CONCEPT OF WAGES

1. Minimum Wage:
Definition:
The minimum wage is the wage which an employer is legally required to pay to workers
employed in scheduled employment under the Minimum Wages Act, irrespective of the
employer’s capacity to pay.
Key Features:
• Must be paid at all costs.
• Independent of:
o Financial condition of the employer
o Profit of the firm
• Fixed by the appropriate government.
• The wage must be fair.
CaseLaw:
Kamani Metals & Alloys vs. Workman (1967)
Principles Laid Down:
1. Minimum wages must be paid under the Act irrespective of:
o (a) Employer’s financial condition
o (b) Profit of the firm
2. Such wages must be fair.

2. Living Wage:
Definition:
A living wage covers not only basic needs (food, clothing, shelter) but also ensures comfort
and security for the worker and their family.
Components:
• Basic Needs + Comfort
o (a) Education
o (b) Health
o (c) Future savings
Extended Needs:
• Education for children
• Insurance against accidents/illness
• Provision for old age/misfortunes
• Social needs and benefits
Determined by:
• National Income
• Paying capacity of the industrial sector

3. Fair Wage:
Definition:
A wage level that lies between minimum wage and living wage. It is more than minimum
wage but less than a living wage.
Characteristics:
1. Decided by the appropriate government.
2. Varies by region due to cost of living differences.
o E.g., Cost of living in Mumbai ≠ Jharkhand
3. Linked to capacity of the industry to pay.
4. Lower limit = Minimum wage
Upper limit = Industry's capacity to pay
Case Law:
Sangam Press vs. Workmen
Court Observations:
• Minimum Wage: Fixed and must be paid irrespective of employer’s capacity.
• Fair Wage: Varies and depends on:
o (a) Employer’s financial capacity
o (b) Financial stability of firm
o (c) Region-specific cost of living

4. Need-Based Minimum Wage:

While not separately defined in your images, this typically refers to:
• Minimum wages determined based on actual needs of a worker and their family.
• It takes into account:
o Basic requirements (food, clothing, shelter)
o Health
o Education
o Other essentials for a dignified living
Need-based minimum wages often serve as a benchmark or guiding principle when
governments revise statutory minimum wages.
Constitutional Validity of the Minimum Wages Act
The Minimum Wages Act, 1948 was enacted to ensure that workers are paid wages sufficient
to maintain a basic standard of living. However, its constitutional validity has been challenged
multiple times on the grounds that it infringes upon certain fundamental rights guaranteed
by the Indian Constitution. The following constitutional articles and case laws are pivotal in
understanding its validity:

Relevant Articles of the Indian Constitution Referred:

1. Article 19(1)(g) – Freedom of trade and profession
2. Article 19(6) – Reasonable restrictions on fundamental rights
3. Article 14 – Right to equality
4. Article 43 – Directive Principles of State Policy (DPSP) on living wages
 5. Article 23 – Prohibition of forced labour

Article 19(1)(g) – Freedom of Trade and Profession

• Employer’s Argument: Employers claimed that the imposition of minimum wages led
to losses and violated their right to carry on any occupation, trade, or business freely
under Article 19(1)(g).
• Constitutional View: Article 19(1)(g) guarantees freedom of trade and profession but
is subject to reasonable restrictions under Article 19(6).

Article 19(6) – Reasonable Restrictions

• The restrictions imposed by the Minimum Wages Act are considered reasonable and
in public interest.
• They are meant to protect the general welfare of workers and maintain public order.
• Case Law – Shamrao vs. Bombay: The court upheld that the restrictions imposed by
the Minimum Wages Act did not infringe Article 19(1)(g) as they were reasonable and
necessary for social justice.

Article 14 – Right to Equality

• The Minimum Wages Act does not violate Article 14 despite variation in wages across
regions and sectors.
• Wage boards consider multiple factors:
1. Industry's capacity to pay
2. Needs of a family (calories, clothing, shelter, education, medical aid)
3. Regional differences in:
▪ Cost of living
▪ Industrial development
▪ Consumption patterns
• Conclusion: Due to these regional and sectoral differences, a uniform minimum wage
is impractical and does not amount to inequality.
• Case Law – Bhikusa Yamasa Kshatriya vs. Aloka Bidikangar Union: The Supreme Court
upheld that such differentiation did not violate Article 14.

Article 23 – Prohibition of Forced Labour

• Non-payment or underpayment of minimum wages amounts to ‘forced labour’, which
is prohibited under Article 23.
• Supreme Court’s View: ‘Forced labour’ may include compulsion arising from hunger,
poverty, want, and destitution.
• Thus, payment below the minimum wage is unconstitutional and inhumane.

