TABLE OF CONTENTS

ACKNOWLEDGEMENT
INTRODUCTION
WAGE STRUCTURE AND ITS COMPONENTS
FIXATION

OF

WAGES

FIXING AND REVISING OF MINIMUM WAGES

CONCLUSION
BIBLIOGRAPHY

INTRODUCTION
The minimum wages Act defines wages under Section 2 (h), which reads as under
Wages means all remuneration, capable of being expressed in terms of money, which would
be, in terms of contract of employment, express or implied were fulfilled, be payable to a
person employed in respect of his employment or of work done in such employment and
includes house rent allowance but does not include :-(i)

the value of
a) any house accommodation, supply of light, water, medical attendance ; or
b) any other amenity or any service excluded by general or specific order of the

(ii)

appropriate government;
any contribution paid by the employer to any pension funds or provident fund or any

(iii)
(iv)

other scheme of social insurance;

any travelling allowance or the value of any travelling concession;
any sum paid to the person employed to defray special expenses entailed on him by
the nature of his employment; or
any gratuity payable on discharge.

(v)

The analysis of this section indicates that the following requirements are necessary for
wages:-1) wages include all remuneration paid to an employee including house rent allowance;
2) wages must be capable of being expressed in terms of money;
3) wages become due when there is a contract between employer and employee.
However, the contract may be expressed or implied;
4) the terms and conditions of the contract must be fulfilled, or he must have done work
assigned to him under such employment.

The term wages has a composite meaning, which includes all remuneration and other
payments payable to an employee, which are not expressly excluded by the provisions of the
Act.

WAGE STRUCTURE & ITS COMPONENTS

Broadly speaking the wage structure can be divided into three categories The basic
minimum wage which provides bare subsistence and is at poverty line level, a little above is
the fair wage and finally the living wage which comes at a comfort level. It is not possible
to demarcate these levels of wage structure with any precision.
Certain principles on which wages are fixed have been stated by the Supreme Court in
Kamani Metals and Alloys v. Their Workmen.
Broadly speaking the first principle is that there is a minimum wage which in
any event must be paid, irrespective of the extent of profits, the financial condition of the
establishment or the availability of workmen on lower wages. The minimum wages is
independent of the kind of industry and applies to all alike big or small. It sets the lowest
limit below which the wages cannot be allowed to sink in all humanity. The second principle
is that wages must be fair, that is to say, sufficiently high to provide a standard family with
food, shelter, clothing, medical care and education of children appropriate for the workmen
but not at a rate exceeding his wage earning capacity in the class of establishment to which
he belongs. A fair wage is thus related to the earning capacity and the workload. It must,
however be realised that fair wage is not a living wage by which it means a wage which
is sufficient to provide not only the essential above mentioned but, a fair measure of frugal
comfort with an ability to provide for old age and evil days. Fair wage lies between minimum
wage, which must be paid in any event, and the living wage, which is the goal.
MINIMUM WAGES--: The expression minimum wages is not defined in the Act
presumably because it would not be possible to lay down a uniform minimum wages for all
industries throughout the country on account of different and varying conditions prevailing
from industry to industry and from one part of the country to another. It was held in Hydro
(Engineers) Private Limited v. The Workmen, that:-The concept of minimum wages takes in the factor of the prevailing cost of essential
commodities whenever such minimum wage is to be fixed. Furthermore, in the right of
spiralling of prices in the recent years, if the wage scales are to be realistic it may become
necessary to fix them so as to neutralize at least partly the price rise in essential
commodities.
Components of a minimum wage.-- The concept of minimum wage does not mean a wage
that enables the worker to cover his bare physical need and keep himself just above

