This article is written by Abanti Bose and Arya Mittal. The article seeks to provide a brief analysis of the Minimum Wages Act, 1948. An attempt has been made to identify the operating provisions of the Act and the changes brought under the minimum wage law through the Code on Wages, 2019.

Introduction 

The economic policies and labour laws complement each other in India. To ensure the social justice and economic well-being of the workers, the Parliament enacted the Minimum Wages Act, 1948. Enacted to address the growing concerns of worker exploitation and inequality, the Act has far-reaching implications for both employees and employers. The primary objective of the Minimum Wages Act, 1948 is to safeguard the interests of the workers by providing a mechanism for ensuring a bare minimum level of remuneration.

From agriculture and manufacturing to the service industry, the Act plays a pivotal role in establishing equitable compensation structures. Additionally, there are various challenges in implementing and adhering to the stipulated minimum wages, considering the dynamic nature of economic landscapes and the diverse needs of an expanding workforce.

The Act categorises the workers into skilled, semi-skilled and unskilled labourers and provides the mechanism for fixing separate minimum wages for each class of labour. In this article, an attempt has been made to analyse the important provisions of the Act, along with the important judicial pronouncements by various Courts of the country. Further, the provisions of the Act have been compared with the provisions of the Code on Wages, 2019, in order to ascertain what changes would be implemented through the new legislation.

Need for minimum wages

The exploitation of labourers in India became a norm at one point in history. Be it the Mughal period or the British rule, the labourers have always suffered economically as well as socially. To improve the situation of the labourers in the country, the State strives to eliminate poverty. By fixing the minimum wages for the labourers, the State tries to achieve the social objective of eradicating poverty of the labourers by guaranteeing a minimum remuneration for the work done, as well as the economic objective of motivating the workers to put in maximum efforts for maximum benefits. These benefits include, but are not limited to, the following:

1. Protecting workers from exploitation – By providing a minimum wage for a fixed number of hours, the exploitation of the workers shall be reduced to a great extent.
2. Ensuring a basic income – Minimum wages are fixed and revised based on adequate living standards. Thus, fixing minimum wages for the workers shall ensure a basic income for them.
3. Reducing income inequality – The disparity in income can be reduced by fixing the minimum wages of the workers.
4. Promoting economic stability – Fixing minimum wages for the workers shall provide a way to promote economic stability by improving the standard of living.
5. Setting labour standards – By reducing the exploitation of workers, the standard of work would improve to a great extent.
6. Addressing poverty – Fixing minimum wages of the employees paves the way for poverty eradication by encouraging more people to undertake work of any kind.

History of minimum wages

With the onset of the Industrial Revolution, the gap between the rich and the poor became wider. The poor were forced to work in factories and establishments to sustain themselves. This was the period when the need to have a law to protect the workers was felt. The Industrial Revolution in India arrived as late as 1854 when India was still a colony of the British. The first discussion in India regarding minimum wages followed its international counterpart, i.e., the Draft Convention adopted at the International Labour Conference, 1928, in the form of the Royal Commission on Labour. The Commission pointed out the need to adopt a structured wage system for the labourers. The question of wage-fixing machinery was again raised at the third and fourth meetings of the Standing Labour Committee held in 1943 and 1944 respectively. Lastly, the Minimum Wages Bill was introduced in 1946 and enacted in 1948.

Objectives of Minimum Wages Act, 1948

The main objectives of the Minimum Wages Act, 1948 are as follows:

1. To fix and revise the minimum wages to be paid by the employer to the employees in certain employments;
2. To fix an adequate minimum wage for all employees in the interest of the public;
3. To fix the daily working hours of an employee according to the employment type;
4. To prevent exploitation of the workers;
5. To resolve any issues pertaining to the non-payment or less payment of wages;
6. To establish and provide the powers and duties of inspectors;
7. To establish and provide the powers and duties of labour commissioners and other important labour officers;
8. To provide the powers to make rules to the appropriate government.

Application of Minimum Wages Act, 1948

The Minimum Wages Act, 1948, is applicable to the whole of India as provided under Section 1 of the Act. The appropriate government may fix minimum wages for scheduled employment if more than one thousand employees are employed in the given industry in the whole State, as provided under Section 1A of the Act. However, it is pertinent to note that this is not a mandatory condition for the application of the Act. The appropriate government may fix and revise minimum rates of wages for employment wherein less than one thousand employees are employed.

