THE MINIMUM WAGES ACT

A PRESENTATION BY
NARAYAN CHANDRA SARANGI,
Ph.D.
ASSOCIATE PROFESSOR, XaHR
 THE MINIMUM WAGES ACT
• The Act seeks to fix the minimum rate of
wages in certain employments;
• “ The justification for statutory minimum
wages is obvious. Such provisions which
exists in more advanced countries are
even more necessary in India, where the
workers organizations are yet poorly
developed and workers bargaining power
is consequently poor”- Gazette of India

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 THE MINIMUM WAGES ACT
• The Act is based on Article 43 of the
Constitution of India, which reads as under:
• “The State shall endeavour to secure, by
suitable legislation or economic organisation or
in any other way, to all workers, agricultural,
industrial or otherwise, work, a living wage,
conditions of work ensuring a decent standard of
life and full enjoyment of leisure and social and
cultural opportunities and, in particular, the State
shall endeavour to promote cottage industries
on an individual or co operative basis in rural
areas”.
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 THE MINIMUM WAGES ACT
• The term “minimum wages” has not been
defined in the Act.
• The most logical reason for not defining
the term “minimum wages” is presumably
the difficulty to lay down an uniform
“minimum wages” for all industries
because of the inherent
differences/situations typical to each
industries.
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 THE MINIMUM WAGES ACT
• On 13.04.1946 Dr. Ambedkar introduced
minimum wages bill and only on 15.03.1948 the
Minimum Wages Act, 1948 was passed;
• It extends to whole of India;
• At present, the Act provides for fixation of
minimum wages of the workers engaged in the
45 scheduled employments in the Central
sphere and 1679 in the state sphere. While the
Centre fixes the floor level for the minimum
wage based on the consumer price index for
industrial workers (CPI-IW), state governments
from 1991 began to fix the minimum wages for
each occupation based on local conditions.
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 THE MINIMUM WAGES ACT
• CONSTITUTIONAL VALIDITY OF THE ACT:
• The Minimum Wages Act does not violate any of the
fundamental rights. On the other hand, it fulfills, in part,
at least, the obligations of the State under the Directive
Principles of the State policy;
[T.G. Lakshmaiah Setty Sons, Adoni v. State of A.P.,
1981 Lab IC 690]

• Although the restrictions imposed upon the freedom of

contract by the fixation of minimum rates of wages
impede to some extent upon the privilege guaranteed
under Art. 19(1)(g) of the Constitution they are not
unreasonable and stand protected by the terms of Cl.(6)
of Art. 19;
[Bijay Cotton Mills Ltd. v. State of Ajmer, (1955) 1 SCR
752] 6
 THE MINIMUM WAGES ACT
• The Act was placed on the statute book as
a welfare measure to lay down the
minimum rates of wages which must be
available to the employees. If it is in the
interest of the general pubic that the
employees should be secured adequate
living wages the good or bad is really
irrelevant; Bakshish Singh v. Darshan
Engineering Works, 1994 LLR 61 (SC);
R/t. Bijay Cotton Mills Ltd. v. State of
Ajmer, (1955) 1 SCR 752.
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 THE MINIMUM WAGES ACT
• There is one principle which admits of no
exception. No industry has right to exist
unless it is able to pay its workmen at least a
bare minimum wage. If an employer cannot
maintain his enterprise without cutting down
the wages of his employees below even a
bare subsistence or minimum wage, he
would have no right to conduct his enterprise
on such terms; Bakshish Singh v. Darshan
Engineering Works, 1994 LLR 61 SC; R/t.
Crown Aluminum Works v. Workman, AIR
1958 SC 30.
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THE MINIMUM WAGES ACT
LIVING
WAGES
FAIR
WAGES
MINIMU
M
WAGES

