Unit 4 Part C: The Minimum Wages Act, 1948
1. Discuss the salient features of the Minimum Wages Act, 1948.
2. Write a note on the Minimum Wages Act, 1948. Mention its objectives and purposes.
3. Briefly explain the procedure for fixing and revising minimum rate of wages in respect of any scheduled employment under the Minimum Wages Act, 1948. 2014, 2017, 2018, 2019, 2023
4. Discuss the components of minimum wage under the Minimum Wages Act, 1948. 2019
5. What remedies are available to an employee under the Payment of Wages Act, 1936 when his rightful wages are withheld by his employer? Explain. 2014
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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:
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.
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.
Reducing income inequality: The disparity in income can be reduced by fixing the minimum wages of the workers.
Promoting economic stability: Fixing minimum wages for the workers shall provide a way to promote economic stability by improving the standard of living.
Setting labour standards: By reducing the exploitation of workers, the standard of work would improve to a great extent.
Addressing poverty: Fixing minimum wages of the employees paves the way for poverty eradication by encouraging more people to undertake work of any kind.
Features of the Minimum Wages Act, 1948
1. The Act applies to the employments listed in the schedule. Therefore, the governments at the State and Central level has to fix the minimum wage. They should also add any employment to the schedule if they satisfy the criteria of 1000 workers, at least.
2. The Act lays down for fixation of the following:
- A minimum time rate of wages
- A minimum piece rate
- A guaranteed time rate and
- An overtime rate
For various occupations, localities or classes of work and adults, adolescents, children, and apprentices.
3. The minimum rate of wages consists of:
- A basic rate of wages and the cost of living allowance or
- A basic rate of wages with or without the cost of living allowance and the cash value of the concessions in respect of essential commodities supplied at concessional rates.
4. The Act lays down that payment of wages be in cash. However, it empowers the appropriate Government to authorize the payment of minimum wages either wholly or partly in kind in particular cases.
5. The appropriate Government is empowered to fix the number of hours of work per day, to provide for a weekly holiday and the payment of overtime wages.
6. The establishments are required to maintain registers and office records as prescribed.
7. The Inspectors are appointed to hear claims arising out of payments.
8. The appropriate Government has to revise the minimum wages every five years.
9. The appropriate Government has to provide special allowance once in six months.
10. On non-payment of wages, section 20 will be applicable. The authority has to pay ten times the difference amount for defaulting.
Purpose of Minimum Wage Act, 1948
The importance of the Minimum wage act 1948 is to prevent employee exploitation and ensure a decent living for a worker. The Act provides that the government will fix the minimum wage rate and revise it every five years. It appoints advisory committees to consider the proposals. The government must follow the guidelines and implement them as soon as possible. In many cases, this means announcing the changes to the law before the public.
- The Act was introduced in 1948, and it was amended in 2000
- The changes included a change in the floor level for minimum wages
- Currently, the minimum wage floor in India is 115, but the law also gives exceptions for certain employees
- The lowest floors are in Andhra Pradesh, Kerala, and Gujarat
- In addition to this, the new law provides for higher minimum wages for workers with disabilities
The act requires the government to consult with the committee and the representatives of the people affected by the minimum wage.
- The committee determines the minimum rate of the act
- The government must publish it in the official newspapers and enforce it within three months
- The government must inform the affected parties of the proposed minimum wage by publishing the decision in a national daily
- In case of non-payment of wages, the authority must pay ten times the difference
The Objective of the Minimum Wages Act
The Minimum Wage Act 1948 accommodates fixing wage rates (time, piece, ensured time, additional time) for any industry.
1) While fixing hours for an ordinary working day according to the demonstration, ought to ensure the accompanying:
- The number of hours to be fixed for an ordinary working day should have at least one stretch/break
- One three-day weekend from a whole week ought to be given to the representative for rest
- Installation for the day chosen to be given for rest ought to be paid at a rate at the very least the additional time rate
2) If a representative is engaged with work that classifies his service in at least two booked vocations, the worker’s pay will incorporate a particular compensation pace of all work for the number of hours devoted at each undertaking.
3) The business must keep records of all workers’ work, wages, and receipts.
4) Appropriate legislatures will characterise and dole out the errand of review and choose examiners for the equivalent.
Procedure for Fixing and Revising Minimum Wage
1. Fixing of Minimum Rates u/s 3(2)
The appropriate government can fix
- A minimum piece rate
- Minimum time rate
Overtime rate which is the minimum time or piece rate as a substitution of some other rate which would have been otherwise applied for overtime work performed by employees.
Guaranteed time rate which is the minimum remuneration rate applicable to employees who had been working on piece rate till now if he is again employed on time rate.
While revising or freshly fixing the wage rate under the Minimum wages act
- Varying rates of minimum wage shall be fixed for
- Varying classes of work under the same scheduled employment
- Different scheduled employment
- Various localities and Apprentices, children, adolescents, and adults
Minimum wage rate can either be fixed by one or more of these wage periods
- Month
- Day
- Hour
- Any other larger wage-period which is deemed appropriate
Section 4 of the Minimum wages act states that the appropriate government can either fix or revise the wage rate of scheduled employments. However, the following parts shall come under the purview of the appropriate government in such a case:
- Basic wage rate and special allowance which should be in harmony with the cost of living index of its workers.
