LABOUR LAW PROJECT

TOPIC – MINIMUM WAGES ACT- CONSTITUTIONAL VALIDITY AND NEW

ASPECT

THANKAM KRISHNAN

A3211117327

B.A.L.L.B. (H)

6TH Semester

Amity Law School, Noida

Amity University
 CERTIFICATE

This is to certify that the project work entitled Minimum Wages Act- Constitutional Validity And
New Aspect has been successfully completed, and is up to the standard both in respect of contents and
language for being referred to the examiner by Ms. Thankam Krishnan from BA LLB(H), semester 6
section E under the guidance and supervision of the undersigned for the requirement of BA LLB(H)
degree of Amity University, Noida(U.P).

Supervisor

(Mrs. Kanika Kaundal)

The minimum wages act up hails the ARTICLE 43 of the Indian constitution, which states that,

‘Living wage, etc, for workers The State shall endeavor to secure, by suitable legislation or
economic organization or in any other way, to all workers, agricultural, industrial or otherwise,
work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of
leisure and social and cultural opportunities and, in particular, the State shall endeavor to
promote cottage industries on an individual or cooperative basis in rural areas’

The spirit of the minimum wages act of India is relied in the soul on of the article 431 of Indian
constitution, which SADLY is enshrined in part IV of the constitution and hence is non-
enforceable by law.

1.) Another constitutional provision that the minimum wages act is said to defy is the
ARTICLE 19(1g) which says that

‘To practice any profession or to carry on any occupation, trade or businesses

It is questioned by certain jurists that the provisions of the minimum wages act that ask for
providing a fixed minimum wage by the employers to the labours is a ‘BAR’ to their
fundamental right guaranteed under 19(1g).

But this question has been raised again and again in the honorable courts which have dissented
from this opinion and upheld the validity of minimum wages act.

In GUL MUHAMMAD TARA SAHEB VS STATE OF BOMBAY2,

Where the honorable court pointed out that the provision of 19(1g) is subject to restriction
enshrined in 19(6) of the Indian constitution.

Article 19(6) states that,

‘Nothing in sub clause (g) of the said clause shall affect the operation of any existing law in so
far as it imposes, or prevent the State from making any law imposing, in the interests of the

1
Article 43 of Constitution of India deals with the topic of Living wage, etc., for workers
2
1962
general public, reasonable restrictions on the exercise of the right conferred by the said sub
clause.

Here in 19(6) the words, ‘the interest of general public’ creates a restriction on the exercise
of this right with respect to public order i.e to preserve public order, the right can be
curtailed.

The same question was raised in V.UNICHOV VS STATE OF KERALA 1962,

And the court upheld the view of GUL MOHAMMAD case.

It was held in this case that the fixation of minimum wages is for the preservation of
public order. As if no minimum wage is fixed, it shall lead to arbitrariness by the
employer and lead TO CLASHES OF INTEREST BETWEEN EMPLOYER AND
LABOUR, which shall cause FRICTION IN SOCIETY.

2.) The ARTICLE 14 of the Indian constitution, which relates to equality. Now, it must be
noted that minimum wages are not fixed in the nation. They vary from places to places
and region to region. This provision of the minimum wages act is condemned by certain
jurist as to say to violate RIGHT TO EQUALITY.

But this view is also put down by the courts throughout the nation.

In BHIKUSHA vs SANGAMARA 1963

It was held by the court that person would be liable to different minimum wages if they
are working in different locality.

In C B BOARDING AND LODGING vs STATE 1970,

It was held that persons working in different industry, even though they work in the same
locality would be granted different wages.
Hence the question of the difference of wages throughout nation is totally disregarded by the
courts.

In N.M.WADIA CHARITABLE HOSPITAL vs STATE OF MAHARASTRA 1993,

It was held by the court that fixing different minimum wages for different locality is
permitted under the constitution and under labour laws.

Hence the question that any provision of the minimum wages act is in any way against the
provisions of constitution is wrong.

The minimum wages act is valid in all sense and completely.

The variation of minimum wages3 between the States is due to differences in socio-economic and
agro-climatic conditions, 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 State Governments are the appropriate Government to fix,
revise and enforce minimum wages in scheduled employments in their respective jurisdictions
under the Act.

“THE MINIMUM WAGES ACT, 1948”.