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 THE MINIMUM WAGES ACT
• LIVING WAGES: CONCEPT & ANALYSIS
• The living wage, as defined by the Fair Wages
Committee’s Report,1949, represented the highest level
of the wage which should enable the worker to provide
for himself and his family not merely the basic essentials
of food, clothing and shelter but a measure of frugal
comfort including education for children, protection
against ill health, requirements of essential social needs
and a measure of insurance against more important
misfortunes including old age.
• But the Committee felt that when such a wage is to be
determined, the considerations of national income and
the capacity to pay of the industry concerned has to be
taken into account and the Committee was of the opinion
that living wage had to be the ultimate goal or the target.
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 THE MINIMUM WAGES ACT
• In Hindustan Times Ltd vs. Their Workmen
[AIR1963 SC1332], the Supreme Court of India
noted the constraints for paying statutory “living
wages” as under:
• “ While industrial adjudication will be happy to fix
a wage structure which would give workmen
generally a living wages, economic
consideration makes it only a dream for
future….”
• It is the promise of the Constitution [DPSP] and
ultimate aim of the Society. 11
 THE MINIMUM WAGES ACT
• FAIR WAGES: CONCEPT & ANALYSIS
• The concept of fair wages involves a rate
sufficiently high to enable a worker to
provide a standard family with food,
shelter, clothing, medical care and
education of children appropriate to his
status in life, but not at a rate, exceeding
the wage coming within the capacity of the
class of establishment concerned.
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 THE MINIMUM WAGES ACT
• Fair wages, on the lower limit is equivalent
to the minimum wages, but on the higher
limit is dependent on the following:
• Productivity of the labour;
• The prevailing rate of wages;
• The level of national income & its
distribution;
• The place of the industry in the economy
of the country.
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 THE MINIMUM WAGES ACT
MINIMUM WAGES: CONCEPT &
ANALYSIS

• Minimum wages is understood in two senses

INDUSTRIAL MINIMUM WAGES

STATUTORY MINIMUM WAGES

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 THE MINIMUM WAGES ACT
CRITERIA FOR FIXING MW
• In the absence of any criteria stipulated for fixing the minimum wage
in the Minimum Wages Act, the Indian Labour Conference in 1957
had said that the following norms should be taken into account while
fixing the minimum wage. The norms for fixing minimum wage rate
are:
(a) three consumption units per earner- [Worker 1 unit,
wife.0.8 unit 2 children 1.2 unit]
(b) minimum food requirement of 2700 calories per
average Indian adult-14 Oz cereals, 3 Oz Pulses, 10 Oz
Vegetables, 2 Oz Milk, 2 Oz Sugar, 2 Oz Oil and ghee, 2 Oz
fruits, 2 Oz fish and meat and 1 Oz eggs.
(c) cloth requirement of 72 yards per annum per family,
(d) rent corresponding to the minimum area provided
under the government's Industrial Housing Scheme and

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 THE MINIMUM WAGES ACT
CRITERIA FOR FIXING MW
(e) fuel, lighting and other miscellaneous items of
expenditure to constitute 20% of the total minimum
wage
(f) Fuel, lighting and other miscellaneous items
of expenditure to constitute 20% of the total
Minimum Wages,
(g) children education, medical requirement,
minimum recreation including festivals/
ceremonies and provision for old age, marriage
etc. should further constitute 25% of the total
minimum wage- Reptakos Brett and Co. vs. Its
workmen- [1992 (1) LLJ 343]
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 THE MINIMUM WAGES ACT
DEFINITIONS
• CHILD - Age less than 14

• ADOLESCENT - Age 14 -less than 18

• ADULT - Age more than 18

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 THE MINIMUM WAGES ACT
DEFINITIONS
• EMPLOYEE [Sec 2(i)]
(1) Employed for Hire or Reward
(2) To do skilled or unskilled work
(3) Manual or Clerical
(4) Job Worker
(5) Any person declared by the appropriate
Government as Employee but, does not
include any member of armed forces

