THE MINIMUM WAGES ACT

Objects of the Act

 The main aim of the Act is to make provisions for statutory fixation of
minimum rates of wages in scheduled employment wherein labour is
not organised and sweated labour is most prevalent.
 The Act purports to prevent the exploitation of labour and for that
purpose, authorises the appropriate Government to take steps to
prescribe the minimum rates of wages in certain employment.
 The State assumes that every employer must pay minimum wages to
the labour engaged by him.
 This Act purports to empower the Government to take steps for fixing
minimum wages and revise it in a timely manner.
 Act does not consider the paying capacity of employer.
 Such provisions for statutory fixation of minimum wages was
necessary in India because worker’s organisation was poorly
developed and bargaining power was consequently poor.
Salient features of the Act

 The Act contemplates the minimum wage rates must ensure not
merely the mere physical needs of a worker which would keep them
just above starvation level, but must ensure for him not only his and
his family’s subsistence, but also to preserve his efficiency as a
worker. It should therefore provide something above the bare
subsistence level.
 Minimum wage is fixed on ethical ground and not on economic
ground. It does not consider either the value of work done by a
worker or the capacity of the employer to pay. It is a bedrock
minimum which must be paid to a worker in any case.
 Where an employer pays less than the minimum wages, a summary
procedure is prescribed for recovery of the balance with penalty and
subsequent prosecution of the offending party.
Salient features of the Act

 A higher period is allowed for fixation of minimum wages for

agricultural labour as administrative difficulties were more than in
other sectors.
Scope

 The Act requires appropriate Government to fix within a specified

period, minimum rates of wages payable to employees in the
Scheduled Employments.

 Minimum wages need not be fixed in respect of a State if it employs

less than 1,000 employees in an industry.
Important Definitions

Competent Authority [Sec. 2(c)]

“competent authority” means the authority appointed by the
appropriate government by notification in its Official Gazette to
ascertain from time to time the cost of living index number applicable
to the employees employed in the scheduled employments specified
in such notification.

Cost of living index number [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 employee in such
employment.
Important Definitions

Employer [Sec.2 (e)]

“employer” means any person who employs whether directly or
through another person or whether on behalf of himself or any other
person one or more employees in any scheduled employment in
respect of which minimum rates of wages have been fixed under this
Act and includes except in sub-section (3) of section 26 –
(i) in a factory where there is carried on any scheduled employment
in respect of which minimum rates of wages have been fixed, any
person named as manager of the factory;
(ii) in any scheduled employment under the control of any
government in India in respect of which minimum rates of wages
have been fixed under this Act the person or authority appointed by
such government for the supervision and control of employees or
where no person or authority is so appointed the head of the
department;
Important Definitions

(iii) in any scheduled employment under any local authority in respect

of which minimum rates of wages have been fixed under this Act the
persons appointed by such authority for the supervision and control
of employees or where no person is so appointed the chief executive
officer of the local authority;
(iv) in any other case where there is carried on any scheduled
employment in respect of which minimum rates of wages have been
fixed under this Act any person responsible to the owner for the
supervision and control of the employees or for the payment of
wages;
Important Definitions

Scheduled Employment [Sec.2(g)]

“schedule employment” means an employment specified in the
Schedule or any process or branch of work forming part of such
employment.

Wages [Sec.2(h)]
“wages” means all remuneration capable of being expressed in terms of
money which would if the terms of the 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
Important Definitions

(b) any other amenity or any service excluded by general or special

order of the appropriate government;
(ii) any contribution paid by the employer to any pension fund or
provident fund or under any scheme of social insurance;
(iii) any traveling allowance or the value of any traveling concession;
(iv) any sum paid to the person employed to defray special expenses
entailed on him by the nature of his employment; or
(v) any gratuity payable on discharge.
 Important Definitions

Employee [Sec.2(i)]

employee” means any person who is employed for hire or reward to do any
work skilled or unskilled manual or clerical in a scheduled employment in
respect of which minimum rates of wages have been fixed; and includes an out-
worker to whom any articles or materials are given out by another person to be
made up cleaned washed altered ornamented finished repaired adapted or
otherwise processed for sale for the purposes of the trade or business of that
other person where the process is to be carried out either in the home of the
out-worker or in some other premises not being premises under the control and
management of that other person; and also includes an employee declared to
be an employee by the appropriate government; but does not include any
member of the Armed Forces of the Union.
Fixing of Minimum Rates of Wages (Sec.3)

The Appropriate Government:

 Shall fix minimum rates of wages for an employment specified in Part
I or Part II of Schedule & added by notification in official gazette.
 May fix rates for a part of the state or for any specific class or classes
instead of fixing minimum rate of wages for whole state.
 Shall review and revise at intervals not exceeding 5 years the
minimum rates of wages.
 Appropriate Govt. has when not reviewed the minimum rates of
wages within an interval of 5 years, it may do so after the expiry of
such 5 years and may also revise them.
 Sub section 1A: appropriate Govt. may refrain from fixing the
minimum rates of wages in respect of any scheduled employment In
which there are in the whole State not more 1000 employees in any
Schedued employment.
Fixing of Minimum Rates of Wages (Sec.3)