India introduced the Minimum Wages Act in 1948, giving both the Central government and State
government jurisdiction in fixing wages. The act is legally non-binding, but statutory. Payment
of wages below the minimum wage rate amounts to forced labour. Wage Boards are set up to
review the industry’s capacity to pay and fix minimum wages such that they at least cover a
family of four’s requirements of calories, shelter, clothing, education, medical assistance, and
entertainment. Under the law, wage rates in scheduled employments differ across states, sectors,
skills, regions and occupations owing to difference in costs of living, regional industries' capacity
to pay, consumption patterns, etc. Hence, there is no single uniform minimum wage rate across
the country and the structure has become overly complex.4

3
As pointed out by the UNION LABOUR AND EMPLOYMENT MINISTER SHRI MALLIKARIUN KHARGE,

4
https://www.linkedin.com/pulse/constitutional-validity-minimum-wages-act1948
In a developing economy like India where about 90 percent of the workers work in the informal
sector, not having collective bargaining power, wages couldn’t be left to be determined entirely
by the interplay of market forces and intervention on the part of the government became
imminent. It is with this objective of protecting the vulnerable/less privileged strata of the society
from exploitation by the capitalist class that government of India enacted the Minimum Wages
Act, 1948. The act provides for fixation/revision of minimum rates of wages in sweating
employments by involving the authority of the state. The minimum rates of wages helps in
reducing the inequalities in the standard of living of different social groups of workers by
statutorily prescribing minimum wage rates. Labour Bureau,

(A): THE ACT IS NOT UNREASONABLE:

It can scarcely be disputed that securing of living wages to labourers which ensure not only bare
physical subsistence but also the maintenance of health and decency is conducive to the general
interest of the public. This is one of the directive principles of the state policy embodied in
Article 43 of the constitution.

Individual employers might find it difficult to carry on the business on the basis of minimum
wages fixed under the Act but this must be not be the entire premise and reason to strike down
the law itself as unreasonable.

“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 the clause (6) of the article
19.” This quote is a part of judgement in the case “Gulmuhommad Tarasaheb5 , a bidi factory by
its proprietors Shamrao /VS/ State of Bombay , AIR 1962 Bom 97: AIR1955, Sc33:1963, Ker
115: 1964 Tri 32.

An another important judgement that favours and supports the constitutional Valitity of the
Minimum Wages Act,1948 is , “ V. Unichonoy /VS/ State of Kerala,1962, SC12. This case
raised the same questions which were raised in the case of Gulmuhommad Tarasaheb /vs/ State

5
GUL MOHAMMAD case.-1962
of Bombay, AIR 1962 Bom 97”., which were , “that , can a state be prevented from making any
law, in the interest of general public, where it creates restrictions and interferes to some extent
with the freedom of trade or business guaranteed under Article 19(1)(g) , of the Constitution of
India, and it was held that , “ Fixation of minimum wages is for preservation of public order , and
if no minimum wage is fixed then it shall lead to arbitrariness by the employers and that shall
lead to clashes of interest between employer and labour which shall cause friction in society”.

The article 14 of the Indian Constitution which relates to equality before the law, it must be
noted that minimum wages are not fixed equally across the whole nation but they vary from
occupation to occupation and industry to industry and from place to place.

The case of ‘Uchinoy /vs/ State of Kerala ,1962 SC12, further quotes the following , “ 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”.

(B) THE ACT DOES NOT VIOLATE ARTICLE 14 OF THE INDIAN 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 held in the case of ‘Bhikusa Yamasa Kshatriya /vs/
Sangammar Akola Bidi Kamgar Union”, AIR 1963 SC306. Further , as decided in the case “C.B.
Boarding & Lodging, Re(1970) II LLJ 403: AIR 1970: SC 2042 : 38 FIR I .” , it added to the
above mentioned case that , “... nor the reason that two different procedures are provided for
collecting information.” .

