PBS KUMAR

KNOW ABOUT FUNDAMENTALS OF MINIMUM WAGES ACT, 1948

The minimum rates of wages may be fixed for different scheduled employments, different
classes of work in the same scheduled employment, adults, adolescents, children and
apprentices and for different localities.

The Act is being implemented by the Central and State Governments, and as such both are
empowered to frame rules. In the text references only to rules of Central Government are
made. Employers may have to refer to rules of a State Government if industry comes within
the jurisdiction of that Government.

Minimum rate of the wages fixed or revised consists of the following :

A basic rate of wages and a special allowance, viz., cost of living allowance ;

A basic rate of wages with or without cost of living allowance and cash value of
concessions for supplies of essential commodities ;

An all inclusive rate, i.e. basic rate, cost of living allowance and cash value of
concessions.

The Government may fix the minimum rates of wages either by the hour, by the day, by the
month or by such large wage period as may be prescribed which may be revised at intervals
and reviewed, if felt necessary.

The employer must pay every employee wages so fixed as notified by the Government.

Wages must be paid in cash.

For the fixation of minimum wages, the employment must have been in Schedule
originally or added to the Schedule by a notification under Section 27 of the Act,. The
Government (Central / State) may fix or revise minimum wages either by committee
procedure or by notification in the Official Gazette.

The employer can take actual work on any day up to nine hours in a 12 hours shift,
but he must pay double the rate for any hour or part of an hour of actual work in
excess of nine hours or for more than 48 hours in any week.

Once the minimum wages are notified and become effective the employer must pay
to every employee engaged in a Scheduled employment under him wages at a rate not
less than the minimum rate of wages fixed by such notification for that class of
employees.

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The employer may make deductions out of wages as may be authorized. And such
fines shall be recorded in the registers in Forms I and II respectively.

The employer shall fix wage-period for the payment of wages at intervals not
exceeding one month or such other larger period as may be prescribed.

The employer shall pay wages on a working day within seven days of the end of wage
period or within 10 days if 1000 or more persons are employed in an establishment.

The employer shall pay the wages to a person discharged not later than the second
working day after his discharge.

Where an employee is employed on piece work for which minimum time rate and not
a minimum piece rate has been fixed, the employer shall pay to such employee wages
at not less than the minimum time rate.

Every employer shall maintain at the work spot a register of wages in the form
prescribed specifying the following particulars for each wage period in respect of
each employed person :

Minimum rate of wages payable.

The number of days in which overtime was worked;

The gross wages;

The wages actually paid and the date of payment;

Every employer shall get the signature or the thumb impression of every person
employed on the wage book and the wage slips.

The employer shall exhibit at main entrance to the establishment and its offices, a
notice in respect of the following in English and local language:

Minimum rates of wages;

Abstracts of the Acts and rules made there under;

Name and address of the Labour Inspector / Asst. Commissioner of Labour etc.

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FIXATION OF MINIMUM WAGES:

In exercise of the powers conferred by sub-section (1) of Section 3 and sub-section (2) of
Section 5 of the Minimum Wages Act, 1948 (Central Act 11 of 1948) and all other
powers hereunto enabling and after having consulted the respective State Minimum
Wages Advisory Boards, the respective State Governors may fixes the minimum rate of
wages which shall consist of Basic Wage as specified in Column (3) of the Schedules
payable to each category of employees specified in corresponding column (2) thereof and
employed in the employment in “__________” as specified in Part-II of the schedule of
Minimum Wages Act, 1948 in the respective State Governments as the same having been
previously published as required under clause (b) of sub-section (1) of Section 5 of the
said Act.