Important provisions of Minimum Wages Act, 1948

Important definitions

Appropriate Government

Since labour law is a subject under the Concurrent List in the Seventh Schedule to the Indian Constitution, both the Central Government and the State governments are authorised to legislate on the subject. Section 2(b) of the Act defines an appropriate government. In relation to industries such as railways, oilfields, major ports, or any establishment under central legislation, the Central government is the appropriate government. In every other industry, the State government is the appropriate government for the purpose of the Act. 

Cost of Living Index Number

Section 2(d) of the Act defines the cost of living index number as an index number as ascertained by the appropriate government in the Official Gazette in relation to the employees. Under the Act, the appropriate government determines the scheduled employment, in respect of which it notifies the minimum wages to be paid by the employer to the employees. The minimum wages are determined on the basis of the cost of living index number. The cost of living index number signifies the cost of a constantly changing standard of living.

Wages

Section 2(h) of the Act provides an inclusive definition of wages, including all remuneration capable of being expressed in terms of money that the employer pays to the employee during the course of employment. It also includes house rent allowance. However, it does not include any accommodation, supply of light, water, medical attendance, or any other amenity as the appropriate government may deem fit; any contribution of the employer towards the Pension Fund or Provident Fund; travel allowance; defrayed special expense; and any gratuity payable on discharge of the employee.

In Workman represented by Secretary v. Reptakos Bret & Company Ltd. & Anr. (1992), the Hon’ble Supreme Court took into consideration the Tripartite Committee of the Indian Labour Conference of 1957. The report of the Committee stated that the structure of the minimum wage policy has to be nothing more than at a subsistence level.

In Municipal Corporation of Delhi v. Ganesh Razak (1995), the Supreme Court held that the entitlement to minimum wages under the Act is an existing right of the workman and does not require any further adjudication than that of the Labour Court.

Employee

Section 2(i) of the Act defines an employee as any person who is engaged to do any skilled or unskilled, manual or clerical work, in respect of which minimum rates of wages have been fixed. It is an important definition under the Act as it defines the scope of its application. Not all employer-employee relations are governed by the Minimum Wages Act. Moreover, not all kinds of employees would fall under the ambit of claiming the benefits of minimum wages fixed by the appropriate government.

Fixing Minimum Rates of Wages

Section 3 of the Act provides for fixing the rates of the minimum wage by the appropriate government. Sub-section (1) provides that the appropriate government shall fix the minimum rate of wages payable to the employees in employment mentioned under Part I or Part II of the Schedule to the Act (Scheduled Employment) and review the minimum wages for a period of five years. Sub-section (1A) provides that the appropriate government may refrain from fixing minimum wages for any Scheduled Employment where the number of employees in the whole State is less than one thousand until such number remains less than one thousand. 

Sub-section (2) provides that the appropriate government may fix:

1. Minimum time rate;
2. Minimum piece rate;
3. A guaranteed time rate; and
4. An overtime rate.

Sub-section (3) provides the power to the appropriate government to fix different rates of minimum wages for the following:

1. Different scheduled employments;
2. Different classes of work in the same scheduled employment;
3. Adults, adolescents, children and apprentices; and
4. Different localities

These minimum wages can be fixed either on an hourly basis, by the day, by the month, or by any other time period as prescribed by the appropriate government.

Section 4 of the Act provides the minimum rates of wages. Minimum rates of wages shall consist of either:

“(i) a basic rate of wages and a special allowance at a rate to be adjusted, at such intervals and in such manner as the appropriate Government may direct, to accord as nearly as practicable with the variation in the cost of living index number applicable to such workers (hereinafter referred to as the “cost of living allowance”); or 

(ii) a basic rate of wages with or without the cost of living allowance, and the cash value of the concessions in respect of supplies of essential commodities at concessional rates, where so authorised; or 

(iii) an all-inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of the concessions, if any.” 

Further, Section 5 of the Act provides that the appropriate government may fix or revise minimum wages either by appointing committees and sub-committees or by publishing its proposal for the people likely to be affected by such proposals in the Official Gazette. 

