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Minimum Wages Act, 1948
1. Constitutional Context & Legislative Competence
• Labour is a Concurrent Subject under the Seventh Schedule of the Constitution (List III), allowing both the Parliament
and State Legislatures to make laws.
• The Minimum Wages Act, 1948 is one of the foundational labour legislations enacted to secure social justice for
workers and prevent exploitation.
2. Genesis and Rationale
• Enacted by the Parliament of India in 1948 to ensure workers receive fair remuneration and are protected from
exploitative practices.
• Reflects India’s commitment to social welfare and economic justice, particularly for unorganised and vulnerable labour
sectors.
3. Purpose and Policy Intent
• Designed to fix minimum rates of wages in certain “Scheduled Employments”.
• Seeks to ensure a minimum standard of living by guaranteeing wages that fulfill basic physical needs, health, and
comfort.
• The law acts as a protective social instrument aimed at poverty reduction, equitable wage structure, and economic
stabilization.
4. Definition and International Perspective
• As per the International Labour Organisation (ILO):
“Minimum wage” refers to the lowest remuneration that an employer is legally obligated to pay, which cannot
be waived by individual or collective agreements.
• Adopted by over 90 ILO member states, affirming its global significance.
5. Scope and Applicability
• Applicable to all employees engaged in “Scheduled Employments”, as notified by Central or State Governments.
• Applies irrespective of gender—ensures equal remuneration for equal work, thereby promoting non-discrimination.
6. Fixation of Minimum Wages
• The Act empowers:
o Central Government: for employment under its jurisdiction.
o State Governments: for employment under state jurisdiction.
• Wages may vary based on:
o Type of work: Skilled, Semi-skilled, Unskilled.
o Type of location: Urban vs. Rural.
o Nature of employment: Time Rate, Piece Rate, Overtime.
7. Objectives of the Act
• Fixation and periodic revision (every five years) of minimum wage rates.
• Secure adequate living wages in public interest.
• Define daily working hours and rest intervals.
• Prevent economic exploitation of labourers.
• Ensure workers can maintain a decent standard of life.
• Provide penal provisions against defaulting employers.
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• Create advisory boards to recommend wage structures.
• Empower Inspectors to ensure enforcement and compliance.
• Facilitate access to appropriate redressal authorities.
• Enable Central and State Governments to frame subordinate rules and regulations.
Section 1 – Short Title and Extent
• Short Title: The Act is cited as the Minimum Wages Act, 1948.
• Extent: It extends to the whole of India.
The section lays down the nomenclature and territorial applicability. It confirms the nationwide application, ensuring uniform
wage standards across all states and union territories.
Section 2 – Interpretation Clause (Definitions)
This section defines key terms used throughout the Act, establishing clarity and legal precision. These definitions are statutory
and override common meanings.
(a) Adolescent
A person who has completed 14 years of age but not completed 18 years.
(aa) Adult
A person who has completed 18 years of age.
(bb) Child
A person who has not completed 14 years of age.
These classifications are aligned with other labour legislations (e.g., Child Labour (Prohibition and Regulation) Act) and are
crucial for determining eligibility for employment under the Act.
(b) Appropriate Government
Distinction based on jurisdiction of employment:
• Central Government:
o Scheduled employment by or under authority of:
▪ Central Government
▪ Railway Administration
▪ Mine, Oilfield, Major Port
▪ Corporation established by a Central Act
• State Government:
o All other scheduled employment
This distinction affects who sets the minimum wages and appoints officers for implementation.
(c) Competent Authority
Authority notified by the appropriate government in its Official Gazette to ascertain the Cost of Living Index Number for
scheduled employments.
(d) Cost of Living Index Number
Refers to the index number declared by the competent authority via notification in the Official Gazette — applicable to
employees in scheduled employment where minimum wages are fixed.
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It acts as a basis for variable dearness allowance (VDA) adjustments.
(e) Employer
A person employing one or more employees in scheduled employment, whether:
• Directly or through another person,
• On his own behalf or on behalf of someone else.
Includes:
1. Factory: The person named as manager under Sec. 7(1)(f), Factories Act, 1948.
2. Scheduled employment under Government: Appointed authority or departmental head.
3. Local authority: Appointed official or CEO.
4. Other cases: Person responsible to the owner for supervision, control, or wage payment.
The definition is wide and includes even indirect or delegated employment structures, ensuring accountability at every
operational level.
(f) Prescribed
Means prescribed by rules made under the Act.
Rule-making power allows flexibility and procedural clarity within the scope of the Act.
(g) Scheduled Employment
Employment listed in the Schedule to the Act or any process/branch of work forming part of such employment.
Examples include agriculture, construction, textiles, etc., notified by Central or State Governments.