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 THE MINIMUM WAGES ACT
DEFINITIONS
• EMPLOYER [Section 2(e)-Exception u/Section 26(3)]
– Who employs persons directly or indirectly through other person.
• DEEMED EMPLOYER IN THE CASE OF GOVERNMENT
AUTHORITY
– The person appointed by the Government to Supervise and
Control the Employees. In case no person was appointed then the
Head of the Department will be the Deemed Employer
• DEEMED EMPLOYER IN THE CASE OF LOCAL
AUTHORITY
– The person appointed by the Local Authority to Supervise and
Control the employees. In case no person was appointed then the
Chief Executive Officer of the Local Authority will be the Deemed
Employer
• DEEMED EMPLOYER IN OTHER CASES
– Any person responsible to the owner for the supervision and
control of the Employees or for the Payment of Wages
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 THE MINIMUM WAGES ACT
DEFINITIONS

• SCHEDULED EMPLOYMENT[Sec-2(g)]
– Any employment specified in Part – I and
Part – II of the Schedule provided in
Minimum Wages Act.
– Part – I specifies certain types of Industries
– Part – II deals with persons working in
Agriculture, Horticulture and Live Stock or
Poultry.

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 THE MINIMUM WAGES ACT
DEFINITIONS
• Employment in agriculture, that is to say, in any form
of farming, including the cultivation and tillage of the
soil, dairy farming, the production, cultivation,
growing and harvesting of any agricultural or
horticultural commodity, the raising of live-stock,
bees, or poultry, and any practice performed by a
farmer or on a farm as incidental to or in conjunction
with farm operations (including any forestry or
timbering operations and the preparation for market
and delivery to storage or to market or to carriage for
transportation to market of farm produce).

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 THE MINIMUM WAGES ACT
COST OF LIVING INDEX- Sec 2(d)
• "cost of living index number", in relation to
employees in any scheduled employment in
respect of which minimum rates of wages have
been fixed, means the index number
ascertained and declared by the competent
authority by notification in the Official Gazette
to be the cost of living index number
applicable to employees in such employment;

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 THE MINIMUM WAGES ACT
COST OF LIVING INDEX- Sec 2(d)
• In Mangalore Ganesh Beedi and Allied Industries vs. State of
Karnataka & Ors.(2003), the Court noted in affirmative that:
The consumer price index numbers are also known as cost of
living index numbers which are generally intended to represent
the average change over time in the prices paid by the ultimate
consumer of a specified basket of goods and services. The need
for constructing consumer price index numbers arises because the
general index numbers fail to give an exact idea of the effect of
change in the general price level on the cost of living of different
classes of people since a given change in the prices affect
different classes in different manners.”

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 THE MINIMUM WAGES ACT
WAGES- Sec 2(e)
• WAGES
– Expressed or Implied Monetary Payment in terms of Contract of
Employment and includes House Rent Allowance.
• WAGES DO NOT INCLUDE
– House Accommodation, Supply of necessities like Light, Water
and Provision of Medical Attendance and Other Amenity or
Service specifically excluded by the Appropriate Government.
– Contribution made to Pension Fund or Provident Fund or under
any Scheme of Social Insurance
– Travelling Allowance or the value of any Travelling Concession
– Special Allowances provided based on the nature of Employment
– Gratuity Payable

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FIXING OF MINIMUM RATE OF WAGES BY
APPROPRIATE GOVERNMENT

• MINIMUM TIME RATE (Section-3)

– The Minimum Wages paid for Time Work.
• MINIMUM PIECE RATE
– The Minimum Wages paid for Piece Work.
• GUARANTEED TIME RATE
– Those employed under the scheme of Piece Work but,
guaranteed wages will be paid on the basis of Time.
• OVERTIME RATE
– Time Rate of Piece Rate will apply where the Employee has
worked overtime over and above his normal working hours.