In Standard Vacuum Refining Company v. Its Workmen (1961), the Apex Court held that the following shall be the guiding principles for the determination of minimum wages by all wage fixing authorities:

1. A standard working-class family should contain 3 units for every earning member, in which the earnings of women, children, and adolescents must be disregarded;
2. Minimum food requirement must be calculated on the basis of net calorie intake;
3. Clothing must be calculated at the rate of 18 yards per person per annum;
4. With respect to housing, the rent corresponding to the minimum area provided for under the Government’s Industrial Housing Scheme should be taken into consideration; and
5. Fuel, lighting, and other miscellaneous items of expenditure must constitute 20% of the total minimum wage.

Later, in Reptakos Brett & Company’s case, the Court added another factor for fixing minimum wages in addition to the above five. It was held that the education of the children, medical requirements, minimum recreation, including festivals, etc., and provision for old age, etc. should further constitute 25% of the total minimum wage.

With regards to the question of whether dearness allowance would constitute a part of the minimum wages, the Bombay High Court in the case of Harilal Jechand Doshi Ghatkopar v. Maharashtra General Kamgar Union (2000) held that the provisions of the Minimum Wages Act, 1948 do not postulate different criteria for the calculation of minimum wages. If the employer pays a total wage that is above the minimum wages fixed under the Act, he cannot be held to be in contravention of the provisions of the Act, as the total wages would comprise of basic wages and a dearness allowance.

A similar view has been taken by the Hon’ble Supreme Court in the case of Airfreight Ltd. v. State of Karnataka & Ors. (1999). The Court held that in cases where the minimum wages are linked with the cost of living index, the amount paid on the basis of dearness allowance is not to be taken as an independent component but rather has to be considered a part and parcel of the minimum wages.

Advisory board under Minimum Wages Act, 1948

Section 7 of the Act establishes the Advisory Board. The scope of the Advisory Board appointed by the appropriate government is the coordination of the committees and sub-committees established under Section 5 of the Act and advising the appropriate government on fixing and revising the minimum wages for Scheduled Employment. A Central Advisory Board (CAB) shall be established under Section 8 of the Act. The Central Government shall establish CAB and appoint its members. The members shall consist of an equal number of representatives of both the employers and the employees, along with independent members nominated by the Central Government. The Chairman of CAB shall be an independent member. The scope of work of the CAB is to ensure coordination with the Advisory Board and other matters under the Act.

Mode of payment of wages under Minimum Wages Act, 1948

All the wages shall be paid in cash only, as provided under Section 11 of the Act. However, where it has been a practice to pay the wages in kind, either wholly or partly, authorisation from the appropriate government is necessary. This includes concessions on essential commodities as required. 

Section 12 of the Act provides the manner in which the employees have to make the payment of the minimum wages. The provision provides that the employer shall pay the minimum rates of wages to every employee working under him within the prescribed time period.

Fixing hours for a normal working day under Minimum Wages Act, 1948

Section 13 of the Act provides that the appropriate government may fix the working hours in the following manner:

1. Fix the working hours of a normal day, including one or more specified intervals.
2. Provide a day of rest in every period of seven days to all the employees or a class of employees, and adequate remuneration must be provided to the employees during the day of rest.
3. Provide payment to the employees on the day of rest, which shall not be less than the overtime rate.

Section 14 of the Act provides that where an employee works over the specified number of hours in a normal working day, he shall be entitled to receive such overtime wages at the rate fixed under the Act for every hour after his normal working hours. 

In case an employee works for less number of hours in a normal working day than prescribed, he shall still receive the minimum wages fixed under the Act. However, this provision shall apply only if the lower number of hours of work was not caused by the unwillingness of the employee. The provision has been provided under Section 15 of the Act. 

Compliance under Minimum Wages Act, 1948

Section 18 of the Act mandates the maintenance of records and registers by every employer under the Act. The records shall contain the particulars of the employees employed by the employer, the work performed by them, the wages paid to them, the receipts given by them, and any other information prescribed by the appropriate government. The employer also has to keep an exhibit of the factory, workshop, or place where the scheduled employment is carried out. Such registers and records may be perused by the inspector appointed by the appropriate government under Section 19 of the Act. The inspector may:

1. In order to examine the register, a record of wages, etc., the inspectors may enter the premises or places within the local limits of their authority where the employees are employed to work and for which minimum rates of pay have been determined under the Act.
2. Examine any person whom the inspector may have reasons to believe is an employee. 
3. Require any contractor to provide information relating to the employees.
4. Seize or make copies of the wage registers, etc., which he may have reasons to believe were committed by the employer.
5. The appropriate government may provide any other powers or duties under the Act.