(C) NOTIFICATION FIXING DIFFERENT RATES OF MINIMUM WAGES FOR

DIFFERENT LOCALITIES IS NOT DISCRIMINATORY.
where the fixation of rates of wages and their revision were manifestly preceded by a detailed
survey and enquiry and the rates were brought into force after a full consideration of the
representations which were made by a section of the employers concerned, it would be difficult
in the circumstances to hold that notification which fixed different rates of minimum wages for
different localities was not based on intelligent differentia having a rational nexus with the object
of the Act, and thereby violated article 14. when the Government issued notification improving
upon the existing minimum wages as revised minimum wages disregarding the contrary report of
the committee appointed under Section 5-1(a) ; such notification was bad under the law and was
to be made inoperative.”.

As pointed out by one of the India’s Union Labour and Employment Minister Shri Mallikarjuna
Kharage ;, “The variation of minimum wages between the states is due to differences in socio-
economic and agro-climatic conditions, 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”.

Referring the case of “N.M.Wadia Charitable Hospital /VS/ State of Maharashtra , 1993”, it was
decided by the Court that – “ Fixing different minimum wages for different localities is permitted
under the constitution and under labour laws , hence the question that any provisio of the
Minimum Wages Act is in any way against the provisio of constitution is wrong.

The constitution of India accepts the responsibility of the State to create an economic order, in
which every citizen finds employment and receives a “fair wage”. This made it necessary to
quantify or lay down clear criteria to identify fair wage. Therefore, a Central Advisory Council,
in its first session in November 1948, appointed a tripartite Committee on Fair Wages. The
committee consisted of representatives of employers, employees, and the Government. Their task
was to enquire into and report on the subject of fair wages to the labour.

(D) SANCTITY OF THE MINIMUM WAGE ACT

Supreme Court in three separate rulings has held that non payment of minimum wages is
tantamount to ‘forced labour’ prohibited under Article 23 of the Constitution. The Supreme
Court holds that ‘forced labour’ may arise in several ways, including “compulsion arising from
hunger and poverty, want and destitution”. In Sanjit Roy Vs. State of Rajasthan (1983), the
Supreme Court held 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.
Drawing on the Supreme Court rulings, Andhra High Court set aside the Government of India
(GoI) notification mandating that prevailing state minimum wage be paid. This has been
underscored in the legal opinion provided by Additional Solicitor General, Ms. Indira Jaising, to
the Central Employment Guarantee Council (CEGC) Working Group on Wages where she made
it clear that using Section 6(1) to allow a payment of less than minimum wage in MGNREGA
works will amount to forced labour. 15 eminent jurists and lawyers of India too have asked
Government of India to immediately revoke its unconstitutional notification and ensure that
minimum wages are paid to all workers in India.

The Act and the judgements are in favour of equality provided under Article 14 of the
Constitution and a judgement in the case namely, “Engineering Workers Union /vs/ Union of
India(1994) I .LLJSup.942Bom.”, pronounces the judgement that , “The provision under Section
3(2)(A), that minimum rate of wages in scheduled employment fixed or revised, shall not apply
to the employees during the period of adjudication, violated equality clause of Article 14 and
hence that section is void”.

In the view of the Directive Principles of State Policy as contained in the Article 43 of the Indian
Constitution, it is beyond doubt that securing of living wages to labourers which ensures not only
bare physical subsistence but also the maintenance of health and decency, it is conducive to the
general interest of the public.

The Minimum wages Act was passed to fulfill the aspiration as contained in the following
resolution:-

“ If the labourers are to be secured the enjoyment of minimum wages and they are to be
protected against exploitation by their employers, it is absolutely necessary that restraints should
be imposed upon the freedom of contract and such restrictions cannot be said to be unreasonable.
On the other hand, the cannot be heard to complain if they are compelled to pay any minimum
wages to their labourers even though the labourers , on account of their poverty and helplessness,
are willing to work even at lesser wages”.

In the case of “PETITIONER: BIJAY COTTON MILLS LTD./Vs./

RESPONDENT: THE STATE OF AJMER.DATE OF JUDGMENT:

14/October /1954”,

The Constitutional validity of this Act was attacked on the ground that it violates the guarantee
of freedom of trade or business etc., envisaged by Article 19(1)(g) of the Indian Constitution,
(Constitution of India, Article. 19(1)(g), 19(6)-Minimum Wages Act (XI of 1948), sections. 3,4
and 5-Appropriate

Government-Fixing minimum rate of wages-Whether offends fundamental rights guaranteed

under Art. 19(1)(g).)

