In this blog post, Shubham Khunteta, a student of National Law University Odisha, Cuttack, who is currently pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, discusses the Minimum Wages Act, 1948 and the minimum wages in Punjab with reference to central law and penalty for non-compliance.
Introduction
Minimum wages is the term that is often used to provide reasonable wages to the employee both in the organized and the unorganized sector. Fixation of these wages can’t be left to be determined according to the forces of demand and supply as that would expose the less privileged class to the prevailing economic condition which may not be compatible to satisfy their basic needs and other needs that are effectively in hierarchy after the basic needs. When we talk about the reasonable wages, it is usually to the extent that employee can efficiently sustain himself/herself without any unnecessary burden. This wage if left in the hands of employers for fixation –
- Then it would not serve the purpose as they may according to their will can increase/decrease the wages which may tantamount to the exploitation of the worker and if the inflation is extremely high, and the wages are not in proportion to the existing standards of living, then that would compromise the workers right to get reasonable wages.
- It is also thought that if employers are being given the discretion to fix these wages, then they would, based on the sector’s performance, arbitrarily increase/decrease the wages, which would be damaging to the interests of the worker who are often most vulnerable to these changes.
Now, to regulate all this, the government brought out the legislation to provide that no employer shall pay to workers in certain categories of employment, wages at a rate less than the minimum wage prescribed through notifications by the competent authorities under the Act. The Act provides for fixation / periodic revision of minimum wages in employments where the labor is vulnerable to exploitation. Under the Act, the appropriate Government, both Central and State can fix / revise the minimum wages in such scheduled employments[1] Falling in their respective jurisdiction. There exists more than one minimum wage in India.
Important provisions and headings relevant in the Act
As per Section 2 of the Act and Sections 27 and 28, it is mentioned that State as well as Centre has the power to form Minimum Wage rates.[2]In India, minimum wages are declared at national, regional, sectoral and occupational or skill level. As per Section 3 of the Act, minimum rates of wages may be fixed at national & state level. Also, Section 3 (3) of the Act specifies that minimum rates of wages may be fixed for different skills and occupations. Section 2(h) of the Act of 1948 defines “wages” and also indicates those payments which are not to be included in the definition of ‘wages’, which is as under:
“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(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 travelling allowance or the value of any travelling 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;”
This distinction is made in the wages because these non-inclusions in the wages form part of salary, which usually is paid to the qualified professionals in the organized sector.
Declaration of minimum wages
Minimum wages in India is declared on the daily, hourly, and monthly basis. As per Section 3 (b) of the Act, it defines that Minimum Wages are as per the piece rate, hour rate, and monthly rate as well as per Section 3 (14) (b) of the Act, there has not been any specific period. But may be in accordance with the period fixed under Section 4 of the Payment of Wages Act, 1936 (4 of 1936)[3].
Minimum wages are fixed by
As per Section 8[4] of the Act, there is a Central as well as Regional Advisory Board formed which has involvement from governmental bodies, employer representatives and trade unions representatives of employees. As per Section 9 of the Act[5] uprating are centered on decision jointly made by the Government, employer and trade union representatives.
Component of minimum wages
Minimum wages in India has both fixed and variable component. Section 4[6] mentions that minimum wages may be inclusive of basic pay and with a special allowance on which it is based. Fixed component of minimum wages is updated in more than 2 years. Section 3[7] Of the Act mentions that the period for revision of fixed component of minimum wages can be anywhere within 5 years of its fixation. The variable component of minimum wages is updated at uneven time lags. Section 4 of the Act mentions that the special allowance rate should be adjusted at such intervals and in such manner as the appropriate Government may direct.
Minimum Wages Act, 1948 applicability to Punjab and relevant rules[8]
States frame rules for the minimum wages by the backing of the provisions of Section 27 of the Minimum Wages Act, 1948. Minimum wages governed by this Act is of scheduled employment only, and states can add any new scheduled employment if it is of the opinion that it is necessary.
Mode of computation of cash value of wages
The retail price at the nearest retail market would be taken into an explanation to compute the cash value of the wages paid in kind and of essential commodities supplied at concessional rates subjected to directions issued by government from time to time.
Deduction permissible from wages of the employee (See Rule 21 for requisite conditions to be satisfied before going ahead with the fines and deductions)
Before listing out the deductions permissible from the wages, it is better to enumerate what is the deemed and the not deemed or supposed deduction from the wages[9]–
Deemed deduction from wages – Every payment made by the employee to the employer or his agent.
Not deemed deduction from the wages – Imposition for a good and sufficient cause like the withholding of an increment or promotion or the reduction to a lower post or time-scale or to a lower stage in a time-scale or suspension are not deemed deduction. In other words, if the employee is punished by preventing his promotion or increment or reducing his post or suspension, then that would not be supposed the deduction from the wages.
Fines imposed on the below-mentioned grounds are deductions–
- Absence from duty without sufficient cause and without leave (Fine may be imposed as an alternative to deduction approved under Rule 2(2) (ii). This implies outright fine may be taken instead of deducting it from the wages provided for a month at the specified time.