Every inspector under the Act shall be deemed to be a public servant as prescribed under the Indian Penal Code, 1860. 

Claims under Minimum Wages Act, 1948

The appropriate government may, by notification to the Official Gazette, appoint any Commissioner for Workmen’s Compensation or any officer of the Central Government exercising functions as a Labour Commissioner for any region, or any officer of the State not below the rank of Labour Commissioner, or any other officer with experience as a judge of a Civil Court or as stipendiary Judicial Magistrate to be the Authority to hear and decide for any specified area all claims arising out of payment of less than the minimum rates of wages or in respect of wages not paid within the prescribed time limit. A Block Development Officer, Tahsildar, Additional Tahsildar, or Naib Tahsildar can also be appointed as an Authority by the State Government by notification in the Official Gazette.

For the procedure under an application under Section 20 of the Act is made to the Authority, both the employers and the employees shall be granted an equal opportunity of being heard. Under this Section, every direction of the Authority shall be binding and final. The Authority appointed under the Act shall have the powers of a Civil Court under the Code of Civil Procedure, 1908 for the purposes of taking evidence, enforcing the attendance of witnesses, production of documents, etc.

Procedure before the Authority 

The following is the procedure to be followed before the Authority under the Act in cases relating to non-payment or payment of less than minimum wages fixed under the Act, as prescribed under Section 20:

• Both the employers and the employees shall be granted an equal opportunity to present their case.
• The Authority shall direct the refund of such amount of wages as has not been paid by the employer to the worker or has delayed in paying the wages, along with compensation to the extent of damages suffered by the worker.
• However, if the employer proves that the delay in payment of wages was due to a bona fide error, the Authority shall not direct any payment of compensation. An example of a bona fide error could be that the person authorised to make the payment of wages did not pay such wages even after due diligence of the employer.

Penalty under Minimum Wages Act, 1948

For a malicious or vexatious application of a claim under the Act, a penalty of not more than fifty rupees may be levied on the applicant to be paid to the employer, as has been provided under Section 20(4) of the Act. Sub-section (5) of Section 20 of the Act provides the mechanism for recovery of the penalty. If the Authority is a Magistrate, the penalty may be recovered by the Authority as if it were a fine imposed by the Magistrate. If the Authority is not a Magistrate, the Authority has to make an application to the Magistrate and the penalty shall be recovered by the Magistrate as a fine imposed by such Magistrate.

For employers who have paid less than the minimum wage under the Act, or who are in contravention of an order passed under Section 13 of the Act, the punishment may extend to a term of not more than six months or a fine of not more than five hundred rupees may be imposed, subject to the amount of compensation awarded to the Applicant under Section 20 of the Act.

Exemption from liability in certain cases under the Minimum Wages Act, 1948

Section 23 of the Act provides that where an employer has been accused of committing any offence under the Act, and he charges the offence upon any other person, the employer shall be entitled to be discharged of such an offence if the following conditions are fulfilled:

1. The employer shall make a complaint against such other person before the Authority under the Act;
2. The employer shall bring before the Court such other person upon whom he places the charge of the offence;
3. The employer shall satisfy the Court that due diligence for the execution of the provisions of the Act was conducted on his behalf;
4. The employer shall satisfy the Court that such an offence was committed by such other person without his knowledge, consent, or connivance.

In such cases, the other person shall be convicted for the offence and the employer shall be discharged. If the Court deems it necessary, it may examine the employer under oath.

Power to make rules under Minimum Wages Act, 1948

Section 30 of the Act provides that the Appropriate Government may, by notification in the Official Gazette, make rules for the following purposes:

1. Term of office of members of the committees, sub-committees, and the Advisory Board;
2. Method of summoning the witnesses, production of documents relevant for enquiries before the committees, sub-committees, and Advisory Board;
3. Mode of computation of cash value of wages in kind;
4. Time and conditions of payment of, and deductions permissible from wages;
5. Adequate publicity of minimum wages fixed under the Act;
6. Provide a day of rest in every period of seven days and for the payment of remuneration in respect of such a day;
7. Prescribe the number of hours constituting a working day or week, as may be applicable;
8. Prescribe the manner in which the wages of an employee employed for less number of hours/days is to be computed;
9. The form of registers and records to be maintained, along with the particulars to be entered in such registers and records;
10. Provide for the issue of wage books for wage slips and attendance cards;
11. Powers of the Inspectors under the Act;
12. Regulate the costs of proceedings under the Act;
13. Prescribe the court fee for the cases under the Act;
14. Provide for any other matter that is to be or may be prescribed.