, it was held that , the restrictions imposed upon the freedom of contract by the fixation of
minimum rates of wages though they interfere to some extent with the freedom of trade or
business guaranteed under Art. 19(1)(g) of the Constitution are not unreasonable and being
imposed in the interest of general public and with a view to carry out one of the Directive
Principles of State Policy as embodied in Art. 43 of the Constitution are protected by the terms of
el. (6) of Art. 19. It can thus be said that the provisions of the Act are bound to affect harshly and
even oppressively a particular class of employers, who for purely economic reasons are unable to
pay the minimum rate of wages fixed by the authorities , but have absolutely dishonest intention
of exploiting their workers.

The fact that employer might find it difficult to carry on business on settled principle cannot be a
sufficient reason for striking down the law itself as unreasonable. The poverty of labourers is
also a factor to be taken into consideration while determining the question whether a particular
provision is in the interest of the general public.

Sanctity of The Minimum Wage Act

Supreme Court in three separate rulings, has held that non payment of minimum wages is
tantamount to ‘forced labour’ prohibited under Article 23 of the Constitution. The Supreme
Court holds that ‘forced labour’ may arise in several ways, including “compulsion arising from
hunger and poverty, want and destitution”. In Sanjit Roy Vs. State of Rajasthan (1983), the
Supreme Court held 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.
Drawing on the Supreme Court rulings, Andhra High Court set aside the Government of India
(GoI) notification mandating that prevailing state minimum wage be paid. This has been
underscored in the legal opinion provided by Additional Solicitor General, Ms. Indira Jaising, to
the Central Employment Guarantee Council (CEGC) Working Group on Wages where she made
it clear that using Section 6(1) to allow a payment of less than minimum wage in MGNREGA
works will amount to forced labour. 15 eminent jurists and lawyers of India too have asked
Government of India to immediately revoke its unconstitutional notification and ensure that
minimum wages are paid to all workers in India.

Three Chief Ministers (Rajasthan, Andhra Pradesh and Kerala) have written to the Prime
Minister requesting the Ministry of Rural Development’s (MoRD) compliance with the
Minimum Wage Act, followed by a letter from the Chairperson, NAC and UPA, to the Prime
Minister calling his attention to find urgent resolution of this matter. Finally, the Labour Ministry
too has reiterated its “fundamental objection” to Section 6(1), warning that using Section 6(1) to
allow payment of less than prevailing state minimum wage will not stand legal scrutiny.

However despite this overwhelming legal and political consensus, both the GoI and the
Government of Andhra Pradesh continue to be in contempt of the Andhra Pradesh High Court
(July 2009) citing fiscal concerns. In fact in his response to the Chairperson, NAC regarding
violation of minimum wages in NREGA, the PM has asserted that the wage rate under NREGA
is independent of the provisions of the Minimum Wages Act, a statement that runs counter of the
established Constitutional, legal and political opinion

The Act and the judgments are in favour of equality provided under Article 14 of the
Constitution and a judgment in the case namely,

“Engineering Workers Union /vs/ Union of India(1994) I .LLJSup.942Bom.”, pronounces the

judgment that , “The provision under Section 3(2)(A), that minimum rate of wages in scheduled
employment fixed or revised, shall not apply to the employees during the period of adjudication,
violated equality clause of Article 14 and hence that section is void”.

In the view of the Directive Principles of State Policy as contained in the Article 43 of the Indian
Constitution, it is beyond doubt that securing of living wages to labourers which ensures not only
bare physical subsistence but also the maintenance of health and decency; it is conducive to the
general interest of the public.

The Minimum wages Act was passed to fulfill the aspiration as contained in the following
resolution:

“If the labourers are to be secured the enjoyment of minimum wages and they are to be protected
against exploitation by their employers, it is absolutely necessary that restraints should be
imposed upon the freedom of contract and such restrictions cannot be said to be unreasonable.
On the other hand, the cannot be heard to complain if they are compelled to pay any minimum
wages to their labourers even though the labourers , on account of their poverty and helplessness,
are willing to work even at lesser wages”.

In the case of “PETITIONER: BIJAY COTTON MILLS LTD./Vs./

RESPONDENT: THE STATE OF AJMER.DATE OF JUDGMENT:

14/October /1954”,

The Constitutional validity of this Act was attacked on the ground that it violates the guarantee
of freedom of trade or business etc., envisaged by Article 19(1)(g) of the Indian Constitution,
(Constitution of India, Article. 19(1)(g), 19(6)Minimum Wages Act (XI of 1948), sections. 3,4
and 5 Appropriate.

