Concept of minimum wages fair wage and living wage and need

based minimum wages.

According to economic theory, wages are defined broadly as any economic

compensation paid by the employer to his labourers under some contract for
the services rendered by them. In its actual sense which is prevalent in the
practice, wages are paid to workers which include basic wages and other
allowances which are linked with the wages like dearness allowances, etc.
Traditionally, in the absence of any bargaining power possessed by labourers,
they did not have any say in the determination of wages paid to them.
In the Indian context, soon after the independence, Government of India set
up a Committee on Fair Wages in 1948 which has defined various concepts of
wages which govern the wage structure in the country specially in those
sectors which can be termed as underpaid and where workers do not have
bargaining power through unions. These concepts are: minimum wage, living
wage, and fair wage. Later, the concept of need-based minimum wage was
added. Let us have a brief look at these concepts.

Minimum Wage

A minimum wage is one which has to be paid by an employer to his workers

irrespective of his ability to pay. According to the above committee Minimum
wage is the wage which must provide not only for the bare sustenance of life,
but for the preservation of the efficiency of the workers. For this purpose,
minimum wage must provide some measure of education, medical
requirements and amenities.

Subsequent to the committee’s report, Government enacted legal provisions

regarding minimum wages under the Minimum Wages Act. 1948. This Act
does not define the concept of minimum wages but empowers the Central
Government as well as State Governments to fix minimum wages from time to
time. Wherever this Act applies, the payment of minimum wages is
mandatory. In 1957, Indian Labour Conference elaborated the concept of
fixation of minimum wars which were termed as need-based minimum wages.
For the calculation of wages, the Conference suggested the following
guidelines:-

The standard working class family should be taken to consist of three

consumption units for the earner; the earnings of women, children and
adolescents should be disregarded.

The minimum food requirements should be calculated on the basis of the net
intake of 2.700 calories per adult.

The clothing requirements should be estimated at a per capita consumption of

18 yards per annum per person.

In respect of housing. the norms should be the minimum rent charged by the
Government in any area for houses provided under subsidized housing
scheme for low-income groups.

Fuel, lighting and other miscellaneous items of expenditure should constitute

20 per cent of the total minimum wage

Fair Wage

The concept of fair wage is linked with the capacity of the industry to pay. The
Committee has defined fair wage as follows:
Fair wage is the wage which is above the minimum wage but below the living
wage. The lower limit of the fair wage is obviously the minimum wage: the
upper limit is to be set by the capacity of the industry to pay.

Thus, fair wage depends on different variables affecting wage determination.

Such factors are labour productivity prevailing wage rates, the level of national
income and its distribution and the capacity of industry to pay. At present, the
concept of fair wages is followed by the most business organisations.

Living Wage

Along with the minimum wage the Committee on Fair Wages has given the
concept of living wage which has been defined as follows:-
A living wage is one which should enable the earner to provide for himself and
his family not only the essentials of food, clothing, and shelter but a measure
of frugal comfort including education for his children, protection against ill-
health, requirements of essential social needs and a measure of insurance
against the more important misfortunes including old age.

Living wage is more than the concept of minimum wage. Such a wage is
determined keeping in view the national income and paying capacity of
industrial sector. The Committee also observed that since the national income
did not support the payment of living wage. It should be implemented in three
phases. In the initial stage the wages to be paid to the entire working class
were to be established and stabilized. In the second phase fair wages were to
be established in the community and industry. In the final phase the working
class was to be paid the living wage.

Minimum Wages

This is the type of wage provided for bare subsistence so that the workers can
maintain a decent standard of living such as providing for educatio, medical
requirements and an adequate level of comfort. Fair wage: Any wage paid to
the employees that are more than the minimum wage is known as a fair wage.

Need basis of minimum wages

The need-based minimum wage is also a level of fair wage and represents a
wage higher than the minimum obtaining at present in many industries,
though it is only in the lower reaches of the fair wage. It, therefore, hold that in
fixing the need-based minimum, the capacity to pay will have to be
considered.
 The Maternity Benefit Act, 1961 – Overview

Introduction

Comprising half the population, women make up a crucial chunk of the

workforce. Employment demands the need to balance work and child-bearing
and child-caring responsibilities. The Constitutional framework endeavours to
provide equality to women in all walks of life. In furtherance of this pursuit, the
Maternity Benefit Act, going along the lines of the International Labor
Organisation, aims to grant maternity protection to women. The Maternity
Benefit Act of 1961 and the very recent amendment of 2017 ensure active
participation in economic activities post maternity. The gradual change that
society has undergone demands that women have not become vulnerable during
the fragile phase of pregnancy.

Hence, the Maternity Benefit Act ensures that a woman has equal protection to
employment during pregnancy so that it does not impact women, their
productivity or economic growth.