Example: ( The following is extracted from Law of Minimum Wages of A.P)

Government of Andhra Pradesh , Model Gazette Notification

MINIMUM RATE OF WAGES

1. (ANY) OIL MILLS

[G.O.Ms.No.54,Labour, Employment, Training and Factories (Lab-II), dated 27-11-2002,

w.e.f. 17-03-2003]

The Schedule

Sl.No. Name of the Category Total Basic Wage

Oil Mills Solvent Plants

VDA VDA
Daily Monthly for Wage+ VDA Daily Monthly for Wage+ VDA
33 w.e.f.01-10- 33 w.e.f.01-10-
Points 2003 Points 2003
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

Office and General

A Category
1
2

B Other Category
1
2

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COST OF LIVING ALLOWANCE :

The minimum basic rates of wages fixed are linked to Consumer Price index Numbers for the
industrial workers at 447 points (Base year 1982=100 series). The Commissioner of Labour
shall notify the Cost of Living Allowance for every six months i.e. 1st April, 1st October. For
this purpose, the average rise in the State industrial workers consumer price index numbers
for half year ending December and June respectively shall be taken into account. The details
of calculation of Cost of Living Allowance for any rise in cost of Price Index over and above
447 points is specified in the format below. The neutralization rate is limited at Rs. 10.50 per
point for the basic wage of Rs. 2000.00 and above.

Basic Wage Cost of living allowance to be paid per point

increase
Rs. Ps. Rs. Ps.

Note :

1. If any categories employed in this employment are left out, they should not be paid
less than the minimum rates of wages fixed for the category of the workers, doing
similar nature of work in this employment.
2. Where piece rate workers are employed, the remuneration paid to each of them for a
normal working day shall not be less than the minimum wage fixed for a general
worker for 8 hours of work.
3. To arrive at a daily rate, the monthly rate shall be divided by 26, which includes the
rest day wages.
4. Where the nature of work is the same, no discrimination on the payment of minimum
rates of wages should be made in respect of male and female workers.
5. Where any category of employee is actually in receipt of higher rate of wages than
those specified above shall continue to paid such higher wages.
6. Solvent Plant means a Factory / Unit consisting of oil Mill / Solvent Extract Unit /
Refinery Unit.
7. Oil Mill means by Oil Mill not having solvent extraction / Refinery Facilities.

Table showing the CPI No.s. and the rise to the link points for purpose of calculation of
Cost of Living Allowance.

Link : 447

Period CPI Rise

From To
01.10.2002 31.03.2003 454 07
01.04.2003 30.09.2003 470 23
01.10.2003 31.03.2004 480 33

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How to Calculate of Variable Dearness Allowance?

Dearness Allowance is payable to monthly, daily and piece rate earners. Every six months the
Respective State Governments issues the Cost of Living Index number for each and every
scheduled employment.

Example from the above notification:

Any Oil Mills – issued in G.O. Ms. No. 54, dt. 27-11-2002. The Cost of Living Index Numbers
as on 01-10-202 are issued vide Notification dt. 01-10-2003, as per the notification the CPI is
480. The link is 447.

That is there is a rise of 33 points in the CPI. The Cost of the Living Allowance is given under
the Schedule of rates. For e.g. an employee drawing a salary of 1875/- per month will get
VDA as follows.

No. of points x Cost of Living

i.e. 33 x 10 = 330.00
Total wage would be Basic Wage + VDA
i.e. 1875 + 330 = 2205/-

Note :

Example of calculation of Cost of Living Allowance is a follows:

(a) The minimum basic rates of wages are linked to Consumer Price Index for the industrial
workers at 411 points (Base year 1982=100 series). For any rise in cost of Price Index over
and above this level. The cost of living allowance shall be paid as specified below.

Basic Wage Cost of Living Allowance to be paid Per point increase (in Rs.)

For Rs. 500.00 (taken as base) Rs. 03.00

And for an increase of every Rs. 50.00 in the Basic Wages and part thereof 0.25 Paise shall be
paid as VDA subject to the limitation of Rs. 10.50 for Basic Wage of Rs. 2000.00 and above.

Example :

Rs. 501 to 550 Rs. 3.25

Rs. 551 to 600 Rs. 3.50

NOTE: FOR ACTUALS PLEASE SEE THE G.O NOTIFICATION

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