Constitutionality of Minimum Wages Act, 1948

The constitutionality of the Act has been challenged on the grounds of violation of Article 14 and Article 19 of the Constitution in the following cases:

Bijay Cotton Mills Ltd. v. State of Ajmer (1954)

In this case, there was an industrial dispute between the employers and employees of the mill regarding the enhancement of wages. The dispute was taken to the Industrial Tribunal, which dismissed the petition of the employees, stating that the financial capacity of the mill precludes the enhancement of wages for the workers. An appeal was preferred before the Appellate Tribunal. Meanwhile, the Government of Ajmer implemented the provisions of the Act and prescribed the minimum wages for industries in Ajmer. The Appellate Tribunal remanded the case and the final award of the Industrial Tribunal was passed, wherein the basis on which the minimum wages were fixed was rejected by the Tribunal. The minimum wages fixed by the Commissioner were challenged by various industries on the ground that the Act itself was violative of Article 19(1)(g) of the Constitution, as the employers were unable to carry out their businesses due to the condition of paying the minimum wages.

The Hon’ble Supreme Court of India, rejecting the contention of the employers, held that the Minimum Wages Act, 1948, is not violative of the right to freedom of trade, as it has been implemented as a part of the Directive Principles of State Policy, specifically under Article 43 of the Constitution. While it may be difficult for certain employers to start their business while complying with the payment of minimum wages, the provisions of the Act have been adopted keeping the larger interests of people in mind. Thus, the Act was held to be constitutional.

Bhikusa Yamasa Kshatriya v. Sangamner Akola Taluka Bidi Kamgar Union (1958)

In this case, the validity of the Minimum Wages Act, 1948, was again challenged before the Hon’ble Bombay High Court. There were various claims under Section 20 of the Act on the applicability of minimum rates of wages in certain districts of the State of Bombay. Inter alia other contentions, the employers challenged the validity of the Act on the grounds that it was violative of Article 14 and Article 19(1)(g) of the Constitution and that the State of Bombay did not follow the requisite procedure for determining the minimum rates of wages.

Rejecting the contentions of the employers, the Court held that the petitioners failed to establish that the requisite procedure was not followed by the State of Bombay while determining and revising the minimum wages and that the provisions of the Act were violative of Article 14 or Article 19(1)(g) of the Constitution.

N.M. Wadia Charitable Hospital & Ors. v. State of Maharashtra & Ors. (1986)

In this case, the State of Maharashtra appointed a committee to advise on the matter of the revision of the minimum wages payable to hospital employees. However, the government did not adopt the rates of wages recommended by the committee in its report but rather adopted a higher rate of minimum wages. The notification was challenged by the petitioners on the ground that there was no application of mind by the government. 

It was held by the Court that fixing different rates of minimum wages for different localities was permissible under the Act and did not violate any provisions of the Constitution. 

Code on Wages, 2019

In order to codify the existing labour laws and bring them in conformity with contemporary times, the Central Government in 2019-20 consolidated 29 statutes into four Codes, namely, the Code on Wages, 2019; the Occupational Safety, Health and Working Conditions Code, 2020; the Code on Social Security, 2020; and the Industrial Relations Code, 2020. Although these codes are yet to be enforced, they hold importance in contemporary times.

The Code on Wages, 2019 consolidates four major statutes, namely, the Payment of Wages Act, 1936; the Minimum Wages Act, 1948; the Payment of Bonus Act, 1965; and the Equal Remuneration Act, 1976. While a microscopic view of the differences between the two statutes (the Minimum Wages Act, 1948 and the Code on Wages, 2019) would be a redundant task as the Code has not been enforced yet, a preliminary comparison has been provided as follows:

1. The definition of cost of living index number has been omitted from the Code and no alternative has been provided.
2. The definition of appropriate government has been changed to include certain important industries such as air transport services, telecommunications, banking and insurance companies established by the Central Government, and the Central Government shall be the appropriate government for such industries.
3. The definition of employer now includes contractors and the legal representative of a deceased employer.
4. The scope of wages has been defined with more clarity as to what would constitute a wage and what would not constitute a wage. For instance, dearness allowance and retaining allowance would now be included as wages under the Code on Wages, 2019.
5. The categorization of employment has been changed significantly. Under the Minimum Wages Act, 1948, the categorization was based upon agricultural and non-agricultural work. However, under the Code on Wages, the categorization has been done on the basis of skill level, and employment has been divided into highly skilled, semi-skilled, and unskilled. This aids in a more systematic division of labour for the purposes of fixing minimum wages.
6. The concept of floor wage has been introduced by the Code. Floor wage shall be the basis of the determination and fixing of minimum wages under the Code.
7. The time frame for revising minimum wages has been reduced from five years to three years. Moreover, the appropriate government cannot exceed the limit of three years in any case.
8. The Code also takes into consideration the geographical aspect, such as the fixation of minimum wages for workers employed in hills, plains, deserts, etc. Consequently, the minimum wages may be fixed according to time work, piece work, or periods of hours by day or month. Another aspect that shall be taken into consideration is the arduous nature of the job like underground work, hazardous work conditions, etc.

The concept of Floor Wage under the Code

The concept of floor wage has been introduced under the Code on Wages, 2019, which was not provided under the Minimum Wages Act, 1948. Floor wages can be understood as the basis on which the appropriate government has to decide the minimum wages. Floor wages may be differentiated on the basis of location and type of work. For example, the floor wages of a work in the hills to be performed by an unskilled labour may be different from a similar work to be performed in a desert.

It is pertinent to note that the rationale behind introducing floor wages is to bring uniformity to the minimum wages to be paid to employees. It would also help keep the migration of workers in check.

Floor wages are to be fixed by the Central Government under Section 9 of the Code on Wages. The Central Government may prescribe the floor wages of a particular area. The appropriate government is obliged to follow floor wages while fixing minimum wages. The appropriate government, under no circumstances, can fix the minimum wages below the level of the floor wages fixed by the Central government. Moreover, the appropriate government cannot reduce the minimum wages already fixed if it is higher than the floor wages.

The Central Government can seek the advice of the Central Advisory Board under the Code for the determination of floor wages. Additionally, the revision of floor wages cannot exceed the time limit under the Code, i.e., five years.

The concept of floor wages was introduced by the Bhootlingam Committee in 1978 in the name of “National Wage.” Thereafter, in 1991, the National Commission on Rural Labour Floor suggested the “National level floor minimum wages.” However, the Code on Wages, 2019 is the first statute to implement this concept.

Recent judicial pronouncements

Mohd Imran Ahmad v. Government of NCT of Delhi & Anr. (2023)

In this case, the petitioner filed a Public Interest Litigation (PIL) against the Government of NCT of Delhi under Article 226 of the Constitution, praying for the issue of a writ of mandamus. The Government of Delhi maintains a job portal where several vacancies are posted. It was the case of the petitioner that the jobs posted under the portal were not in compliance with the provisions of the Minimum Wages Act, 1948, as well as notifications fixing minimum wages notified by the Government of Delhi. The portal allowed employers to post advertisements regarding vacancies.

The Court directed the Government of the NCT of Delhi to not allow any advertisements that are not in compliance with the provisions of the Minimum Wages Act, 1948.

Assistant Provident Fund Commissioner v. M/s G4s Security Solutions (India) Ltd. & Anr. (2023)

In this case, the Assistant Provident Fund Commissioner preferred an appeal against the order passed by the Hon’ble Punjab and Haryana High Court which stated that the basic wages under the Employee Provident Fund Act, 1952, are not required to comply with the minimum wages fixed under the Minimum Wages Act, 1948. The appellant contended that for the purpose of determining the liability of the employer towards the employee’s provident fund, the employers have deliberately reduced the basic wages below the minimum wage so as to evade liability.

However, the Hon’ble Supreme Court rejected this contention and upheld the order of the Hon’ble High Court, stating that there is no need to equate the basic wages under the EPF Act with the minimum wages under Section 4 of the Minimum Wages Act, 1948.

Karnataka General Labour Union v. Union of India & Ors. (2023)

In this case, the Labour Union was seeking relief against the retrenchment of contractual employees as well as non-payment of wages. Several cases were filed under the Minimum Wages Act, 1948, to obtain relief through conciliation. In the conciliation proceedings, the conciliator directed the respondent to maintain the status quo. As the respondent refused to do so, the conciliation proceedings failed. The case was presented before the Hon’ble Karnataka High Court.
The Labour Union contended that the respondents were bound by the undertaking given to the conciliator, and violation of the same must not be tolerated. On the other hand, the respondents claimed that the Labour Union misrepresented themselves as permanent employees of the respondents, and hence the case must be dismissed.