starvation. The capacity of the employer to pay is irrelevant in fixing minimum wage.
Therefore, no addition shall be made to the components of the minimum wage, which would
take the minimum wage near the lower level of the fair wage. In Unichay v. State of Kerala, it
was held that the Act contemplates that minimum wage rates should be fixed in the
scheduled industries with the dual object of providing subsistence and maintenance of the
worker and his family and preserving his efficiency as a worker.
The concept of the need based minimum wage was evolved by the 15th Indian Labour
Conference, held in July, 1957. With regard to the minimum human needs of the industrial
worker, irrespective of any other considerations. In order to calculate the minimum wage,
the Tripartite Committee of the Indian Labour Conference held in New Delhi in 1957,
accepted the following norms, and recommended that they should guide all wage-fixing
authorities, including minimum wage committees, Wage Boards, adjudicators, etc. :-1) In calculating the minimum wage, the standard working class family should be
taken to consist of three consumption units for one earner; the earnings of women,
children and adolescents should be disregarded.
2) Minimum food requirements should be calculated on the basis of net intake of 2700
calories, as recommended by Dr. Aykroyd for an average Indian adult of moderate
activity.
3) Clothing requirements should be estimated as per consumption of 18 yards per
annum which would give for the average workers family of four, a total of 72
yards.
4) In respect of housing, the norm should be the minimum rent charged by
Government in any area for houses provided under the Subsidised Industrial
Housing Scheme for low income groups.
5) Fuel, lighting and other miscellaneous items of expenditure should constitute 20%
of the total minimum wage.
6) Childrens education, medical requirements, minimum recreation including
festivals/ceremonies and provision for old age marriages, etc. should further
constitute 25% of the total minimum wage.
It was further held in the above case that the wage structures which approximately answers
the above six components is nothing more than a minimum wage at subsistence level. The
employees are entitled to minimum wage at all times and under all circumstances. An
employer who cant pay minimum wages has no right to engage labour and no justification to
run the industry.

In Peoples Union for Democratic Rights v. Union of India, it was held by the Supreme Court
that where children below the age of 14 years are employed in violation of the Employment
of Childrens Act, 1938 and minimum wages are denied to such children or to other persons
who by reason of poverty or socially or economically disadvantageous position are unable to
approach the Court, legal redress may be sought on their behalf by any member of the public.
FAIR WAGES:
There is a difference between minimum wages and fair wages. In case of fair wage, besides
the principle of industry-cum-region, the companys capacity to bear the financial burden
must receive due consideration. But mere hopeful observations made in the directors annual
report cant be basis for awarding increased wages because such observations are sometimes
made to inspire hope and confidence in shareholders and they cant be a substitute for actual
audited figures.
It was held in Transport Corp. of India Ltd. v. State of Maharashtra & Others, that it is not for
the Labour Court or Tribunal to fix the minimum rates of wage. While fixing fair rates of
wages the courts or tribunals take into consideration the minimum rates of wages and where
the Government has not fixed the minimum rates of wages then the courts or tribunals
ascertain for themselves what would be the minimum rate of wages. In fact minimum rate of
wages are fixed by the Government. Courts or tribunals merely ascertain what are the
minimum rates of wages for the purpose of deciding fair wages.
LIVING WAGE:
The Fair Wage Committee in its report published by Government of India, Ministry of labour
in 1949 defined the living wage as under:
The living wage should enable the male earner to provide for himself and his family not
merely the bare 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 the more important misfortunes including
old age.

FIXATION OF MINIMUM WAGES

Section 3 of the act lays down that the appropriate Government shall be empowered to fix the
minimum rates of wages in the manner prescribed under this Act. It shall fix such rates of
wages payable to employees employed in an employment specified in Part I or Part II of the
Schedule and in an employment added to either part by notification under Section 27.
But the appropriate Government may in respect of employees employed in an employment
specified in part of the Schedule, instead of fixing minimum rates of wages under this clause
for the whole State, fix such rates for a part of the State or for any specified class or classes of
such employment in the whole of the state or part thereof.
The appropriate Government shall review the minimum rates of wages to fix and revise the
minimum rates, if necessary at such intervals as it may think fit. The intervals as aforesaid
shall not exceed five years. But where for any reason the appropriate government has not
reviewed the minimum rates of wages fixed by it within an interval of five years, the
appropriate government shall not be with the power to review or revise after five years. Until
the minimum rates are revised, the minimum rates in force immediately before the expiry of
the said period of five years shall continue in force.
Sub-section (1-A) provides that the appropriate government may refrain from fixing
minimum level of wages in respect of any scheduled employment in which there are in the
whole state less than one thousand employees engaged in such employment. But if at any
time, the appropriate Government comes to a finding after such enquiry as it may make or
cause to be made in this behalf that the number of employees in any scheduled employment
in respect of which it has refrained from fixing minimum rates of wages, has risen to one
thousand or more. It shall fix minimum rates of wages payable to employee in such
employment as soon as may be such finding.
In Sahadeo Sahu v. State of M.P. and another it was held that Section 3(1-A) does not prevent
the appropriate government from fixing the minimum rates of wages even if the number of
employees in that scheduled employment is less than one thousand. The word refrain used
in Section 3(1-A) would include jurisdiction to withdraw the minimum rates of wages fixed if
the strength of the scheduled employment falls below 1000. The power to rescind the wages
once fixed without any expressed provision is that regard in Section 3(1-A) can well be
inferred with reference to Section 21 of the General Clauses Act.
Sub-section (2) provides that the government may fix