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 Contd. From Slide -25
• MINIMUM RATE OF WAGES WILL BE
FIXED FOR
– Employments provided in Schedule – I & II
– Adults, Adolescents, Children and Apprentices.
– Different Localities
• WAGE PERIODS FIXED UNDER MINIMUM
RATE OF WAGES
– By the Hour , – By the Day
– By the Month
– By such other larger wage period as may be
prescribed

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 Contd. From Slide-25
• Method 1 – Basic Rate of Wages + Special
Allowance called as Cost of Living Allowance;
• Method 2 – Basic Rate of Wages without any
Cost of Living Allowance;
• Method 3 – Consolidated Pay without splitting
into Basis Rate of Wages, Cost of Living
Allowance or Cash Value of Concession;
• Value of Supply of Essential Commodities;
The Value will be computed by the Competent
Authority periodically as per the directions given
by the Appropriate Government.

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 MINIMUM RATE OF WAGES
SECTION-4
• The object of Section 4 is to see that minimum wage can be linked with
increase in cost of living so that increase in cost of living can be neutralized
or all-inclusive rates of minimum wages can be fixed.
• From the combined reading of Sections 3 and 4, it becomes clear that what
is fixed is total remuneration which should be paid to the employees
covered by the Schedule and not for payment of costs of different
components which are taken into consideration for fixation of minimum
rates of wages.
• The concept of minimum wages does take in the factor of the prevailing
cost of essential commodities whenever such minimum wage is to be fixed.
The idea of fixing such wage in the light of the cost of living at a particular
juncture of time and of neutralizing the rising prices of essential
commodities by linking up scales of minimum wages with the cost of living
index is provided for in Section 4.

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 Procedure for fixing & revising
minimum wages (Sec 5)
1) In fixing minimum rates of wages in respect
of any scheduled employment for the first
time or in revising minimum rates of wages
so fixed, the appropriate govt. shall follow
either of the 2 following modes;
a) It shall appoint as many committees and sub-
committees 'as it considers necessary to hold
enquiries and advice it in respect of such
fixation or revision, as the case may be; of
fixation or revision of minimum rates of
wages; or
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 Procedure for fixing & revising
minimum wages (Sec 5)
b) It shall, by notification in the official Gazette
publish its proposal for the information of
persons likely to be affected thereby and
specify a date not less than two months from
the date of the notification on which the
proposals will be taken into consideration
[Sec. 5(1)].

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 SAFEGAURDS FOR PAYMENT OF
MINIMUM WAGES
• Section 11-Wage in Kind
• Section12-Payment of minimum rate of wages
• Section 13- Fixing of working hours including weekly
holidays
• Section 14- Rate of overtime
• Section 15- Wages for working less than normal prescribed
duty hours per day;
• Section 16- Wages for two or more classes of work;
• Section 17- Minimum time rate wages for fixed work
• Section 18- Maintenance of Registers & Records.

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SECTION 32: EXEMPTION OF EMPLOYER
FROM LIABILITIES IN CERTAIN CASES
• Where an employer is charged with an offence against this
Act, he shall be entitled, upon complaint duly made by him, to
have any other person whom he charges as the actual
offender, brought before the Court at the time appointed for
hearing the charge; and if, after the commission of the offence
has been proved, the employer proves to the satisfaction of
the Court
(a) that he has used due diligence to enforce the execution of
—
this Act; and
(b) that the said other person committed the offence in
question without his knowledge, consent or connivance,

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 Contd. Sec-23
• that other person shall be convicted of the offence
and shall be liable to the like punishment as if he
were the employer and the employer shall be
discharged: Provided that in seeking to prove, as
aforesaid, the employer may be examined on oath,
and the evidence of the employer or his witness, if
any, shall be subject to cross-examination by or on
behalf of the person whom the employer charges as
the actual offender and by the prosecution.
• Sulabh International vs. RLC ( C) & AIIMS vs. VIDYA
NANADA SHARMA – 18/12/2010-HC of Delhi
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 ASIAD GAMES CASE
• Peoples’ Union For Democratic Rights vs. UOI[AIR
1982 SC 1473] : The Supreme Court considered the scope
and ambit of Article 23 in detail. The Court held that the
scope of Article 23 is wide and unlimited and strikes at
"traffic in human beings" and "beggar and other forms of
forced labour" wherever they are found. It is not merely
"beggar" which is prohibited by Article 23 but also all other
forms of forced labour, "Beggar is a form of forced labour
under which a person is compelled to work without receiving
any remuneration. This Article strikes at forced labour in
whatever form it may manifest itself, because it is violative of
human dignity and contrary to basic human values. The
practice of forced labour is condemned in almost every
international instrument dealing with human rights.