Article 43 – Directive Principles of State Policy (DPSP)

 • Article 43 directs the State to ensure that workers are paid living wages and have
decent conditions of work.
• Though not enforceable in court, this provision guides the government in making laws
like the Minimum Wages Act.
• Significance: The Act is a step towards fulfilling the DPSP under Article 43 and supports
the broader constitutional vision of social justice.

Conclusion
The Minimum Wages Act, 1948 stands constitutionally valid due to the following reasons:
1. It imposes reasonable restrictions under Article 19(6).
2. It upholds the principle of equality under Article 14 by allowing necessary distinctions
based on rational criteria.
3. It prevents forced labour as per Article 23.
4. It advances the Directive Principles in Article 43 promoting socio-economic welfare.
The judiciary, through various judgments, has consistently upheld the Act’s validity,
recognizing it as an essential legislative tool for protecting workers' rights and achieving the
constitutional goal of a welfare state.
rocedure for Fixation and Revision of Minimum Wages (Sections 3–5 of Minimum Wages Act,
1948)

Section 3: Fixation and Revision of Minimum Wages

1. Responsibility of Government
• It is the responsibility of the appropriate government (Central or State) to fix
and revise minimum wages.
• The government must set a specific yardstick to determine wages.

2. Applicability
• Applies to employees in scheduled employment (as listed in Part 1 & 2 of the
Schedule).
• Central Govt – For MRPO.
• State Govt – For Part 2, including agriculture.

3. Review Period
• Wages must be reviewed and revised at intervals not exceeding 5 years.

4. Exemption Clause
• As per Section 3(1A), if the number of employees in a scheduled employment
is less than 1000, the government need not initiate revision.
5. Types of Minimum Wages Fixation (Section 3(2))

Appropriate government can fix wages based on:

• (a) Minimum piece rate
• (b) Minimum time rate
• (c) Overtime rate (for work done beyond normal hours)
• (d) Guaranteed time rate (if piece rate yields less than minimum time rate)

6. Wage Differentiation Factors

When fixing wages, the government can vary rates based on:
• (A) Type of work (skilled, unskilled, clerical, manual)
• (B) Scheduled employment type
• (C) Locality
• (D) Category of person (apprentices, children, adolescents, adults)

7. Wage Periods (Section 3(3))

Wages may be fixed for:

• (a) Month
• (b) Day
• (c) Hour
• (d) Any other larger wage period

Section 4: Components of Minimum Wages

When fixing or revising wages, the following components are considered:

1. Basic Wage
• Fixed wage component paid for work done.

2. Allowances
• Dearness Allowance (DA) – Adjusted with cost of living index.
• Special Allowances.

3. Comprehensive Wage Rate

• Can also be an all-inclusive rate, covering:
• Basic wages
• Cash value of concessions (e.g., food, clothing)
• Other benefits
 NOTE: Cost of living allowances revised twice a year (April 1st and October 1st).

Section 5: Procedure for Fixation/Revision of Wages

The appropriate government may adopt either of the two methods:

1. Committee Method [Sec 5(1)(a)]

• Government appoints committees and sub-committees to:
• Conduct inquiry
• Advise the government
• After reviewing their advice, the government can fix or revise wages through
notification in the official gazette.

Case Law: Edward Mills Co. vs. Ajmer

• Committee under Sec 5 is advisory only, not binding on government.

Committee Composition [u/s 9]:

• (a) Equal number of employer and employee representatives.
• (b) 1/3rd members must be independent.
• (c) One independent member shall be appointed as Chairman.

2. Notification Method [Sec 5(1)(b)]

• Government publishes proposal in the official gazette.
• Proposal must be shared with affected persons.
• Government must specify a date (minimum 2 months notice) for considering
the proposal.

Final Notification:

• New wage rate comes into effect from the specified date.
• If no date is specified, it comes into effect 3 months after the notification.
Fixation of Minimum Rates of Wages by Time Rate or Piece Rate

(As per Sections 13 to 19 of the Minimum Wages Act, 1948)

Section 13: Fixing Hours for a Normal Working Day

• Authority: The appropriate government is empowered to fix:
• Working hours for a normal working day.
• Rest intervals.
 • Weekly holidays.

Key Provisions:
1. Adult workers in factories:
• Maximum: 48 hours per week.
• One weekly holiday must be given.
2. If employee works on a holiday:
• Employer must compensate with either:
• Compensatory holiday, or
• Overtime wages as fixed by the government.

Section 14: Overtime Rate

If a worker works more than the fixed hours:

• The worker is entitled to overtime wages.
• Overtime is applicable when:
• Work exceeds normal working hours, or
• Work exceeds 48 hours a week.

Key Point:
• Overtime wage rate = Twice the normal wage rate.

