Labour and

Industrial Law-II

Assignment topic:-

“MINIMUM WAGE
ACT,1948”

Submitted to:-
DR. Meenu Singh
Submitted by:-
Apoorv Chopra
813
LL.B.(4TH SEM.)

MINIMUM WAGES ACT

 India is a labour-intensive country as we have a great amount of
human capital to invest in our industries and other areas of work.
Minimum wage is an indispensable part of any such country because
there is a huge chunk of population which is dependant on daily
wages for their bread and butter.
The concept of minimum wages in India was brought in by Mr K. G.
R. Chaudhary in 1920. After the International Labour Conference,
1928, the machinery of wage-fixing was brought into actual policy
formulation. The bill regarding the same was brought in 1946 and by
the year 1948, the bill was enforced and we had saviour rights for all
the blue-collar workers. Blue-Collar Workers refer to those people
whose profession requires them to perform manual labour.
The advent of this Act ensured that sweated labour was protected
from any type of exploitation and their rights are duly recognized.

Objective of the Act

There were several objectives that this Act needed to ensure:
Minimum wages need to be ensured to all blue-collar workers in the
organized sector.
Prohibition of exploitation of labour in the workplace.
The Act would empower the government to fix minimum wages and
revise those wages from time to time according to the economic
situation of the country.
To ensure the application of this Act to a maximum number of
organized sector employers.

Constitutional Validity of the Act

The Act is constitutionally valid and it can be ascertained from the
following pointers:
The Act does not violate Article 19 of the Constitution: The
constitutional validity of the Act was challenged in the cases of U.
Unichonoy vs State of Kerala and Gulmuhommad Tarasaheb vs State
of Bombay. The parties challenged that this law restricted their
Article 19(1)(g), as it puts a restriction on freedom of trade. But, the
court held in favour of the Act. It was held that, in the absence of any
such Act, the employers will pay wages, arbitrarily.
The Act does not violate Article 14 of the Constitution: It was
contended that the Act violates the ‘equal protection of laws’ clause.
However, the court ruled that the Act does not violate Article 14 in
the case of Bhikusa Yamasa Kshatriya vs Sangammar Akola Bidi
Kamgar Union.

Historical Backdrop
In 1920, Shri K.G.R. Choudhary recommended setting up boards
determining wages for each industry.
In 1928, the International Labour Conference was adopted that
determines different minimum wages for different sectors.
In 1943, in recommendation of International Labour conference, a
labour investigation committee was adopted to investigate in the
matters like housing, social conditions and employment.
In 1945, draft bill was considered by the Indian Labour Conference.
In 1946, the 8th meeting of standard labour committee was held that
to enact a separate legislation for unauthorized sectors including
minimum wages, paid hours and working hours.
In 1948, the Minimum Wages Act was passed. Under this a
committee was formed “The tripartite committee of fair wage”
which has given the definition of minimum wage.

Salient features of the Act

The act has some salient features, let us have a look at them.
The Act specifies for minimum wages for all government sectors
employees, both centre and state.
The minimum wages include House Rent Allowances. Therefore,
Minimum Wages is equals to (=) Minimum Payment + Special
Allowances
There are several kinds of wage-fixing mechanisms:
Minimum Wage Rate;
Minimum Piece Rate;
Guaranteed Time Rate;
Time Rate or Piece Rate Applicable to Overtime.
Classes of fixing minimum rates of wages :
(a) different scheduled employments;
(b) different classes of work in the same scheduled employment;
(c) adults, adolescents, children and apprentices; and
(d) different localities (zone-wise).
There is a standard criteria of fixing minimum wage rate. Standard
family consists of four members where it is considered that three
consumption units are required on one earner.
The food requirement must be ascertained by the regular calorie
intake by the family.
It is considered that the family requires clothing of 72 yards.
The rent is considered to correspond to the minimum area.
The expenditure is generally considered to be 20% of the minimum
wage earned.
The social expenditure is also considered to be 25% of the total
minimum wage.
The minimum wages must be revised within 5 years and the revised
special allowance must be announced every six months.
The regional labour commission shall be the authority for claiming
the remedy under Section 20 of the Act. In Gujarat, Assistant
Commissioner of labour shall be the authority.

Application of the Act

The application of the Act can be seen in the provisions. The
provisions clearly mention all the procedures and the enactment of
the laws laid down.
Employee– a person who is employed for hire or reward to any
work.
Section 3 to 9 of the minimum wages act, 1948 mentions the
procedure for the determination of minimum wages. Section 3(i) of
the act provides that the appropriate government shall be
empowered to fix the minimum wages in the manner prescribed
under this act. It shall fix the minimum rates of wages payable to
employees employed in an employment specified in part 1 or part 2
of the schedule. But the appropriate government may, in respect of
employees employed in an employment specified in part 2 of the
schedule, instead of fixing minimum wages under this clause for the
whole state, fix such rates for a part of the state or part thereof, thus
the jurisdiction to determine the minimum wages is with the
appropriate government.
Section 3(1)(A) provides that the appropriate government may
refrain from fixing minimum rates of wages in respect of any
scheduled employment in which there are in the whole state less
than 1000 employees engaged in such employment. But if at any
time the number of employees has risen to one thousand or more,
then it shall determine the minimum rates of wages.
Subsection (2) provides that the government may fix:

A minimum rate of wages for time work ( i.e., ‘a minimum time

rate.’)
A minimum rate of wages for piece work (i.e., ’a minimum piece
rate.’)
A minimum of remuneration to apply in case of employees employed
on 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.”
A minimum rate to apply in substitution for the minimum rate which
would otherwise be applicable, in respect of overtime work done by
employees which are known as “overtime.”