(h) Wages
All remuneration (expressible in money) payable under express or implied terms of employment, including:
• House Rent Allowance (HRA)
Excludes:
1. Value of housing, light, water, medical, or amenities excluded by government order.
2. Employer’s contribution to Provident Fund, Pension Fund, Social Insurance.
3. Travelling allowances or concessions.
4. Sums paid for special employment-related expenses.
5. Gratuity payable on discharge.
The definition protects employees from exploitative wage practices and ensures clarity in what constitutes minimum wages.
(i) Employee
Any person employed for hire or reward to perform:
• Skilled, unskilled, manual or clerical work in scheduled employment.
Includes:
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• Out-workers: Working from home or premises not under employer’s control, on materials given for processing
(cleaning, finishing, repairing, etc.).
• Any person declared as employee by appropriate government.
Excludes:
• Members of the Armed Forces
The inclusive definition brings informal and home-based workers under the ambit of protection, aligning with social security
objectives.
Minimum Wages Act, 1948 – Section 3: Fixing of Minimum Rates of Wages
Statutory Power under Section 3(1):
The appropriate Government is empowered to fix minimum rates of wages:
• For employments listed in Part I or Part II of the Schedule, or any employment added by notification under Section 27.
Proviso under Section 3(1)(a):
For employments in Part II, minimum wages can be fixed:
• For the whole State
• For a part of the State
• For any specified class or classes of employment
Section 3(1)(b):
• Government must review and revise the fixed minimum wages at intervals not exceeding five years.
• Even if not revised within 5 years, the existing rate shall continue until revised.
• Review can be done after 5 years also — not barred by law.
Section 3(1A): Threshold Clause for Fixation
• Government may refrain from fixing wages in scheduled employments where less than 1000 employees are engaged in
the entire State.
• If later it is found (through inquiry) that 1000 or more employees are engaged, it must fix minimum wages as soon as
may be.
Section 3(2): Types of Minimum Wage Rates
The Government may fix:
• (a) Minimum Time Rate – for time work
• (b) Minimum Piece Rate – for piece work
• (c) Guaranteed Time Rate – for piece workers to ensure minimum wages on a time basis
• (d) Overtime Rate – in substitution for ordinary wages during overtime
Section 3(3): Differential Rates Permissible
• For different scheduled employments
• For different classes of work in the same employment
• For adults, adolescents, children, and apprentices
• For different localities
Section 3(3)(b): Wage Periods
Minimum wages may be fixed:
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• By the hour
• By the day
• By the month
• Or by such other prescribed larger wage-period
Note: If wage-periods are fixed under Section 4 of the Payment of Wages Act, 1936, then minimum wages must be consistent
with it.
Minimum Wages Act, 1948 – Section 4: Minimum Rate of Wages
Section 4(1): Composition of Minimum Wages
The minimum wage fixed or revised by the appropriate Government may comprise:
• (i) Basic rate of wages and special allowance (Cost of Living Allowance)
→ Indexed to variations in Cost of Living Index Number, adjusted periodically
• (ii) Basic wage with or without COLA + Cash value of concessions (e.g., subsidised essential commodities)
→ Where authorised
• (iii) All-inclusive rate
→ Includes basic wage, COLA, and value of concessions
Section 4(2): Computation Method
• The Cost of Living Allowance and Cash Value of Concessions shall be computed:
→ By a competent authority
→ As per directions and intervals prescribed by the appropriate Government
Section 5: Procedure for Fixing and Revising Minimum Wages
• The section provides two alternative procedures for fixing/revising minimum wages:
o Committee Method [Clause (a)]: Appropriate Government may appoint committees and sub-committees to
hold enquiries and advise on fixation or revision.
o Notification Method [Clause (b)]: Government may publish proposals in the Official Gazette for public
consultation, giving a minimum of two months before considering representations.
• Final Notification: After due consideration of either committee advice or public representations, the Government shall
fix or revise the minimum rates of wages via notification.
• Commencement: Unless otherwise stated, the notification comes into force after three months from the date of issue.
• Mandatory Consultation: If the notification method [Clause (b)] is used, the Advisory Board must also be consulted.
Key Concepts:
• Procedural Flexibility
• Time-bound Gazette Notification
• Tripartite consultation (committee/public + Advisory Board)
Section 7: Advisory Board
• Constituted by the appropriate Government to:
o Coordinate the work of committees and sub-committees under Section 5.
o Advise on general matters relating to fixation and revision of minimum wages.
• Functions as a tripartite advisory mechanism at the state level.
Section 8: Central Advisory Board
• Established by the Central Government to:
o Advise both Central and State Governments on wage fixation and revision.
o Coordinate the functioning of Advisory Boards across states.
• Composition:
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