Section 15: Wages of Workers Who Work for Less Than Normal Day

If a worker works less than normal hours:

1. Due to employer’s fault (e.g., no work assigned):
• The worker is entitled to full wages for the day.
2. Due to worker’s own fault:
• The worker is not entitled to full wages.

Section 16: Wages for Two or More Classes of Work

If a worker performs multiple types of work with different wage rates:

• Employer must:
• Pay each wage rate separately for the hours worked in each class.
• Avoid combining and averaging the wage rate.

Section 17: Minimum Time Rate Wages for Piece Work

• If piece-rate wages are fixed and a minimum time rate is also applicable:
 • Worker must be paid at least the minimum time rate if their earnings are lower
on a piece-rate basis.
• This ensures fair compensation regardless of quantity output

Section 18: Employer’s Duty to Maintain Registers

Employers must maintain a register with the following details:

• (a) Names of employees.
• (b) Work performed.
• (c) Wages paid.
• (d) Receipts signed by employees.

Ensures transparency and verifiability of wage payments.

Section 19: Inspectors

Appointment:
• Inspectors are appointed by the appropriate government.

Powers and Duties:

1. Visit establishments during reasonable hours.
2. Examine employers and employees.
3. Supervise wage payment.
4. Demand production of relevant documents.
5. Seize or copy records if required.
6. Exercise any power necessary to ensure compliance with the Act.

Inspectors are deemed public servants under the Indian Penal Code.
rocedure for Hearing and Deciding Claims

(Sections 20–25 of the Minimum Wages Act, 1948

Section 20 – Claims

➤ Purpose:

If an employee does not receive minimum wages, overtime wages, or compensatory leave as
prescribed, he/she may file a claim.

➤ Time Limit:
• Claims must be filed within 6 months from the date wages became payable.
 • Delay beyond 6 months is permitted if sufficient cause is shown.

➤ Authorities Appointed:

The appropriate government can appoint any of the following to hear claims (via notification
in the official gazette):
1. Labour Commissioner
2. Any officer with experience as a civil judge
3. Stipendiary Magistrate (now replaced with District Judge in 2000)

➤ Who Can File the Application:

1. The employee himself
2. His advocate
3. Official of a registered trade union
4. Inspector
5. Any authorized person

Procedure After Application

1. Hearing:
• The authority gives both employee and employer a chance to be heard.
2. Inquiry:
• Further inquiry can be made by the authority.
• Authority’s directions are final.
3. If underpaid:
• Calculate the deficit between actual and minimum wages.
• Authority may order:
• Deficit amount +
• Compensation (max 10x the deficit)
4. If other violations (e.g., denial of overtime/leave):
• Compensation up to Rs. 10 may be awarded.
5. Malicious/Vexatious Claims:
• If claim is false, penalty up to Rs. 50 may be imposed in favor of employer.
Section 21 – Single Application for Multiple Workers
• Allows group claims (like class action).
• One application can cover multiple employees.
• Useful when many workers are affected by the same issue.
Section 22 – Penalties for Certain Offences

➤ Punishable Offences:
1. Paying less than minimum wage.
 2. Violating rules under Section 13 (e.g., working >48 hrs/week without break).

➤ Penalty:
• Imprisonment up to 6 months or
• Fine up to ₹500 or both.
• Court must consider compensation already awarded while imposing a fine.
Section 22A – General Provision for Other Offences
• For any other violation of the Act (not specifically mentioned).
• Penalty: Fine up to ₹500.
Section 22B – Cognizance of Offences
• Court cannot take cognizance of a case on its own.
• Court will only act if a claim was first filed under Section 20.

➤ Special Provisions:
• For complaints under Section 13 (e.g., working hours), inspector’s sanction is
required.
• Complaint must be filed within:
• 1 month after obtaining sanction (under Sec 13).
• 6 months if under Section 22A

Section 22C – Offences by Companies

• If an offence is committed by a company:
• All persons in charge at the time will be deemed guilty.

➤ Exception (Proviso):
• Not guilty if the person proves:
• (a) It happened without his knowledge, or
• (b) He exercised due diligence.

Section 22E – Protection Against Attachment of Assets

• Any security deposit made with the government (for contract compliance)
cannot be attached by any court for:
• Debt or liability unrelated to the said contract.
• Other claims not connected to employees under the contract.
Section 23 – Exemption of Employer from Liability
• If an employer is charged, he can prove another person was responsible.
• That person will be prosecuted if the court accepts the claim
 Section 24 – Bar of Suits

No civil court shall entertain a suit to recover wages if:

• (a) The claim has already been made under Section 20.
• (b) Relief was granted under Section 20.
• (c) It has already been adjudicated.
• (d) It could have been recovered under Section 20.