While remanding the case to conciliation proceedings, the Court highlighted the importance of conciliation proceedings in industrial disputes. The Court also directed the conciliator to settle the issue regarding the payment of minimum wages to the workers.

Hindustan Sanitaryware and Industries Ltd. & Ors. v. The State of Haryana (2019)

In this case, the Haryana Government issued a notice fixing the minimum wages under Section 5 of the Minimum Wages Act, 1948. In the said notification, a criterion for considering unskilled labour as semi-skilled and semi-skilled labour as skilled on the basis of experience level was prescribed. 

The said notification was challenged before the Hon’ble Punjab & Haryana High Court. The High Court upheld the validity of the notification. A Special Leave Petition was preferred by Hindustan Sanitaryware and Industries Ltd. before the Hon’ble Supreme Court. The Supreme Court, while overturning the decision of the High Court, held that such classification of workers based on their experience level would be in contravention of the contract between the workers and the employers, which is beyond the jurisdiction of the government.

Conclusion

The Minimum Wages Act, 1948, is a pivotal piece of legislation under the labour laws of India. It provides a guarantee of minimum remuneration for the work done by the employee. Both the Central Government and the State Governments are appropriate governments under the Act, as labour law is a subject under the Concurrent List. Accordingly, both governments can fix and revise minimum wages according to the requirements of the employees falling thereunder. Moreover, the State Governments can also make amendments to the Act for application in their respective States.

Apart from providing provisions for minimum wages, the Act also contains provisions relating to the fixation of work hours, providing a day off after six days of work, provision for minimum wages for overtime, etc. This ensures that not only the economic interests but also the social interests of the labourers are protected.

The Parliament has enacted the Code on Wages, 2019, which shall repeal and replace the Minimum Wages Act, 1948, to consolidate all the laws related to wages into one code. However, the Code has not been enforced yet. The Code will bring along certain important changes, as has been discussed in the article. The implementation of the Code is expected to overcome the lacunae and inconsistencies in all the labour legislations relating to wages.

Frequently Asked Questions (FAQs)

Whether the appropriate government can take more than five years to revise minimum wages?

Under the Minimum Wages Act, 1948, the proviso to Section 3(1)(b) provides that nothing in the Act shall prevent the appropriate government from reviewing the minimum wage even after five years if the appropriate government cannot revise it within the stipulated time. However, under the Code on Wages, 2019, the appropriate government cannot breach the stipulated period of three years for revising the minimum rates of wages.

Does the Minimum Wages Act, 1948, allow the appropriate government to enact rules only for fixing the minimum rates of wages?

No, the Minimum Wages Act, 1948, in addition to fixing and revising the minimum rates of wages, also allows the appropriate government to fix the number of working hours, minimum wages for overtime, powers of the inspectors, authority for adjudicating dispute claims, etc. under the Act. The same powers have been provided to the appropriate government under the Code on Wages, 2019.

Can the employer deduct minimum wages if the worker has not completed the minimum number of hours in a normal working day?

The number of hours that would constitute a normal working day has to be fixed by the appropriate government under Section 13 of the Act. Even if the worker has not completed the prescribed number of hours in a day, the employer cannot deduct wages for that day. The only exception where the employer is allowed to deduct the wages is the unwillingness of the employee to work, which has been provided under the proviso to Section 13.

To what kind of employment does the Minimum Wages Act apply?

The Schedule to the Act provides the employments where the Minimum Wages Act shall be applicable. The appropriate government is required to fix and revise the minimum wages for the scheduled employment if there are more than one thousand employees employed under the same.

References

• Introduction to Labour and Industrial Laws, Avtar Singh (4th ed., 2017)
• Handbook on Labour Wage Code, Saurabh Munjal, Vaibhav Munjal (1st ed., 2021)
• Labour and Industrial Laws, S.N. Mishra (29th ed., 2019)
• Labour and Industrial Laws, K.M. Pillai (16th ed., 2015)
• Textbook on Labour and Industrial Laws, Dr. H.K. Saharay (7th ed., 2017)