Government fixing minimum rate of wages Whether offends fundamental rights guaranteed
under Art. 19(1)(g).) .

It was held that, the restrictions imposed upon the freedom of contract by the fixation of
minimum rates of wages though they interfere to some extent with the freedom of trade or
business guaranteed under Art. 19(1)(g) of the Constitution are not unreasonable and being
imposed in the interest of general public and with a view to carry out one of the Directive
Principles of State Policy as embodied in Art. 43 of the Constitution are protected by the terms of
el. (6) of Art. 19. It can thus be said that the provisions of the Act are bound to affect harshly and
even oppressively a particular class of employers, who for purely economic reasons are unable to
pay the minimum rate of wages fixed by the authorities, but have absolutely dishonest intention
of exploiting their workers.

The fact that employer might find it difficult to carry on business on settled principle cannot be a
sufficient reason for striking down the law itself as unreasonable. The poverty of labourers is
also a factor to be taken into consideration while determining the question whether a particular
provision is in the interest of the general public.
 NEW ASPECTS IN MINIMUM WAGES ACT

The Union Labour & Employment Minister Shri Mallikarjun Kharge has informed the Rajya
Sabha that the norms recommended by the Indian Labour Conference (ILC), held in 1957 are
taken into account while fixing the minimum wages. These are as follows: -
a) 3 consumption units for one earner.
b) Minimum food requirements of 2700 calories per average Indian adult.
c) Clothing requirements of 72 yards per annum per family.
d) Rent corresponding to the minimum area provided for under Government’s Industrial Housing
Scheme.
e) Fuel, Lighting and other miscellaneous items of expenditure to constitute 20% of the total
minimum wage.

The Hon’ble Supreme Court delivered a judgment in the case of

REPTAKOS & CO. VS. ITS WORKERS

‘that the children’s education, medical requirement, minimum recreation including
festivals/ceremonies, provision for old age, marriage etc. should constitute 25% of the
minimum wage and used as a guide in fixation of minimum wages. The State Governments
have been requested from time to time to keep the above norms and judicial pronouncement in
view while fixing/revising the minimum wages.’

The recently held 44th Indian Labour Conference, inter alia, discussed the issue of
amendment of the Minimum Wages Act and made certain recommendations for incorporation in
the amendment proposals. The recommendations were mainly on national minimum wage,
enhancement of penal provisions, adoption of VDA in all States/UTs, etc.
A Conference Committee of the 44th session of ILC was constituted to discuss Agenda Item No.
(i) concerning Minimum Wages and related issues. These issues, inter alia, include norms for
fixation/revision of minimum rates of wages, Variable Dearness Allowance(VDA), National
Floor Level Minimum Wages etc. On the basis of detailed discussion, the following points
emerged.
 
1. There was broad consensus that the Government may fix minimum wages as per the
norms/ criteria recommended by the 15th ILC (1957) and the directions of the Hon’ble
Supreme Court (Reptakos& Co. Vs. its workers Union) 1992. The Government may take
necessary steps accordingly.
2. It was suggested that the Minimum Wages Act should cover all employments and the
existing restriction for its applicability on the scheduled employments only should be
deleted. This will also help India ratify ILO Convention No.131.
3. It was broadly agreed that there should be national minimum wages applicable to all
employments throughout the country.
4. It was pointed out that the payment to the apprentices should be treated differently from
the other categories.
5. The Committee noted that at present there are 12 States/UTs who have not adopted
VDA. There was consensus that all States/UTs should adopt VDA.
6. It was also recommended that the payment of minimum wages should be done through
Banks/Post Offices etc.
7. It was felt that the enforcing agencies should not be given the power of adjudication and,
therefore, this proposal should be re-examined.
8. Regarding penal provision for violation of the Act, it was felt that imprisonment clause
under Section 22 and 22A is harsh to the employer and may be re-examined. Further, it
was felt that non-maintenance of registers should not attract imprisonment.
9. The proposal of paying different minimum wages in respect of same employment either
in the Centre or in the States should be done away with.