a) a minimum rate of wages for time work (i.e., a minimum time rate);
b) a minimum rate of wages for piece work (i.e., a minimum piece rate);
When a piece rate is fixed, every worker will not earn the same amount for the day.
If the difference is due to reasons which are purely personal to the worker, no
grievance can be made, but if the difference is brought about by furnishing one with
an appreciable example providing one with a machinery and the other with a hand
mallet, there may be a possibility of injustice and an attempt must be made for
arriving at a result which may really be reasonable and just in the circumstances.
c) a minimum of remuneration to apply in the case of employees employed in a piece
work for the purpose of securing to such employees a minimum rate of wages on a
time work basis which is known as a guaranteed time rate, Clause (c) of section
3(2) is intended to meet a situation where operation of minimum rate fixed by the
Government may result in worker earning less than minimum wage.
d) a minimum rate ( whether a time rate or a piece rate ) to apply to apply in
substitution for the minimum rate which would otherwise be applicable, in respect
of overtime work done by the employees, which is known as overtime.
The minimum rates of wages shall not apply in the following cases during the period in
which the proceeding is pending and the award made therein is the operation or where the
notification is issued during the period of operation of an award during that period:
(i)

where in respect of an industrial dispute relating to the rates of wages payable to any
of the employees employed in a scheduled employment any proceeding is pending
before a Tribunal or a National Tribunal under the Industrial Disputes Act 1947, or

(ii)
(iii)

before any like authority; or

where an award made by any such authority as aforesaid in its operation; and
a notification fixing or revising the minimum rates of wages in respect of the
scheduled employment is issued during the pendency of such proceeding or the
operation of the award.

Where such proceedings or award relates to the rates of wages payable to all the employees in
the employment no minimum rates shall be fixed or revised in respect of that employment
during the said period.
In fixing or revising minimum rates of wages under Section 3:
a) different minimum rates of wages may be fixed for --i.
different scheduled employments;
ii.
different classes of work in the same scheduled employment;

iii.
adults, adolescents, children and apprentices;
iv. different localities;
b) minimum rates of wages can be fixed by one or more of the following wage periods,
namely:-i.)
by the hour,
ii.)
by the day,
iii.)
by the month, or
iv.)
by such other longer wage-period as may be prescribed.

Where such rates are fixed by the day or the month, the manner of calculating wages for a
month or for a day, as the case may be, may be indicated. Where any wage-period have been
fixed under Section 4 of the Payment of Wages Act, 1936, minimum wages shall be fixed in
accordance therewith.
In S.F.A.L. Works v. State Industrial Court, Nagpur, it was held that in fixing the minimum
rates of wages, the Act also makes provisions for the special allowances to be paid along with
the basic rate of wages. The allowance is fixed by the Government to accord as nearly as
practicable with the variation in the cost of living index number applicable to such workers.
So far as the provisions of the act relating to the minimum wages and special allowances are
concerned they are fixed without any reference to the paying capacity of the employer, but
when a dearness allowance is fixed as a part of the fair wage, it will have to depend upon the
paying capacity of the employer. It has been held though the dearness allowance is given to
compensate for the rise of the cost of living, cent per cent neutralisation is not given as it may
tend to inflation.
In Jyothi Home Industries v. State of Karnataka, the question for consideration was
whether the appropriate government can fix guaranteed remuneration under this Act, for the
day on which the employer in unable to give the work. It was held that the appropriate
government under Section 3 can fix minimum wages for hours actually worked by the
employee and if he is not in the position to fulfil his part of the contracts on account of the
facts that the employer does not offer him necessary raw materials required for his job, he
would be entitled to remuneration under Section 3(2)(c). This view is supported by the other
provisions like section 13 and 20 of the Act also. Thus the Government can fix guaranteed
remuneration.

