This article is written by Shubhangi Sharma, 5th year student of BA LLB in Lloyd Law College, Greater Noida and Anushka Ojha, a student at ICFAI University, Dehradun. This article discusses about Minimum Wages Act, 1948 and their important aspects.
Table of Contents
Labour laws in India include Industrial Dispute Act, 1947; Workmen Compensation Act, 1923; Payment of Bonus Act, 1965; the Payment of Wages Act,1936; Minimum Wages Act, 1948; Equal Remuneration Act, 1976 etc. The labour laws are subject under Concurrent List in the Constitution of India. Both Central And state government have the power to make laws upon this subject but some matters are confined to the central government only. These laws have been made to generate employment opportunities and also to protect and benefit the workers, including the poor, deprived and underprivileged section of society to establish a healthy work environment for higher output and productivity. The focus of Government is on promoting welfare activities and providing social security to the labourers in both organized and unorganized sectors. So, these purposes can be achieved by enacting labour laws which governs the rules and regulations of service, wages, compensation, employment of workers. Both Central And State Government have their separate Labour Ministry which are governed by Central and State labour laws which ensures the working of their subordinate bodies.
Minimum Wages Act, 1948
The concept of minimum wage initially developed in terms of worker’s remuneration in industries, where the level of wages was much lower as compared to the wages of similar types of labour in other industries. Prior to the state intervention in the matter of wages, the decision related to the wages was taken by free bargaining between workmen and employers. But when the enquiry held upon these matters it was revealed that there is exploitation of women and children in small scale industries. So, to avoid these kinds of malpractices, various legislation was introduced. In 1943, Standing Labour Committee and Indian Labour conference constituted a labour inquiry committee to inquire in matters relating to working conditions and minimum wages of workers. Ghosh and Nandan, the report which was Submitted by the Standing Labour Committee, became the basis for Implementing India’s minimum wage policy.
The Minimum Wages Act of 1948 was the first law of India related to the working rights of labourers. The Act contains detailed procedures which have been set for setting and listing minimum wages in various industries. Wages were fixed by Appropriate Governments at the central and state levels for various scheduled employment based on skilled and unskilled labour, agricultural and non-agricultural employment and minimum wages in different states for a specific time period in India under its domain. Hence, the objective of the Minimum Wages Act was to provide more rights to the worker class.
The Tripartite Committee on Fair Wages appointed in 1948 defined three different types of wages: a Living wage, fair wage and minimum wage. Living wage was defined as allowing a person to live a decent life for himself and his family and the other factor is equal to fair wages should be based on productivity. The committee accepted that the general wage level was low and stated that there should be a balance built between employee subsistence and normal productivity. Finally, the minimum wage was not only on the basis of subsistence but also on the basis of labour efficiency. The purpose of the Act was to protect workers from labour exploitation which was held in the case of Chandra Bhavan Boarding and Lodging Bangalore v. State of Mysore and another. Protection from exploitation was to be achieved by providing representation and speedy compensation to the workers. There was a provision of an Advisory Committee and Advisory Board to give workers and employers equal representation to reduce unequal bargaining. Thus, the Act provided early resolution to labour disputes through a summary process that would ensure penalties and then civil prosecution of the offending party.
The Minimum Wages Act has been passed for the benefits of workers. It came into existence to secure and for the welfare of workers in competitive market by providing minimum wages in certain employment. It empowers the Central And State Government to fix the minimum wage in certain employments to prevent the exploitation of labourers or unprivileged class of labours. The objectives of are:
- To allot Fixed of minimum wages in schedule employment.
- Empowers the Government to take steps regarding fixation of wages and to revise them in every five years.
- To prevent exploitation of workers.
- To provide appointment of Advisory Committee and boards having equal number of representatives of both employers and workers.
- To apply this law to the majority in organized sector.
Application of the Act
The Act applies to the whole India except Jammu and Kashmir. It applies in those sectors which employs 1000 employees in respective sector. It does not apply on the employees who are governed under Central government or the federal railways, except with the consent of the Central Government.
