Minimum Wages

Act, 1948
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 benefits 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.
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.
Need for minimum wages

Protecting Ensuring Reducing Promoting Setting Addressing

Protecting workers Ensuring a basic Reducing income Promoting Setting labour Addressing poverty
from exploitation – income – Minimum inequality – The economic stability – standards – By – Fixing minimum
By providing a wages are fixed disparity in income Fixing minimum reducing the wages of the
minimum wage for and revised based can be reduced by wages for the exploitation of employees paves
a fixed number of on adequate living fixing the minimum workers shall workers, the the way for poverty
hours, the standards. Thus, wages of the provide a way to standard of work eradication by
exploitation of the fixing minimum workers. promote economic would improve to a encouraging more
workers shall be wages for the stability by great extent. people to
reduced to a great workers shall improving the undertake work of
extent. ensure a basic standard of living. any kind.
income for them.
 Objectives of Minimum Wages Act, 1948

To fix and revise the

To fix an adequate To fix the daily working
minimum wages to be
minimum wage for all hours of an employee To prevent exploitation
paid by the employer to
employees in the according to the of the workers;
the employees in
interest of the public; employment type;
certain employments;

To establish and
To resolve any issues provide the powers and To provide the powers
To establish and
pertaining to the non- duties of labour to make rules to the
provide the powers and
payment or less commissioners and appropriate
duties of inspectors; other important labour
payment of wages; government.
officers;
Important definitions

• Since labour law is a subject under the Concurrent List in

the Seventh Schedule to the Indian Constitution, both the Central
Government and the State governments are authorised to legislate
on the subject. Section 2(b) of the Act defines an appropriate
government. In relation to industries such as railways, oilfields,
major ports, or any establishment under central legislation, the
Central government is the appropriate government. In every other
industry, the State government is the appropriate government for
the purpose of the Act.
• Cost of Living Index Number
• Section 2(d) of the Act defines the cost of living index number as an
index number as ascertained by the appropriate government in the
Official Gazette in relation to the employees. Under the Act, the
appropriate government determines the scheduled employment, in
respect of which it notifies the minimum wages to be paid by the
employer to the employees. The minimum wages are determined on
the basis of the cost of living index number. The cost of living index
number signifies the cost of a constantly changing standard of living.
 • Section 2(h) of the Act provides an inclusive definition of wages,
including all remuneration capable of being expressed in terms of
money that the employer pays to the employee during the course
of employment. It also includes house rent allowance.
• However, it does not include any accommodation, supply of light,
water, medical attendance, or any other amenity as the
appropriate government may deem fit; any contribution of the
employer towards the Pension Fund or Provident Fund; travel
allowance; defrayed special expense; and any gratuity payable on
discharge of the employee.