- Negligence in work;
- Smoking on the premises where it is not permissible;
- Entry or leave from a gate in the premise not specified and permitted;
- Non-maintenance of the department and the cleanliness by breaching rules or instructions;
- Impairment to work in process or property of the employer;
- Intervention with the safety devices fitted in the premises;
- Distribution of any advertising material on the premises without previous approval from the employer;
- Misconduct
- Deduction for absence from duty;
- Deduction for loss by negligence or default in bailed goods entrusted by the employer to the employee;
- Deduction for house accommodation given by employer;
- Deduction for amenities and services( doesn’t include the supply of tools and protective required for the work) provided by the employer and as specified by the general or special order of the government;
- Deduction for recovery of advance by the employer to the employee, but it is kept in mind that such advance don’t exceed the 2 months wages and deduction do not exceed the ¼ of wages earned in a month;
- Deduction of Income-tax if employee wages come under the tax bracket, and the employer pays it;
- Deductions on the direction of the court or the other competent authority;
- Deductions for subscription to provident fund to which the Provident Fund Act applied as defined in Sec 58A of Indian Income-tax Act;
- Deduction for payment to cooperative society or any insurance scheme prescribed by the government;
- Deduction for recovery of loans made from any fund constituted for the welfare of labor and granted for house building or other purposes [Approved by State government].
- Deduction for payment of insurance premium on Fidelity Guarantee Bond.
**** Any fine imposed or deduction made for any loss or damage shall be made only when employed person is given the reasonable opportunity of fair hearing. Fines imposed shall be intimated to the employee under Rule 21(3)[10]. Any deduction made for the purpose as mentioned above except for the payment to cooperative society shall not exceed 50% of the wages [Rule 21(4)][11].
See Rule 21(4) (iii) for recovery of fine related conditions and the requirements to be satisfied for the successful salvage of fine without any hiccups.
Part I of Schedule I of Act defining sectors of employment regulated by Minimum Wages Act, 1948
Scheduled employment means an employment specified in the Schedule, or any process or branch of work forming part of such employment. State government has power under Section 27[12] to add to schedule any employment in respect of which it is of the opinion that minimum rate of wages should be fixed under this Act by notification in the Official Gazette not less than 3 months’ notice of its intention to do so. Employees in this employment are divided in unskilled, semi-skilled, skilled and highly skilled, and their pay varies accordingly to their skills in this employment.
State Government had issued letter No.2015/8232-8377 dated 24.4.2015[13] wherein minimum rates of wages had been increased to the tune of Rs.200/- per month provisionally w.e.f. 1.3.2015 and the daily rate has been enhanced to Rs.263.72 and hourly wages are Rs.32.96., but latest data on the minimum wage in Punjab w.e.f. Sep1, 2015 to Feb 28, 2016[14].
Legal sanctions can be imposed if compliance is lacking
In the case of non-compliance, fines, imprisonment, and payment of arrears can be applied as per law. Section 22 of the Act mentions that if anyone contravenes the rules formed under the Act, he may be punished to pay fine, imprisonment which may extend to a period of six months or payment of arrears by the employer to the employee.
Complaint regarding procedure
In case individuals earn less than specified minimum wages, they can complain to Labour Inspectorate coordinates or Trade Union Coordinates. As per Section 19 of Minimum Wages Act, 1948, the government may appoint such person as it thinks fit to be Inspectors for this Act. As per Section 20 (2) of Minimum Wages Act, 1948 it mention that employee can make a complaint in writing by himself or through any legal practitioner or any official of a registered trade union authorized to act on his behalf or any Inspector or any person acting with the permission of the authority.
Conclusion
After reading the above-mentioned details, it can be deduced that the there is a parliament backed legislation which under its provisions render powers on the states to make relevant rules in consonance with the Act[15] to make the statute fractious and functional and to notify in accordance with their needs the sectors of new employment and fix wages in assistance and in collaboration with Central advisory council so as to resolve any disputes if arose Meanwhile in taking the decision for the revision of wages.
So, at last, it can be understood that if the state want to revise the wages considering cost of living index, it can do so if it feels that the wages for the employees are not appropriate and employees are grappling with the present wages, but it should be kept in mind that appropriate authority can only revise wages when it is of the opinion that majority or class in the employment of particular sector are affected.
Footnotes:
[1] Sec 2(g) of the Minimum Wages Act, 1948
[2] http://www.paycheck.in/main/salary/minimumwages/minfaqfolder#header0
[3]https://indiankanoon.org/doc/915487/
[4] Sec 8, Minimum Wages Act, 1948
[5] Sec 9, Minimum Wages Act, 1948
[6]Sec 4, Minimum Wages Act, 1948
[7] Sec 3, Minimum Wages Act, 1948
[8] http://www.ilo.org/dyn/travail/docs/624/Minimum%20Wages%20(Central)%20Rules%201950.pdf
[9] Rule 21(iii) of Punjab minimum wages rule, 1950
[10] See, Punjab Minimum Wages Rules, 1950
[11]Ibid at 10
[12]See; Minimum Wages Act, 1948
[13]http://www.labourlawreporter.com/wp-content/uploads/PUNJAB-MW.pdf
[14]http://www.paycheck.in/main/salary/minimum wages/Punjab/minimum-wage-in-punjab-w-e-f-september-1-2015-to-february-28-2016
[15]http://pblabour.gov.in/pdf/acts_rules/minimum_wages_act_1948.pdf