Scope and need for the legislation:

National and International perspective

The fundamental aim of the Act is to remove the obstructions that women
encounter when they entail on the journey of motherhood. The Act has the
primary aim of enabling women to combine work and not compromise on their
choice of having a child. Tracing history, Germany led the race by having
maternity allowance by the end of the 19th century. International Labor
Organization followed the concept and came up with the Maternity Protection
Convention. In the Indian scenario, the need to have a maternity benefit
legislation was recognized by N.M Joshi as back as 1929, when he introduced
the Maternity Benefit Bill (No. 31 of 1924) in the Central Legislature. Before
this, Women’s Association India had already led a quest demanding
maternity rights in the Jamshedpur steel industry in 1920. Post that, the
Central Government showed efforts by introducing the Mines Maternity
Benefit Act 1941, Employees’ State Insurance Act 1948, and Plantations
Labour Act 1951, which finally paved way for the Maternity Benefit Act of
1961, which was enacted by the Parliament with the sole object to regulate the
employment of women for a certain period before and after child-birth.
The reasons that compelled the codification could be seen in the discrepancies
with respect to the different periods of maternity leave as well as the qualifying
period of service of eligibility for maternity benefit. Thereby, fulfilling a
broader object of protecting dignity attached with motherhood by providing full
and healthy maintenance of woman and her child during the period when she is
not working.

In the International Arena

The United Kingdom grants 52 weeks of maternity leave with 6 weeks paid at
90% of the average weekly earnings.

In the case of Australia,

52 weeks of paid maternity leave is provided.

In South Africa,

the condition is comparably unsatisfactory with 17 weeks paid with 60 per cent
of the wages which is shared by the employer, employee and the government.

In Singapore,

the conditions are impressive with 16 weeks of full payment that is shared by
the employer and the government via public funds.

2017 Amendment
The 2017 Amendment was brought in after the 259th Law Commission Report

Which states as follows:

“The Maternity Benefit Act be amended in accordance with the forward-looking

provisions in the CCS Rules, whereby maternity benefits should be increased
from twelve weeks to 180 days. The provision of maternity benefits should be
made obligatory on the State and not left to the will of the employers and should
cover all women, including women working in the unorganized sector. It is
suggested that the government formulates policy or guidelines laying down
minimum specifications of paid maternity leave to women employed in the
private sector.”

The Amendment Bill was introduced in the Rajya Sabha by the Minister for
Labour and Employment, Mr Bandaru Dattatreya. The Bill was introduced after
the 44th Session of the Indian Labour Conference (ILC) recommended
enhancement of maternity leave period, which was reiterated in the 45th and
46th Session. This was coupled with the suggestions of the Ministry of Women
and Child Development that aimed at improving the ambit of maternity benefits
for women. As per World Health Organization Recommendations, there was a
need to increase the duration of Maternity Leave to protect the mother’s and
child’s health, especially since a child needs to be breastfed for the first 24
months to improve the survival rate.

Analysis of important provisions of the legislation

i) Duration of maternity leave [S. 5(3)]

The Act states that every woman shall be entitled to a maternity benefit of 12
weeks. The Act endeavours to increase the same to 26 weeks. Furthermore, as
per the prior provisions, a woman could not avail of the said benefit before 6
weeks from the date of expected delivery. The Amendment changes this to a
period of 8 weeks. In the case of a woman having two or more children, the
maternity benefit will continue to be 12 weeks, which cannot be availed before
six weeks from the date of the expected delivery.

(ii) Maternity leave for adoptive and commissioning mothers: [S.5(4)]

The Amendment furthermore grants 12 weeks of maternity leave to, a woman

who legally adopts a child below three months of age; and a commissioning
mother who has been defined as a biological mother who uses her egg to create
an embryo implanted in another woman. The 12 weeks of maternity benefit will
be calculated from the date the child is handed over to the adoptive or
commissioning mother.

(iii) Option to work from home: [S.5 (5)]

The Amendment brings in a novel provision that permits women to work from
home, depending upon the nature of the work that is to be carried out by them.
By a mutual agreement, the work can be decided upon by the employer and the
employee. This option does not get exhausted after delivery but can continue
even post-delivery for a period mutually decided by the employer and the
woman.

(iv) Crèche Facilities: [S.11A-(1)]

The Amendment brings in a fresh provision of having creche facilities within a

stipulated distance. The mother shall be allowed 4 visits to the creche in a day,
including her time for rest.
(v) Informing women employees of the right to maternity leave: [S.11-A (2)]

The provision calls for spreading awareness amongst women employees at the
time of their employment vis-à-vis maternity benefits available to them.

(vi) Leave for Miscarriage [S.9]

After a miscarriage or medical termination of pregnancy, a woman shall be

given a 6 weeks maternity benefit on the production of medical documents.

(vii) Leave with wages for tubectomy operation [S.9-A]

After providing necessary medical documents, a woman shall get 2 weeks of

maternity benefit immediately after the operation.

(viii) Prohibition of dismissal during absence or pregnancy [S.12]

It is unlawful to dismiss or discharge a woman employee who is absent from

work in accordance with provisions of this Act. If the employer has dismissed
or discharged the employee, he will have to pay her maternity benefit or bonus
as specified in the Act. If this is not complied with, then the aggrieved woman
can appeal to the authorities.