Wages • In Workman represented by Secretary v. Reptakos Bret &

Company Ltd. & Anr. (1992), the Hon’ble Supreme Court took into
consideration the Tripartite Committee of the Indian Labour
Conference of 1957. The report of the Committee stated that the
structure of the minimum wage policy has to be nothing more
than at a subsistence level.
• In Municipal Corporation of Delhi v. Ganesh Razak (1995), the
Supreme Court held that the entitlement to minimum wages under
the Act is an existing right of the workman and does not require
any further adjudication than that of the Labour Court.
 • Section 2(i) of the Act defines an
employee as any person who is
engaged to do any skilled or unskilled,
manual or clerical work, in respect of
which minimum rates of wages have
been fixed. It is an important
definition under the Act as it defines
Employee the scope of its application.
• Not all employer-employee relations
are governed by the Minimum Wages
Act. Moreover, not all kinds of
employees would fall under the ambit
of claiming the benefits of minimum
wages fixed by the appropriate
government.
Cost of Living Index Number
• Section 2(d) of the Act defines the cost of living index number
as an index number as ascertained by the appropriate
government in the Official Gazette in relation to the employees.
Under the Act, the appropriate government determines the
scheduled employment, in respect of which it notifies the
minimum wages to be paid by the employer to the employees.
The minimum wages are determined on the basis of the cost of
living index number. The cost of living index number signifies
the cost of a constantly changing standard of living.
Fixing Minimum Rates of Wages
• Sub-section (2) provides that the appropriate government may fix:
• Minimum time rate;
• Minimum piece rate;
• A guaranteed time rate; and
• An overtime rate.
• Sub-section (3) provides the power to the appropriate government to fix different rates of
minimum wages for the following:
• Different scheduled employments;
• Different classes of work in the same scheduled employment;
• Adults, adolescents, children and apprentices; and
• Different localities
• These minimum wages can be fixed either on an hourly basis, by the day, by the month, or by
any other time period as prescribed by the appropriate government.
• Section 4 of the Act provides the minimum rates of
wages.
• Further, Section 5 of the Act provides that the
appropriate government may fix or revise minimum
wages either by appointing committees and sub-
committees or by publishing its proposal for the people
likely to be affected by such proposals in the Official
Gazette.
Standard Vacuum Refining
Company v. Its Workmen (1961)
• the Apex Court held that the following shall be the guiding principles for the determination of minimum
wages by all wage fixing authorities:
• Minimum food requirement must be calculated on the basis of net calorie intake;
• Clothing must be calculated at the rate of 18 yards per person per annum;
• With respect to housing, the rent corresponding to the minimum area provided for under the
Government’s Industrial Housing Scheme should be taken into consideration; and
• Fuel, lighting, and other miscellaneous items of expenditure must constitute 20% of the total minimum
wage.
Later, in Reptakos Brett & Company’s case, the Court added another factor for fixing minimum wages in
addition to the above five. It was held that the education of the children, medical requirements, minimum
recreation, including festivals, etc., and provision for old age, etc. should further constitute 25% of the
total minimum wage.
Airfreight Ltd. v. State of Karnataka
& Ors. (1999)
• The Court held that in cases where the minimum wages
are linked with the cost of living index, the amount paid
on the basis of dearness allowance is not to be taken as
an independent component but rather has to be
considered a part and parcel of the minimum wages.
Advisory board under Minimum Wages Act,
1948
• Section 7 of the Act establishes the Advisory Board. The scope of the
Advisory Board appointed by the appropriate government is the
coordination of the committees and sub-committees established under
Section 5 of the Act and advising the appropriate government on fixing
and revising the minimum wages for Scheduled Employment. A Central
Advisory Board (CAB) shall be established under Section 8 of the Act.
• The Central Government shall establish CAB and appoint its members.
The members shall consist of an equal number of representatives of
both the employers and the employees, along with independent
members nominated by the Central Government. The Chairman of CAB
shall be an independent member. The scope of work of the CAB is to
ensure coordination with the Advisory Board and other matters under
the Act.
Mode of payment of
wages

• All the wages shall be paid in cash only, as provided

under Section 11 of the Act. However, where it has
been a practice to pay the wages in kind, either
wholly or partly, authorisation from the appropriate
government is necessary. This includes concessions
on essential commodities as required.
• Section 12 of the Act provides the manner in which
the employees have to make the payment of the
minimum wages. The provision provides that the
employer shall pay the minimum rates of wages to
every employee working under him within the
prescribed time period.
 Section 13

Fixing hours
for a
normal
working day Section 14 of the Act
Compliance
• Section 18 of the Act mandates the maintenance of records and registers by
every employer under the Act. The records shall contain the particulars of the
employees employed by the employer, the work performed by them, the wages
paid to them, the receipts given by them, and any other information prescribed
by the appropriate government. The employer also has to keep an exhibit of
the factory, workshop, or place where the scheduled employment is carried
out. Such registers and records may be perused by the inspector appointed by
the appropriate government under Section 19 of the Act.
• Every inspector under the Act shall be deemed to be a public servant as
prescribed under the Indian Penal Code, 1860.
Penalty

