Handout- Industrial Relations and Labour Laws
Minimum Wages Act 1948
The Minimum Wages Act, 1948 is a Central legislation aimed at statutory fixation of
minimum rates of wages in the employments where sweated labour is prevalent with
possibility for exploitation of unorganized labour. The provisions of the Act are intended to
achieve the object of doing social justice to workmen employed in the scheduled
employments by prescribing minimum rates of wages for them. The Act aims at statutory
fixation of minimum wages with a view to prevent exploitation of labour.
Pay fixing experts were guided by the standards recommended by the Fair Wage Committee
in the settlement of issues identifying with wage problems in organized industries.
The Fair Wage committee explained the core of minimum wages, but they didn’t say how to
evaluate the minimum wage. The 15th session of the Indian Labour Conference explained
the necessary physical requirements and health maintenance of the labours.
Scope and Objective of the Minimum Wages Act
• To safeguard that the employee has a basic physical necessity, proper health, and
comfort.
• Ensure that the labour gets fair wages.
• To ensure that the labour lives a decent life and have a respectable name in society.
Criteria for Fixing Minimum Wages
According to section 3 of the Minimum Wages Act 1948 “The Appropriate Government” will
fix minimum wages. Appropriate Government can include local, State and Central
Government. This section sets the rate according to hours, days, months or any other wage
period may be prescribed.
The rates to be fixed need not be uniform. Diverse rates can be fixed for various zones or
areas. If the wages are fixed according to section 4 of the Payment of the Wages Act, 1936,
the fixing will be done according to the Act.
Minimum Wages are fixed according to the following criteria
• Time Rate – The minimum rate is fixed according to the duration of the work done
by the labour.
• Piece Rate – Here the minimum wage is fixed by the total number of pieces
manufactured in the factory.
• Overtime Rate – Here the minimum rate is fixed by the overtime done by the labor
regardless of the time or piece rate.
Wage Committee
A wage committee shall be formed by the appropriate government, which shall consist of
members from both the employer and employee side. Therefore, an independent person
with having no interest in the employment scheme shall be appointed as the chairman of
the wage committee. The appointment process in the Minimum Wages Act is made in this
way so that there is no scope of discrimination to the labours.
Advisory Board
Section 7 of the Minimum Wages Act, the Advisory Board, which proposes
recommendations and changes to be brought in labour laws. The advisory board proposes a
recommendation to the State and Central Government in fixing the minimum wages.
• According to Section 9 of the Act, it talks about the appointment of committees and
subcommittees. The included members are:
• A person appointed by the Appropriate Government.
• Employers and employees, who belong to the scheduled employment and they shall
be equal in number.
• Independent persons and they shall not exceed one-third of the total number of
members. An independent person will be appointed as chairman of the committee.
Wages in Kind
Section 11 says that the wages shall be paid in cash. If somewhere, the payment is done
either wholly or partly and if it is a customary process, then in that the case, the
government through a notification in the official gazette shall enforce the payment partly or
wholly.
Fixing hours of normal working days
Section 13 provides for the fixing of normal working hours in a working day. The fixation of
normal working hours includes:
• The fixed number of working hours will include intervals from time to time.
• The fixed period must also include a day of rest in every seven days.
• The rest day must also be included in the pay, payment for not less than the
overtime rate.
There are certain exceptions related to those employees whose work is of nature that is
irregular. Such exceptions will be provided only after the consent of the appropriate
government.
Overtime
If any employee works for more than prescribed hours then that person is entitled to excess
payment for that period. However, it is also mentioned that nothing in this Act must be
prejudicial to Section 59 of the Factories Act, 1948. Section 14 of the Act provides for
overtime.
Wages for two or more classes of work
When two or more classes of work are performed by a single employee, the minimum wage
will be altered according to the time invested in each class of work and remuneration
provided in such work. Section 16 of the Act, this practice is mentioned.
Consequences of Non – Compliance
Non- compliance of the Minimum wages act, i.e not paying minimum wages is a culpable
offense. Hence, violation of fixing hours also attracts the penal provision.
Imprisonment up to 5 years and a fine up to 10,000 is the maximum punishment that can be
awarded. Section 22 of the Act defines the sanctions.
Exemptions and exceptions
The appropriate government may impose such conditions on the employers as they deem
fit. Such official notification may be granted in the official gazette. The employer does not
have to comply with these norms given in the Act if the employee is a family member.
Power of State Government to add to Schedule
The appropriate Government, after giving a notification in the Official Gazette at least three
months’ notice before its intention may by notification, add to either Part of the Schedule
any employment in respect of which may be minimum rates of wages should be fixed under
this Act, and thereupon the Schedule shall in its application to the State be deemed to be
amended accordingly. Section 27 of the Act provides for that power to the state.
Power of the Central Government to give directions
The central government has the power to give directions for the smooth functioning of
implementation of the minimum wages throughout the country. Section 28 of the Act
mentions about this power.
Power of the Central Government to make rules
Along with the power to give directions, the Central government has also got the power to
formulate rules in favour of the functioning of the Act. The Central Government may make
rules by publishing the news in the official gazette. The rules may be regarding prescribing
the term of office of the members, the procedure to be followed in the conduct of business,
the method of voting, the manner of filling casual vacancies in membership or the quorum
necessary for the transaction of business of the Central Advisory Board.
Power of the appropriate Government to be laid before the
Parliament
The Parliament of India has the authority that whenever such a rule is made regarding this
Act, the same shall be laid before parliament for approval by the majority. This must happen
within a period of 30 days.
Validation of fixation of certain minimum rates of wages
The fixed minimum rates of wages shall be valid until the appropriate government revises
this minimum rate of wages. This is provided under Section 31 of the Act. This Act also
provides for the maintenance of itself. The rules and regulations are sufficient for its own
sustenance.