Salient features of the Act
The Act provides the fixation of:
Minimum time rate of wages.
Minimum piece rate.
Overtime rate for different occupations or class of work for adults, adolcensents, children and apprentices
The minimum wages under the Act may contain:
Basic rate of wages and living allowance.
Basic rate of wages with or without living allowance cost.
The Act requires to pay the wages in cash , but it also empowers the Government to sanction the payment of minimum wages, in kind in particular cases either wholly or partially.
This also gives authority to Appropriate Government to fix the number of working hours per day, to provide a weekly holiday and the payment of overtime with regard to any scheduled employment in respect of which the fixation of minimum rate of wages is done under the Act.
It also provide appointment of Inspectors and competent authorities to hear and decide the issues arising out of payment of wages at less than the minimum rate of wages or remuneration of days of rest or of work done on such days of overtime. It also provides dealing with the complaints made for the violation of the provision of the Act and also improving the penalties for the offences committed under this Act.
Fixing of minimum rates of wages
Section 3 of Minimum wages Act, 1948 lays down that the Appropriate Government shall be empowered to fix the minimum rate of wages in a manner which is prescribed in the Act. It shall fix the wages which has to be paid to the employees employed in employment under Part I and Part II of the schedule.
The appropriate Government shall have the authority to review the minimum rates of wages to fix and revise the minimum rate if required, at such intervals as may be deemed fit. The intervals must not exceed 5 year. Subsection (1-a) describes that Appropriate Government may abstain from fixing minimum rates of wages in respect of any scheduled employment in which there are less than one thousand employees are involved in such employment.
Minimum rates of wages
- The basic rate of wages and a special allowance shall be adjusted in such intervals which may be directed by the Appropriate Government which varies with the cost of living index.
- The basic rate of wages with or without cost of living allowance based on the cost of living index number.
- All inclusive rates is allowing for the basic rate of wages with the cost of living allowance and cash value of concessional supply of materials.
Procedure of fixing and revising minimum wages
Section 5 deals with the procedure of fixing and revising minimum rates of wages in respect of any scheduled employment under this Act or revising minimum rates of wages so fixed , the Appropriate Government shall either:
- Appoint as many committees and Subcommittees as it considered necessary to hold enquiry and advise it in respect of such fixation and revision, or
- By notification in the official Gazette, publish its proposal for the information of the person likely to be affected thereby and specify the date which must not be less than two months from the date of notification of which the proposals will be taken into consideration.
The Appropriate Government Shall according to Section 7 appoint an Advisory Board for the purpose of :
- Coordinating the work of committees and sub-committees, appointed under Section 5; and
- Advising the Appropriate Government in the matter of fixation and revision of minimum rates of wages.
Besides the Advisory Board may frame the procedure to be adopted for discharging its functions under Section 5 of the Act
Central Advisory board
Section 8 makes it obligatory upon the Central Government to appoint a Central Advisory Board for the following purposes:
- a) Advising the Central And State Government in the matters of the fixation and revision of minimum rates of wages and other matters under the Act, and
- b) For co-coordinating the work of the Advisory Boards.
Section 8(2) provides that the Central Advisory Board shall consist of :
- a) Persons to be nominated by the Central Government representing employers and employees in the scheduled employment, who shall be equal in number; and
- b) Independent persons not exceeding one-third of its total number of members.
The Chairman of the Central Board shall be one of the independent persons and shall be appointed by the Central Government.
Composition of committees
Section 9 provides that such committees, sub committees and the Advisory Board shall consist of persons to be nominated by the Appropriate Government. Persons who can be appointed to these committees shall be representatives of employers and employees in scheduled employments and shall be equal in number. The person who are independent must not exceed one-third of the total number of members in such bodies shall also be appointed. The Appropriate Government shall appoint one of such independent persons to be the Chairman. The expression independent person in this section means a person other than those who are employers and employees in relation to the scheduled employment in respect of which minimum wages are sought to be fixed.