CASE LAW
HYDRO ENGINEERS PVT.LTD.V/S WORKMEN (A.I.R 1969 S.C.182) –
The supreme court held that the main purpose of section3(2)(c) is to
face such circumstances where the operation of minimum piece rate
fixed by the government may result in worker earning less than
minimum wages.
In fixing or revising minimum rates of wages under section 3,
different minimum rates of wages may be fixed for the following:
I. Different scheduled employments
II. Different classes of work in the same scheduled employment
III. Adults, adolescents, children and apprentices:
IV. Different localities

Fixation of minimum rates of wages

The policy formulation regarding minimum wage happens only after
due deliberation on the following:
The minimum wages must be in compliance with the cost of living
index of the employees.
The basic wage rate with or without the cost of living allowance
along with the authorised cash value of concessions pertaining to the
supply of essential basic commodities at subsidized rates.
Comprehensive basic wage rate will include the cash value of the
concessions, cost of living and the basic rate.

Minimum rates of wages

The minimum rate of wages is clearly defined in the table given
below:

Procedure for fixing and revising minimum wages

Section 5 of the Act gives the procedure for fixing and revising the
minimum wages. The appropriate government shall appoint
committees and subcommittees that may be able to advise on the
fixation of minimum wages. The appropriate government is also
supposed to publish the minimum wage fixation in the newspapers
so as to inform the stakeholders regarding the changes
implemented. This publication has to be done at least before two
months of the implementation. The stakeholders may also raise
issues if any after the publication. The ascertainment of the
minimum wage is then published in the Official Gazette. There may
also be consultations regarding the revision of wages, with the
Advisory Board. One may wonder, what constitutes an Advisory
Board. Let us know what is it and its constitution.
U. UNICHAY V/S STATE OF KERALA (A.I.R1962) HYDRO ENGINEERS
PVT.LTD. V/S WORKMEN (A.I.R1969 S.C. 182) AND CHANDRA
BHAWAN BOARDING AND LODGING, BANGLORE V/S STATE OF
MYSORE (A.I.R1970 S.C. 2042) – It was said that the minimum rate of
wages means the essential commodity required to live like food,
residence, clothes, etc. Are not only, but also education, medicine
and other necessary facilities.

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.
Minimum time-rate wages of piece work
The minimum time rate must be given to those who are employed
on the piece-rate system. The system must not be a minimum piece
rate but only minimum time rate. The minimum time rate is a
system, where the wages are paid on the basis of the time worked.
Section 17 of the Act provides for this clause.
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.
What is the responsibility of the employer towards payment of
wages to employee?

Every employer shall be responsible for the payment of all wages

required to be paid under the Payment of Wages Act, 1936 to
persons employed by him and in case of persons employed-
In the case of contractor, a person designated by such contractor
who is directly under his charge;
A person designated by the employer as a person responsible for
complying with the provisions of the Act

Are contract workers covered under the Minimum Wages

Act?
The provisions of the Act are applicable to the contract labour if the
employment in which they are engaged is duly covered by the
Minimum Wages Act, 1948
.
What penalties can be imposed on employers for
contraventions of any provisions of the Minimum Wages
Act?
Offences of employers such as paying his employees less than the
minimum wages fixed to his class of work or fails to pay them
overtime wages and for work done by them on the day of rest, etc. is
punishable under Section 22 of Minimum Wages Act, 1948 by
imprisonment upto six months or fine or both.
Section 22 B provides that cognizance of offence should be taken
only when the Authority under Section 20 of the Act sanctions the
application and the appropriate Government gives its sanction to file
a complaint.
Section 22 C of the act clarifies who could be held guilty in case the
employer happens to be an incorporated body, firm, association of
persons, etc.
Section 22 D deals with the case of payments found due to an
employee who is dead or not traceable.

What is the provision relating to timely payment of wages

to employees?
As per the provisions under Payment of Wages Act, 1936 wages
needs to be paid-
Before the expiry of the 7th day after the last day of the wage period,
where there are less than 1000 workers employed and in rest case
on the 10th day;
In current coin or currency notes and by cheques or by crediting the
wages in the employee’s bank account after obtaining his written
authority;
On a working day;
Before the expiry of the second day, to the person whose
employment is terminated.

What type of deductions can be made on pay?

The following mentioned are the main deductions that are allowed
under the Payment of Wages Act, 1936-
Fines;
Deduction for the actual period of absence
 Deduction for the damage or loss of goods expressly entrusted
to the employed person;
Deduction for house accommodation;
Deduction for the amenities and service supplied by employer
with agreement to the employee;
Deduction for recovery of advances and interest, and
adjustment of overpayment;
Deductions for recovery of loans from any fund constituted for
the welfare of labour as agreed between employer and
employee;
Deduction for income tax;
Deduction on orders of a court or other authority;
Deduction for subscription and repayment of advance from any
Provident Fund;
Deduction for payments to cooperative societies as agreed
between employer and employee;
Deduction of premium for LIC policy on written authorization of
the employed person; or any other investment for Post Office
Saving Schemes;
However, as mentioned in section 7 of the Act, the total amount of
deductions should not exceed 75% of wages of the employee in any
wage period if whole or part of the deductions is meant for the
payments to cooperative societies. In other cases it should not
exceed 50%.

-Thank you-