FIXING AND REVISING OF MINIMUM WAGES.

Irrelevant considerations in fixation of minimum wages.
The following considerations are not relevant in fixation of wages:a) The fact that an employer may find it difficult to carry on his business on the basis of
b)
c)
d)
e)

minimum wages
The financial capacity of the employee i.e., his capacity to pay
The fact of the employer-company having incurred losses during the previous years.
Employers difficulties in importing raw materials and
The region cum industry principles

However, in fixing fair wages the financial capacity of the employer and the wages scale
prevailing in the comparable industries in the region are some of the relevant considerations.
Minimum wages must be paid irrespective of the extent of the profits, the financial condition
of the establishment or the availability of workmen, on lower wages. The minimum wages
are independent of the kind of industry and applies to all alike, big or small. It sets the lowest
limit below which wages cannot be allowed to sink in all humanity.

PROCEDURE
Section 5 lays down that in fixing minimum rates of wages in respect of any scheduled
employment for the first time under this Act or in revising minimum rates of wages so fixed,
the appropriate Government shall either:
a) Appoint as many committees and sub- committees as it considers necessary to hold
enquiries and advise it in respect of such fixation or revision, as the case may be; or
b) By notification in the Official Gazette, publish its proposals for the information of the
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 in consideration.

After considering the advice of the committees appointed, and all representations received by
it before the date specified in the gazette notification, the appropriate government may by
notification in the Official Gazette, fix or revise the minimum wages in respect of the each
scheduled employment, which shall come into force after the expiry of three months unless
otherwise provided in the notification.
When the appropriate Government proposes to revise the minimum rates of wages, by the
mode specified in section 5(1) (b), the appropriate government shall consult the advisory
board also.
If the advisory board approves the notification, regarding revision of wages without
discussing the objections made, the action of the board would be arbitrary because it amounts
to non-application of mind in granting approval.
The exercise of power to fix or revise the minimum wages under sub-section (2) of section 5
is limited to employment specified in the schedule. Under Section 27 of the Act, the
appropriate government may add any employment to the schedule. The nature and extent of
the power of the appropriate Government under Section 27 and Section 5 (2) is separate and
distinct and what can be done by the appropriate government in exercise of its power under
Section 27 cannot be done by it in exercise of its powers under Section 5 (2) of the Act.
The power conferred upon the appropriate Government under Section 5(1) is neither arbitrary
nor unguided. Therefore, sub-section (1) does not offend Article of the Constitution. In the
matter of fixing minimum wages, the economic capacity of the trade or industry is irrelevant,
for, what alone is germane, is, the wage required by the employees to survive. The fixation of
wages depend upon the prevailing economic conditions, the cost of living in a place, the
nature of the work to be performed and the conditions in which the work is performed.
Where a notification is issued by the Government authorising the employer to deduct the sum
mentioned in the notification towards the cost of free meals supplied to the workers by him, it
was held that the notification gives only an option to the employer and does not impose an
obligation upon him.
In Muruga Home Industries v. Government of Tamil Nadu & Anr. minimum wages of beediworkers were revised by the State Government revised by the State Government by a
notification issued after consultation with the Advisory Board. It was the notification fixing
minimum wages should not be interfered with in writ proceedings except on most substantial