The fact that the person nominated to function as an independent member of the committee is a Government official, there is no-bar to such nomination. It does not mean that persons in the employment of Government were to be excluded. The presence of high Government officials who may have actual working knowledge about the problems of employers and employees can afford a good deal of guidance and assistance in formulating the advice which is to be tendered under Section 9 to the appropriate Government. The appointment of a Labour Commissioner, as a Chairman, who is conversant with the employment conditions and representing independent interest is valid.
Payment of minimum rates of wages
Section 12 lays down that in respect of any scheduled employment for which a notification under Section 5 is in force, the employer shall pay to every employee engaged in a scheduled employment under him, wages at a rate not less than the minimum rate of wages fixed by such notification for that class of employees in that employment without any deductions except as may be authorized within such time and subject to such conditions as may be prescribed. Provisions of Section 12 of this Act should not affect the provisions of the Payment of Wages Act, 1936.
Fixing hours of normal working day, etc
Section 13(1) provided that, in regard to any scheduled employment minimum rates of wages in respect of which have been fixed under this Act, the Appropriate Government may:
- Fix the number of hours of work which shall constitute a normal working day, inclusive of one or more specified intervals.
- Provide for day of rest in every period of seven day which shall be allowed to all the employees or any specified class of employees and for the payment of remuneration in respect of such a day of rest.
- Provide the payment of work on a rest day must not be less than the overtime rest.
According to Section 13(2), the provisions of sub-section (1) shall, in relation. to the following classes of employees apply only to such extent and subject as may be prescribed in respective Act:
- Employees engaged on urgent work, or in any. emergency which could not have been foreseen or prevented.
- Employees. engaged in work in the nature of preparatory or complementary work which must necessarily be carried on outside the limits laid down for the general working in the employment concerned.
- Employees whose employment Is essentially intermittent.
- Employees engaged in a work which could not be carried on except at the time dependant on irregular action of natural forces.
- Employees involved in any work which for technical reasons has to be completed before the duty.
Maintenance of Register and Records
Every employer has to maintain register regarding these:
- Every employer shall maintain such registers and record containing such particular of employees employed by employer.
- Update the work performed by employees.
- Wages paid to the employees.
- Maintain the receipts given by the employers.
- Every employer should hold the notices exhibited in such a factory, workshop or place as used for giving work to employees.
- The appropriate Government can provide for the issue of wage books or wage slips to employees employed in any scheduled employment as per the rules made under the Act.
Section 20(1) empowers the Appropriate Government to appoint, by notification in the official Gazette, in authority to hear and decide for any specified area the following claims:
- Any claims arising out of payment of. less than the minimum rates of wages.
- Claim in respect of payment of remuneration for days of rest.
- Any. claim in respect of payment of remuneration of work done on such days under clause (b) or (c) or Section 13(1).
- Any claims of wages under overtime rate under Section 14 or employees employes or paid in that area.
Who can be appointed as authority?
The following persons may be appointed an authority to decide any claims aforesaid:
- Any Commissioner tor, Workmen’s Compensation.
- Any officer of Central ‘Government exercising as a Labour Commissioner for any region.
- Any officer of the StateGovernment not below the rank of a Labour Commissioner.
- Any other officer with experience as a Judge of a Civil Court.
Section 22 deals with Fines or penalties which cannot be imposed on any employed person in relation to the omission of such acts by the employer with the authority specified as the previous Government approval or notice under sub-section (2).
Notices specifying such acts and omissions may be displayed in the prescribed manner in the premises in that case or place of a person employed like a railway (in a factory) at the appointed place or places. Penalties cannot be imposed on a person employed unless he is the reason for the fine or following such procedure as may be prescribed for the imposition of a fine.
The total amount of penalty on any employed person in any pay period should not exceed an amount equal to 3% of the wages payable to him in relation to that pay period. The fine cannot be imposed on any employed person who is under fifteen years of age.