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 ASIAD CASE CONTD.
• Every form of forced labour "beggar" or other forms, is
prohibited by Article 23 and it makes no difference whether
the. person who is forced to give his labour or service to
another is paid remuneration or not. Even if remuneration is
paid, labour or services supplied by a person would be hit By
this Article, if it is forced labour, e.g., labour supplied not
willingly but as a result of force or compulsion,
this Article strikes at every form of forced labour even if it
has its origin in a contract voluntarily entered into by the
person obligated to provide labour or service. If a person has
contracted with another to perform service and there is a
consideration for such service. In the shape of liquidation of
debt or even remuneration he cannot be forced by compulsion
of law, or otherwise to continue to perform such service as it
would be forced labour within the meaning of Article 23.

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 ASIAD CASE CONTD…
• No one shall be forced to provide labour or
service against his will even though it be under a
contract of service. The word "force" was
interpreted by the court very widely. Bhagwati, J.
said, 'The word 'force' must therefore be
construed to include not only physical or legal
force but also force arising from the compulsion
of economic circumstances which leaves no
choice of alternatives to a person in want and
compels him to provide labour or service even
though the remuneration received for it is less
than the minimum wage.
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 Bandhua Mukti Morcha Vs UOI,AIR
1984 SC 802
• BRIEF FACTS:
• The Petitioner was an ‘an organisation dedicated to the cause
of release of bonded labourers’. It conducted a survey in
stone quarries and mines in Faridabad district. It found that
several workmen in these mines were migrant workers from
other States in India who were ‘bonded labourers.’ They were
living in conditions of abject poverty. The mine owners did
not provide them with shelter, clean drinking water, latrines
or medical facilities, among other things. The workers were
also subject to respiratory infections due to the pollution
generated by stone crushers. There also existed an illegal
system of thekedars or middlemen who extracted a large
percentage of wages from the workmen as commission.

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 BANDHUA CASE CONTD.
• The Petitioner, on behalf of these workmen,
addressed a letter to the Court invoking the
jurisdiction of Article 32 of the Constitution and
sought reliefs for, among other things, reduction in air
pollution, clean and potable drinking water,
conservancy facilities, medical facilities and
compensation. The Supreme Court treated it as public
interest litigation and appointed a commission for
inquiry into the Petitioner’s allegations. The
Respondent-Government challenged the petition on
the ground that it was not procedurally in accordance
with the Rules of the Supreme Court and the Code of
Civil Procedure.

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 BANDHUA CASE CONTD.
• There can be no doubt that pure drinking water is absolutely essential to the
health and welfare of the workmen and some authority has to be responsible for
providing it.’ Para 12

• ‘This right to live with human dignity enshrined in Article 21 derives its life
breath from the Directive Principles of State Policy and particularly Clauses (e)
and (f) of Article 39 and Articles 41 and 42 and at the least, therefore, it must
include protection of the health and strength of workers men and women, and of
the tender age of children against abuse, opportunities and facilities for children
to develop in a healthy manner and in conditions of freedom and dignity,
educational facilities, just and humane conditions of work and maternity relief.
These are the minimum requirements which must exist in order to enable a
person to live with human dignity and no State neither the Central Government
nor any State Government has the right to take any action which will deprive a
person of the enjoyment of these basic essentials.’ Para. 14.
•

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“Always recognize that human individuals are
ends, and do not use them as means to your
end”- Immanuel Kant , German philosopher

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