grounds. Advisory Board is well balanced since representation is given to employers and
employees. Work in Beedi industry is unorganised sector and condition of work and wages of
beedi workers are below subsistence level and minimum wages fixed is fair and just and not
arbitrary.
In North Bihar Chamber of Commerce and Industries, Muzzaffarpur and others v. State of
Bihar and others, a notification was issued revising the minimum rates of wages on the
advice of the Advisory Board. It was contended that the composition of the Advisory Board
was defective. The revised rates of minimum wages were impugned in these petitions.
Dismissing the petitions the High Court observed that the petitioner had neither pleaded nor
advanced arguments that any prejudice was caused by an alleged defect in the composition of
the Advisory Board would not per se vitiate the decision.
In Andhra Pradesh Hotels Association v. Government of Andhra Pradesh & Anr, the
Government of Andhra Pradesh issued a Gazette notification on March 1999 proposing
revision of minimum wages in Hotel industry under Section 5(2) of the Minimum Wages Act,
1948. On October 17, 2000 the Government of Andhra Pradesh in consultation with the State
Advisory Board issued another G.O. revising the minimum wages in exercise of powers
conferred by Sections 3(1) and 5(2) of the Act in Hotels and Restaurants etc. Being aggrieved
by the said notification the petitioner association filed the present writ petition. Dismissing
the appeal the High Court made following observations:-1) Fixation of minimum wages was an administrative act and the quantum fixed on
humanitarian ground was not subject to judicial review, unless the fixation was ultra
vires, the Minimum Wages Act, 1948.
2) Minimum wages must provide not merely for bare subsistence but for the preservation
of workers efficiency also, and so the capacity of the employer to pay such wages
was treated as irrelevant.
3) The High Court while reviewing a notification fixing minimum wages could not
assume the role of an appellate authority and reappreciate each and every factor.
4) It could not be said that under no circumstances the rate of neutralisation of variable
D.A. should not exceed 100%.
5) The Minimum Wages Act, 1948 was a beneficial piece of social legislation and in
fixing the wages under it, the consideration was that workmen should receive their
proper share of the National income which they help to produce.
6) The appellant had not made out any permissible ground to quash the impugned
Government order.

The further part of the Act talks about the authorities under the Act, their composition and
process of working. The later Sections also enlist the penalties for different offences under
the Act and also the power of the Government to make and validate rules under the Act.

CONCLUSION
This Act provides the workers with a weapon to defend themselves in case undue advantage
of their services is sought to be taken by the employers. It empowers the workmen to demand
for special allowances in addition to the minimum wages. The fixation of minimum wages
for every sort of work ensures that a basic standard of living is enjoyed by the workers and
that they are properly rewarded for their labour.
However, minimum wage provides not merely for the bare subsistence of life but for the
preservation of the efficiency of the worker. Therefore, provisions for some measure of
education, medical requirements and amenities are also enunciated in the Act. The idea of

fixing such wages in the light of cost of living at a particular juncture of time and neutralising
the rising prices of essential commodities by linking up scales of minimum wages with the
cost of living index cant, therefore, be said to be alien to the concept of minimum wage.
The concerned Act also provides for a fair procedure for determination of minimum wages as
well as remedies that could be sought in case the workers are deprived of their much deserved
minimum wages. This legislation specifically aims at securing livelihood for the unskilled
workers who lack the ability to raise a demand for their services or labour.
This project has brought to light the need for fixing of such minimum wages, the procedure
for determination of minimum wages for different industries, the reasons which the
appropriate government takes into account before determination of minimum wages as well
as the remedies available to the workmen.

BIBLIOGRAPHY

Books referred:

Labour Law & Labour Relations (Cases & Materials), The Indian Law Institute

Publications, 2002
Industrial Relations & Labour Laws, S.C. Srivastava, Vikas Publishing House, 2006

Labour & Industrial Law, S.N. Mishra, Central Law Publications, 2009

PROJECT REPORT ON:

FIXATION OF WAGES UNDER
MINIMUM WAGES ACT 1948
Submitted by
GOKUL RUNGTA
Division- B Class- BA LLB
Of AMITY Law School II, NOIDA
AMITY University
NOIDA

Under the guidance of

Ms. Priyanka Ghai
Course in Charge, Amity Law School II,
NOIDA 201301

Acknowledgement
I, express my sincere gratitude to my labour law teacher, Ms. Priyanka Ghai for
giving me the opportunity to work under his guidance on the project on PROJECT
REPORT ON FIXATION OF WAGES UNDER MINIMUM WAGES ACT
1948Several people have been instrumental in allowing this project to be completed.
Any attempt at any level cannot be satisfactorily completed without the support and
guidance of learned people. I have endeavoured my best to make this project and
would be grateful for any suggestions for improvement.

THANKING YOU

GOKUL RUNGTA
BA.LLB (B)
Enrollment No.
A11911112114