Conflict of MGNREGA wages rate or minimum wages rate
Mahatma Gandhi National Rural Employment Guarantee Act is a scheme which guarantees employment for 100 days at a rate of wage of INR 120 per day (determined in 2009). These benefits can be secured by any family, whether they are below the national poverty line or above. The Central Government removed the MNREGA wage rates from the state’s lowest minimum wage rates in January 2009 when states such as Uttar Pradesh, Rajasthan and Maharashtra revised and increased their minimum wage rates. This had implications for the MNREGA scheme directly in the Central Government budget. The move to stop the MGNREGA scheme created distress in various parts and sections of India as the move was considered to dissolve the Minimum Wages Act, 1948. MNREGA wage rates were lower than the minimum wage rates of the respective states and they were in five states below the national level of minimum wage.
Protests erupted across India with disputes regarding corruption, workers’ payments, poor quality of infrastructure, unclear sources of funds and unintended negative impact on poverty. The recommendations made by the National Advisory Council headed by Jean Dreze and the Central Employment Guarantee Council that MGNREGA wage rates should be coordinated with the Minimum Wages Act were rejected by the Central Government. The Central Government stuck on its decision to freeze MGNREGA wages even after a Supreme Court order. Eventually, the Prime Minister agreed to accept the recommendations and converted MNREGA wages into minimum wage rates until an expert committee headed by Pranab Mukherjee produced a satisfactory index. However, he maintained a clear distinction between MGNREGA wage rates and minimum wage rates to avoid an increase in the budget on the revision of state-wise minimum rates.
Constitutional validity of the Act
The Act is not unreasonable.
One of the directive principles of state policy, incorporated in Article 43 of the Constitution of India, speaks of giving workers living wages, which not only ensures material subsistence, but health and decency are important to the public interest. While it is true that individual employers may find it difficult to do business on the basis of the minimum wage prescribed under the Act, it should not be the entire basis and reason for declaring the law unreasonable.
In the case, Gulmuhommad Tarasaheb a bidi factory by its proprietors Shamrao vs State Of Bombay it was decided by the court that “The restrictions, though they interfere to some extent with the freedom of trade or business guaranteed under Article 19(1)(g) of the Constitution, are reasonable and being imposed on the general interest of the general public, are protected by the terms of clause (6) of the Article 19.”
The determination of the minimum wage is for the preservation of public order, and if there is no minimum wage set, it will cause employers to be arbitrary and this will undoubtedly lead to a confrontation between the employer and labour which will create “friction in society”.
The case of Uchinoy vs. State of Kerala the judgement includes, “ As regards to the procedure for fixing of the minimum wages, the ‘Appropriate Government’ has undoubtedly been given very large powers , but it has to take into consideration, before fixing wages, the advice of the committee if one is appointed on the representations on proposals made by persons who are likely to be affected thereby. The various provisions constitute an adequate safeguard against any hasty or capricious decision by the ‘Appropriate Government’. In suitable cases, the ‘Appropriate Government’ has also been given the power of granting exemptions from the operations of the Provisions of the Act. There is no provision undoubtedly, for a further review of the decision of the Appropriate Government, but that itself would not make the provisions of the Act unreasonable”.
Doesn’t violate Article 14 of the Constitution
On a careful examination of the various of the Act and the machinery setup by this Act, Section 3(3)(iv) neither contravene Article 19(1) of the Constitution nor does it infringe the equal protection clause of the Constitution. The Courts have also held that the Constitution of the committees and the Advisory Board did not contravene the statutory provisions in that behalf prescribed by the legislature, this was decided in the case of Bhikusa Yamasa Kshatriya vs Sangammar Akola Bidi Kamgar Union.
As it was held in the case of “C.B. Boarding & Lodging it added to the mentioned case that ,”nor the reason that two different procedures are provided for collecting information”.
Notification of fixing different rates of minimum wages for different areas is not discriminatory.