• For a malicious or vexatious application of a claim under the Act, a penalty of not more than fifty
rupees may be levied on the applicant to be paid to the employer, as has been provided under
Section 20(4) of the Act. Sub-section (5) of Section 20 of the Act provides the mechanism for
recovery of the penalty. If the Authority is a Magistrate, the penalty may be recovered by the
Authority as if it were a fine imposed by the Magistrate. If the Authority is not a Magistrate, the
Authority has to make an application to the Magistrate and the penalty shall be recovered by the
Magistrate as a fine imposed by such Magistrate.
• For employers who have paid less than the minimum wage under the Act, or who are in
contravention of an order passed under Section 13 of the Act, the punishment may extend to a
term of not more than six months or a fine of not more than five hundred rupees may be imposed,
subject to the amount of compensation awarded to the Applicant under Section 20 of the Act.
Exemption from liability in certain cases
• Section 23
• The employer shall make a complaint against such other person before
the Authority under the Act;
• The employer shall bring before the Court such other person upon
whom he places the charge of the offence;
• The employer shall satisfy the Court that due diligence for the
execution of the provisions of the Act was conducted on his behalf;
• The employer shall satisfy the Court that such an offence was
committed by such other person without his knowledge, consent, or
connivance.
• In such cases, the other person shall be convicted for the offence and
the employer shall be discharged.
Constitutionality of Minimum Wages Act,
1948
• Bijay Cotton Mills Ltd. v. State of Ajmer (1954)
• 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 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.
Recent cases
• Mohd Imran Ahmad v. Government of NCT of Delhi & Anr. (2023)
• 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.
The Payment of Wages Act,
1936
Introduction
• The Payment of Wages Act, 1936, is a key piece of labor legislation
in India designed to regulate the payment of wages to certain classes
of employees and to ensure timely, fair payment without unlawful
deductions. Here’s a breakdown of its essential provisions and
objectives:
• Objectives
• The main aim of the Act is to:
• Ensure that employees receive their wages on time.
• Prevent unauthorized deductions from wages.
• Establish a legal framework for the redressal of wage-related
disputes.
Significance
• The Payment of Wages Act, 1936, was one of the earliest labor
laws aimed at protecting wage earners in India, setting a
precedent for subsequent legislation in workers' rights. It
ensures that workers receive their due compensation promptly
and prevents exploitation by restricting arbitrary deductions.
• This Act continues to play a significant role in protecting labor
rights, though modern labor codes and regulations now address
a wider scope of worker protections.
S. 3 Responsibility and Timing of payment of
wages
• Employers are responsible for paying wages to the workers.
• (5) Employers must pay the wages promptly, in establishments
with less than 1,000 workers, wages must be paid before the
seventh day of the month; and in larger establishments, wages
must paid before the tenth day of the month after the wage
period
4. Fixation of wage periods
• It is the responsibility of an employer to fix wage periods and no
wage period shall exceed one month.
7. Deductions which may be made from
wages
• Permissible deductions under the act include:
• Fines: Imposed for specified acts or omissions with prior
approval.
• Absence from Duty: Proportional deductions for days of
absence.
• Damage or Loss: Deductions for any damage or loss caused by
the employee.
• House Accommodation: Deductions for housing provided by the
employer.
• Advances and Loans: Recovery of advances and loans granted
to the employee.
8. Fines
• The employer can only impose fines for acts approved by the
prescribed authority. The details of these acts must be
displayed at the workplace. Before imposing a fine, the
employee must be given an opportunity to explain. It is the
responsibility of the employer to ensure that all fines and their
details are recorded in a register. Furthermore, all fines realized
from the employees must be submitted to the state labour
welfare fund;
• 9. Deductions for absence from duty. Deductions may be made
only on account of the absence of an employed person from the
work.
• 10. Deductions for damage or loss. An employer cannot deduct
more than the actual damage or loss caused by the employee's
negligence. Before making a deduction, the employee must be
given a chance to explain. All such deductions and their details
must be recorded in a register.
• 11. Deductions for services rendered. A deduction shall not be
made from the wages of an employed person unless the house-
accommodation has been accepted by him and such deduction
shall not exceed an amount equivalent to the value of the
house-accommodation amenity supplied.
13A. Maintenance of registers and records.
• Employers must maintain records of their employees’ wages,
including details such as work performed, deductions, and
receipts. They are required to keep all necessary registers and
records for three years after the last entry

• Also refer to code of wages 2019.