Four ways in which appropriate Govt. may fix wages:

a) A minimum time rate;
b) A minimum piece rate;
c) A guaranteed time rate;
d) Overtime rate

Different Minimum Wages May Be Fixed By The Government For:

 Different employments (specified in the schedule)
 Different classes (e.g. skilled, unskilled, semis skilled, etc.) of work in
the same employment
 Adults, adolescents, children and apprentices
 Different localities
Minimum rates of wages may be fixed by any one or more of the following
wage periods, namely:
• By the hour
• By the day
• By the month
• By such other larger wage period
as may be prescribed; and where such rates are fixed by the day or by
the month, the manner of calculating wages for a month or for a day,
as the case may be, may be indicated.
Minimum Rate of Wages (Sec.4)

1.Basic + Special Allowance (Which varies with the cost of living index)
2. Basic + Cash value of concessional supply of materials like food,
clothes, etc
3. An all inclusive rate which includes Basic + Cost of living Allowance +
Cash value of concessional supply of materials.
Procedure for fixing and revising minimum
wages (Sec.5)

 Publish its proposals in the official gazette asking comments from

the affected parties
 Constitute committees/sub committees for the purpose.
 The committees/sub-committees and advisory boards constituted by
the Government consist of equal number of members of :
o Employers
o Employees, and
o Independent persons
Fixation of Minimum Wages

Recommendation of Advisory Board for different class [unskilled,

skilled, Clerk, Supervisor]

Publish recommendations in National Publications [for public

comments/representations from Trade Unions etc.]

Hearing of the Representatives etc.

Notification of Minimum wages

Advisory Board

Advisory Board [Sec.7]

 Appointed by appropriate government.
 To co-ordinate the work of committees and sub committees appointed
under Section 5.

Central Advisory Board [Sec.8]

Appointment is obligatory by Central Govt. for following purposes:
 To advise the Central and State Governments in fixation and revision
of minimum rates of wages.
 To co-ordinate the work of the Advisory Boards.
Composition of Committees and Central
Advisory Boards etc.[Sec.9]

 Each of the committee, sub-committee and the Advisory Board shall

consist of:
a. persons to be nominated by the appropriate Government
b. representing the employers and employees in the scheduled
employments who shall be equal in number and
c. independent persons not exceeding one-third of its total number of
members: one of such independent persons shall be appointed the
Chairman by the appropriate Government.
Correction of Errors [Sec.10]

 By appropriate Government at any time.

 By notification in the Official Gazette.

 Correct clerical or arithmetical mistakes or errors arising from and

accidental slip or omission.

 Every such notification shall be placed before the Advisory Board for
information.
Wages in kind [Sec.11]

 Minimum wages shall be paid in cash.

 The appropriate govt. may authorize, where there has been a custom
of payment in this manner, payment of minimum wages either wholly
or partly in kind.
 The appropriate govt. may authorize supply of essential commodities
at concessional rates.
 The cash value of wages in kind and of concessions to be estimated
in prescribed manner.
Payment of Minimum rates of Wages
[Sec.12]

 The Minimum Wages has to be paid without any deductions other

than Statutory Deductions.
Fixing Hours for Normal Working Day
[Section 13]

 Appropriate Govt., in regard to scheduled employment, may

a) fix the number of hours of work inclusive of one or more intervals;
b) provide for a day of rest in every period of seven days with
remuneration;
c) provide for overtime rate for working on a day of rest.
Above provision shall apply to such extent and subject o such conditions
as prescribed in relation to following classes of employees:
a. engaged on urgent work;
b. engaged in work in nature of preparatory or complementary work;
c. where employment is intermittent;
d. engaged in any work which for technical reasons has to completed
before the duty is over;
e. engaged in work dependant upon the irregular action of natural
forces.
Overtime [Sec.14]

Employee working on any day in excess of his working hours

constituting his normal working day, he shall be paid the overtime
rate fixed under the Act or under any law whichever is higher.

Wages for a person who has worked less than normal working
hours [Sec. 15]
 Employer could not provide the activities of the job then, the
employee is entitled to receive full salary.
 Employee has not worked due to his unwillingness then, the
employee is not entitled to receive full salary.
Wages for two or more classes of work [Sec.16]
Where an employee does two or more classes of work for which
different minimum rate of wages is applicable, employer shall pay
according to time respectively occupied for them.

Minimum time rate wages for piece work [Sec.17]

Where an employee is employed on piece work for which minimum
time rate is fixed, employer shall pay to such employee wages at not
less than minimum time rate.
Contracting Out [Sec.25]
Any contract or agreement, whether made before or after the
commencement of this Act, whereby an employee either relinquishes
or reduces his right to a minimum rate of wages or any privilege or
concession accruing to him under this Act shall be null and void so far
as it purports to reduce the minimum rate of wages fixed under this
Act.