It was stated that where the determination of wage rates and their revision was detected by detailed survey and investigation and the rates were implemented after considering the representation made by a section of the employer, it would be difficult To place that notification on the basis of fixed rates of minimum wages for various sectors, it was based on rational deliberation with the purpose of the Act, and thus violated Article 14.
As the matter came into light by one of the India’s Union Labour and Employment Minister Shri Mallikarjuna . The variation of minimum wages between the states is due to differences in socio-economic and agro-climatic conditions, the prices of essential commodities, paying capacity, productivity and local conditions influencing the wage rate. The regional disparity in minimum wages is also attributed to the fact that both the Central and the State Governments are the Appropriate Governments to fix, revise and enforce minimum wages in Scheduled employments in their respective jurisdictions under the Act.
Despite saying nothing in the above statements, it was decided in the case of N.M.Wadia Charitable Hospital vs. State of Maharashtra that “fixing of Different minimum wages are allowed for different localities under the Constitution and Indian labour laws, hence the question whether any provision of the Minimum Wages Act is wrong against the provision of the Constitution.”
The Constitution of India accepts the responsibility of the state to create an economic system, in which every citizen gets employment and receives “fair pay”. This made it necessary to set clear criteria for identifying fair pay. Therefore, in its first session of November 1948, a Central Advisory Council appointed a Tripartite Committee on fair pay. The Committee consisted of employers, employees and Government representatives. Their job was to inquire and report on the subject of fair wages of labour.
Sanctity of the Act
It is a clear decision of the Supreme Court in their three rulings held that non-payment of minimum wages leads to “forced labour” which is prohibited under Article 23 of The Indian Constitution. ‘Forced labour’ can arise in many ways like hunger and poverty, want and destruction.
In the case of Sanjit Roy Vs. State of Rajasthan, the Supreme Court has decided that ‘The Exemption Act in so far as it excluded the applicability of the Minimum Wages Act, 1948 to the workmen employed in famine relief work is “clearly violative” of Article 23. Thus, even public works ostensibly initiated by the Government for the sole purpose of providing employment are subject to the Minimum Wage Act.
After considering the decision of the Supreme Court, the Andhra High Court set aside the notification ofGovernment of India which makes the payment of minimum wages mandatory in prevailing states. This is outlined in a legal opinion provided by Ms. Indira Jaisingh, Additional Solicitor General to the Working Group of wages of the Central Employment Guarantee Council (CEGC), where she made it clear that Section 6(1) to allow payment less than minimum wages in MNREGA works will lead to forced labour. Eminent jurists and lawyers from India have also asked the Government of India to immediately cancel its unConstitutional notification and ensure that all workers in India are paid the minimum wage.
The Act and the decision are in favour of equality provided under Article 14 of the Constitution and a decision in the case namely “Engineering Workers Union Vs.Union of India (1994), “The provision under Section 3(2)(a), that the fixed rate of wages fixed or revised in the prescribed employment shall not apply to the employees during the period, has violated the equality clause of Article 14 and hence this section is void. “.
In view of the Directive Principles of State Policy contained in Article 43 of the Constitution of India, it is beyond doubt that the labourers receive a living wage which not only ensures physical subsistence, but maintains health and decency.
India consists of 487 million workers, the second largest after China. India has numerous labour laws for prohibiting discrimination and child labour. The Act aims to guarantee fair and human conditions of work, provide social security, minimum wages, right to organize, form trade union and enforce collective bargaining. It protects the exploitation of those who are poor in majority, who are socially and economically disadvantaged people. Therefore, it seems necessary for such law not only appears on paper but serve some assurance from exploitation to gain the trust of people. Governments are bound to comply with the socio-economic laws, failure of which will be a violation of Article 21 of the Constitution of India. India is considered to be the highly regulated and most rigid labour laws countries in the world . They need to be flexible for their proper implementation and should be reviewed from time to time according to the need of labour and economy’s dynamics.