(ix) Appointment of inspectors [S.14]

For administration and enforcement of the Act, the government has appointed
Inspectors. According to S.16, these Inspectors shall be Public Servants as
defined in S.21 of the Indian Penal Code.

(x) Power of Inspector to direct payments to be made [S.17]

An Inspector can make an enquiry on his own or by complaint given by the

aggrieved employee. If after investigation the complaint is found to be correct
then the Inspector can direct the employer to pay the employee. If the employee
is not satisfied with the decision of the Inspector then an appeal can be made to
the prescribed authority.
(xi) Penalty for contravention of Act by employer [S.21]

If the employer fails to pay the amount, then he shall be punished in accordance
with provisions of the Act. There shall be imprisonment for not less than 3
months and extendable up to 1 year, with a fine, not less than Rs.2000 which
may extend up to Rs.5000. The aforementioned provisions are an exhibit of a
progressive approach of the legislature regarding women’s rights and the need
to provide women ample opportunity and space for growth which they
otherwise were deprived of before this particular amendment. The legislature
has adhered to the ethos of a welfare state by churning out this amendment.

Views of the National Commission on labour I & II

(i) Commission on labour 1

The first Labour Commission of 1969 apart from doing the spadework of laying
down the basic labour safety and security code, elaborated on the need to have
welfare for the working class. The provision for having creche was spoken of.
The fact that there was an embargo of having a minimum of 50 women workers
to have a creche facility was to be brought down effectively. Employers are to
provide incentives to promote family planning and engage with the government
to effectively render services for the well-being of their employees. Apart from
this, vis-à-vis maternity benefits, a scheme of the central fund was to be adopted
to materialize the goals of the Maternity Benefit Act, 1961.

(ii) Commission on labour 2

The Second Labour Commission, constituted in the year 2002, apart from
calling for a broad classification of labour laws, emphasised the need for
greater social security for the workers, including those in the unorganised
sector. It moreover delineated from the sexist notion of ‘workman’ and changed
it to ‘worker’ acknowledging the female workforce and the need to confer rights
upon them. It also focused on prohibiting unfair dismissal on arbitrary grounds.
Recognising the need for the safety of women and their children, the provision
for having a creche was outlined in the report.

Suggestions/Recommendations

The Amendment of 2017 has brought about any necessary changes to

acclimatize to the changing global conditions about this particular issue. Even
though this amendment has gone a long way in bringing about positive changes
in its sphere, certain lapses can still be seen in Indian jurisprudence. The
pressing issues that need to be addressed through this legislation are suggested
as follows:

Making the provisions gender neutral

In today’s world where gender equality is at the forefront of every aspect,

India’s legislative provisions must address these issues. Although the
amendment of 2017 has addressed key important issues, it has failed to take into
consideration the importance of gender neutrality. The Act has focused on the
fact that a child needs its mother during the formative years but has not taken
into consideration the need of a father during this time. Hence it is of utmost
importance that the Act takes into consideration Paternity Benefits and Leave as
well.

Dividing the payment of maternity benefits

In India, the employer has to pay maternity benefits to the employee. After the
amendment, the duration of leave has changed from 12 weeks to 26 weeks,
which has increased the burden on the employer significantly. This could lead
to discouragement from hiring women employees. In Singapore, a 16-week
leave is given but the payment of benefits is divided equally between the
employer and the state via public funds. India should also implement a similar
policy so that the employer does not get discouraged from hiring women
employees.

Conclusion

The amendment of the Maternity Benefits Act has very beneficial provisions for
working women. But, the drafters of the amendment failed to consider the
shortcomings of the Act. These inadequacies have been discussed in the
suggestions. The amendment has brought the Indian legislation at par with the
International legislations and taken the recommendations given by the 259th
Law Commission report and the 2nd Commission on Labour, but they
should study the provisions in various countries as well. Like in Singapore, the
state shares the burden with the employer for paying maternity benefits. As the
full burden is now on the employer, they might be hesitant to hire more women
employees. The Amendment is also not fully future-ready. This is because,
although on one hand, it added provisions to enable employees to work from
home, it did not consider the factor of paternity benefits.
ESI Corporation: -
ESI is a social security scheme offered by the Government of India as per the Employees'
State Insurance Act, 1948. The Social security legislations that provides for protection of
employees against disablement / death due to employment injury, sickness, and maternity
and death due to employment injuries to workers..

Employees' State Insurance Act,1948 is a social security legislation that provides for
medical care and cash benefit in the contingencies of sickness, maternity, disablement, and
death due to employment injury to workers.

The ESI Scheme is financed by contributions from employers and employees. The rate of
contribution by employer is 4.75% of the wages payable to employees. The employees'
contribution is at the rate of 1.75% of the wages payable to an employee.

This comprised a bunch of five benefits.

A) Medical Benefit
B) Sickness Benefit
C) Maternity Benefit
D) Disablement Benefit
E) Dependants' Benefit.

Welfare of labour:-