wage structures and ensure that all
eligible employees receive at least the minimum wage prescribed for their category. This
includes updating wage rates periodically based on government revisions.
 Bijay Cotton Mills Ltd. vs
The State of Ajmer (1954)

ISSUE RULING IMPACT

The core issue in Bijay Cotton The Supreme Court upheld the The judgment affirmed the state's
Mills Ltd. v. The State of Ajmer constitutional validity of the role in regulating wages to protect
was whether the Minimum Wages Minimum Wages Act, 1948. The workers from exploitation, ensuring
Act, 1948, violated the Court ruled that the Act was fair compensation. It laid down a
fundamental right of employers to enacted to safeguard the welfare of crucial precedent for labor law,
conduct business under Article workers, ensuring they earned a emphasizing that economic interests
19(1)(g) of the Indian Constitution. minimum wage sufficient for basic of businesses cannot override the need
Bijay Cotton Mills argued that the subsistence. It held that the for social justice and protection of
imposition of minimum wages restrictions on the right to conduct workers' rights. This case
limited their ability to operate business were reasonable and strengthened the framework of labor
profitably, and thus, constituted an justified under Article 19(6), which rights in India, ensuring that
unreasonable restriction on their permits the state to impose minimum wage laws were enforceable
freedom to practice any trade or reasonable restrictions on and aligned with constitutional
profession. fundamental rights in the interest of principles.
public welfare.
 Bhikusa Yamasa Kshatriya v. Sangamner Akola Bidi Kamgar
Union (1958)

The key issue was whether the bidi industry, where workers often rolled What the Case is?
ISSUE
bidis from home, came under the scope of the Minimum Wages Act. The
manufacturer argued that the informal work arrangement did not
constitute an employer-employee relationship, questioning the state's
right to fix wages.
Bhikusa Yamasa Kshatriya v. Sangamner
Akola Bidi Kamgar Union (1958) involved
bidi workers seeking enforcement of
minimum wages under the Minimum Wages
The Supreme Court ruled that the bidi workers, even working from home,

SOLUTION were indeed employees under the Act. The Court upheld the state's
Act, 1948. The bidi manufacturer argued
authority to fix minimum wages for such workers, stating that the Act that since most workers rolled bidis from
aimed to protect workers regardless of where the work was performed.
home, the Act shouldn't apply as there was
no formal employer-employee relationship.
The case questioned whether home-based
The judgment significantly expanded the reach of the Minimum Wages workers were entitled to the protections of

IMPACT
Act, ensuring that even workers in informal and home-based industries
were protected. It strengthened labor rights by confirming that minimum
the Act and whether the state had the
wage regulations applied universally, even in less formal work authority to regulate wages in such informal
environments.
work arrangements.
 Narottamdas v. State of Madhya Pradesh (1964)
Narottamdas v. State of Madhya Pradesh (1964) was a case concerning the application of the Minimum Wages Act, 1948.
Narottamdas, a business owner, challenged the state's fixation of minimum wages for his workers. He argued that the wages
set by the government were excessive and affected his ability to conduct business profitably. The case questioned whether
the state’s action was a reasonable regulation under the Minimum Wages Act.

ISSUE SOLUTION IMPACT

The issue was whether the minimum The Court upheld the state’s power The decision strengthened the
wages fixed by the state government to fix minimum wages under the state’s ability to regulate wages and
were excessively high, thereby Minimum Wages Act, ruling that reinforced that protecting workers'
violating the employer’s right to such wage fixation was a reasonable rights and ensuring fair pay were
conduct business under Article 19(1) and necessary measure to protect more important than the financial
(g) of the Indian Constitution. The workers from exploitation. It held concerns of businesses. It set a
employer argued that the state’s that this regulation was a precedent that economic hardship
decision interfered with his ability permissible restriction on the right for employers could not justify
to run a profitable business and to conduct business, as it sought to paying wages below the statutory
imposed an unreasonable burden. ensure workers received a fair, minimum, thus promoting labor
living wage. welfare and social justice.
 The central issue was whether the Minimum Wages Act applied to
workers employed by charitable institutions. The hospital claimed
that its status and financial constraints should exempt it from
minimum wage requirements, while the state argued that the Act’s
protections should extend to all employees, irrespective of their
employer’s nonprofit status.

The Court ruled that the Minimum Wages Act applied to all

N.M. Wadia types of establishments, including charitable ones. It

determined that workers were entitled to fair wages regardless
of their employer's charitable status. The Court highlighted

Charitable that the financial difficulties of a charitable organization did

not justify exemptions from wage regulations designed to
protect workers from exploitation.

Hospital v. State The decision confirmed that the Minimum Wages Act applies

of Maharashtra
universally, including to nonprofit and charitable organizations. It
reinforced the principle that all employees, regardless of the
nature of their employer, are entitled to minimum wage protection.

(1986)
This ruling ensured that charitable institutions must adhere to
wage regulations, thereby safeguarding workers' rights across
various sectors.
 In conclusion, the Minimum Wages Act of 1948 exemplifies
the principles of fairness and equity within the workplace. By
mandating minimum wage standards, the Act ensures that all
employees, regardless of their role or sector, receive fair
compensation for their labor. This aligns with the core tenets

CONCLUSION
of organizational democracy, which emphasize the
importance of equitable treatment and participatory decision-
making in the workplace. The Act’s enforcement across
various industries, including charitable and informal sectors,
reflects a commitment to inclusive governance and the
protection of workers' rights. Through its provisions and
legal precedents, the Minimum Wages Act fosters a more
democratic and just work environment, reinforcing the value
of treating every worker with dignity and respect.