- Basic wage rate either along with or without the cost of living allowance as well as the authorized cash value of concessions pertaining to the supply of essential commodities at subsidized rates.
- A comprehensive wage rate comprising of the cash value of the concessions, cost of living allowance and the basic rate.
Alternatively, a competent authority can calculate the cash value of concessions and cost of living allowance. This has to be done after appropriate intervals and according to the directions laid down by the appropriate government.
Section 5 of Minimum Wages Act – Procedure to Fix or Revise Minimum Wages
1. When the minimum wage rate of scheduled employment is fixed, or revised for the very first time under this act,
- As many committees and sub-committees can be appointed as necessary.
- A notification containing the relevant proposals can be published in the official gazette containing information related to people who might be affected by the same. A date also needs to be specified within a span of two months from the date of notification within which the proposals should be considered.
2. The appropriate government can issue a notification in the Official Gazette after considering the advice of the committee to fix or revise the minimum wage rate.
Remedies Available to Employees when their rightful wages are withheld by Employers
The Payment of Wages Act, 1936, provides several remedies to employees when their rightful wages are withheld by their employer. These remedies are designed to ensure that employees receive timely payment for the work they have performed. Here are the main remedies available to employees under the Payment of Wages Act:
1. Filing a Claim: If an employer fails to pay wages to an employee as required by the Act, the employee has the right to file a claim before the concerned authority. The claim should specify the details of the unpaid wages, including the amount owed and the period for which the wages are due.
2. Recovery of Wages: The concerned authority, typically the labour department or labour court, has the power to issue an order for the recovery of unpaid wages from the employer. This order may direct the employer to pay the outstanding wages to the employee within a specified period.
3. Payment of Penalty: In addition to recovering the unpaid wages, the employer may be liable to pay a penalty for the delay or non-payment of wages. The penalty amount is determined based on the duration of the delay and the provisions of the Act.
4. Interest on Delayed Payment: If the employer fails to pay wages within the specified time period under the Act, the employee is entitled to receive interest on the delayed payment. The rate of interest is typically prescribed by the Act and may vary depending on the duration of the delay.
5. Legal Action: If the employer fails to comply with the order for the payment of wages or refuses to pay the penalty or interest, the employee may take legal action against the employer. This may involve filing a lawsuit in a civil court or initiating other legal proceedings to enforce the rights under the Act.
6. Complaint to Authority: Employees also have the option to lodge a complaint with the concerned authority against the employer for non-compliance with the provisions of the Act. The authority may conduct an inquiry into the matter and take appropriate action against the employer, including imposing fines or other penalties.
7. Protection against Retaliation: The Act provides protection to employees against any adverse action or retaliation by the employer for asserting their rights under the Act. Employers are prohibited from terminating or discriminating against employees for seeking payment of their rightful wages.
Components of Minimum Wages
Under the Minimum Wages Act, 1948, the minimum wage is determined based on various components to ensure fair remuneration for workers. These components vary depending on the nature of the work, skill level, and prevailing conditions in different sectors and regions. Here are the key components of minimum wage under the Act:
1. Basic Wage: The basic wage forms the core component of the minimum wage and represents the minimum amount payable to the worker for performing the assigned tasks. It is typically fixed based on factors such as the cost of living, inflation rates, and the socio-economic conditions prevailing in the region.
2. Cost of Living Allowance (COLA): In addition to the basic wage, the minimum wage may include a cost of living allowance or dearness allowance to compensate for the impact of inflation and rising living expenses. This allowance is adjusted periodically to reflect changes in the cost of living index.
3. Housing Allowance: Some minimum wage structures include a housing allowance to assist workers in meeting their accommodation expenses. This allowance may vary depending on factors such as the location, type of accommodation, and prevailing rental rates.
4. Food Allowance: In certain cases, the minimum wage may include a food allowance to ensure that workers can afford a basic diet to meet their nutritional needs. The amount of the food allowance may be determined based on dietary norms and local food prices.
5. Transport Allowance: Workers may be entitled to a transport allowance to cover the costs of commuting to and from the workplace. This allowance helps workers access employment opportunities without facing financial constraints related to transportation.
6. Special Allowances: Depending on the nature of the work or specific requirements of the job, workers may receive special allowances as part of the minimum wage. These allowances could include overtime pay, hazard pay, shift allowances, or other additional payments.
7. Skill-based Pay: Minimum wages may also vary based on the skill level or qualifications required for the job. Skilled workers or those with specialized expertise may receive higher wages compared to unskilled workers performing similar tasks.
8. Legal Compliance: The minimum wage must comply with the statutory requirements prescribed under the Minimum Wages Act, 1948, and any applicable rules or regulations issued by the government or relevant authorities. Employers are required to ensure that workers receive wages at least equal to the minimum rates prescribed under the Act.