MINIMUM WAGES ACT, 1948

1. To whom the Act is applicable?

(a) The Act applies to persons engaged in scheduled employments or in specified class of work in
respect of which minimum wages have been fixed.

(b) No employee can give up by contract or agreement his rights in so far as it purports to reduce
the minimum rates of wages fixed under the Act.

Hence, any contract or agreement made less than the minimum rates of wages fixed shall be null
and void.

2. What is wage as defined under the Act?

“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 which does not
include other allowances viz.

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:

i) any contribution paid by the employer to any Pension Fund or Provident Fund or under any
scheme of social insurance:

ii) any traveling allowance or the value of any traveling concession:

iii) any sum paid to the person employed to defray special expenses entailed on him by the nature
of his employment; or

iv) any gratuity payable on discharge.

3. What is Minimum Wage?

Wages fixed or revised by the Government in respect of scheduled employments from time to
time which consists of Basic wage + variable dearness allowance.

4. What is V.D.A?

“Cost of living index number” in relation to employees in any scheduled employment in respect of
which minimum rates of wages have been fixed, means the index number ascertained and
declared by the competent authority by notification in Official Gazette to be the cost of living
index number applicable to employees in such employment:
5. Who are Inspectors under Minimum Wages Act?

The Officers from the rank of Asst. Labour Officers, Asst. Commissioners of Labour, Dy.
Commissioners of Labour, etc. are Inspectors under the said Act.

6. Who are the Authorities under M. W. Act?

The Authorities and claim amount is mentioned below :-

ACL : Claims not exceeding Rs.20,000/-

DCL : Claims above Rs.20,000/- and not exceeding Rs.50,000/-
JCL : Claims above Rs.50,000/-
Addl.CL : Any claim irrespective amount of claim.

7. Who can file claims ?

Claims can be filed by Inspectors before the Authorities concerned in the prescribed format. Any
individual employee or Trade Union can also file claims before the concerned authorities in the
prescribed format.

8. Whether any appeal lies in M.W. claims ?

No appeals lie in any Court. However, aggrieved party may approach the Hon’ble High Court of
A.P. under writ jurisdiction.

9. What are the hours of work in a day ?

The no.of hours which shall constitute to normal working day in case of an adult, nine hours
including lunch break of one hour. The employer shall allow a day of rest after six days of work
with wages to the employees every week.

If the employer extract work for more than four hours and less than eight hours the employer has
to pay full day wages.

10. When the workman is entitled for overtime wages ?

Any employee on any day having worked excess of no.of hours prescribed, is entitled to over time
at double the wage except in agriculture wherein it is 1 ½ times of the wage.

11. How is Minimum Wage rate fixed in India ?

Ans: Under Section 5 of Minimum Wages Act, 1948 there are basically two method of
fixation/revision of Minimum Wages (1) Committee Method (2) Notification Method. Revision of
Minimum Wages should not exceed an interval of 5 years. Section 3 empowers appropriate
Government to fix the minimum rates of wages in the scheduled employments.
Minimum rate of the wages fixed or revised consists of the following:

• A basic rate of wages and a special allowance, viz., cost of living allowance;
• A basic rate of wages with or without cost of living allowance and cash value of concessions for
supplies of essential commodities;
• An all inclusive rate, i.e. basic rate, cost of living allowance and cash value of concessions.

The Minimum Wage rate may be fixed at a) time rate, b) piece rate, c) guaranteed time rate and d)
overtime rate.

The Act provides that different Minimum Wage rate may be fixed for a) different scheduled
employments, b) different works in the same employment, c) adult, adolescent and children, d)
different locations or e) male and female.

Also, Government may fix such Minimum Wage by a) an hour, b) day, c) month, or d) any other
period as may be prescribed by the notified authority.

Norms for fixing Minimum Wage:

• Three consumption units per earner,

• Minimum food requirement of 2700 calories per average Indian adult,
• Cloth requirement of 72 yards per annum per family,
• Rent corresponding to the minimum area provided under the Government's Industrial Housing
Scheme and
• Fuel, lighting and other miscellaneous items of expenditure to constitute 20 % of the total
Minimum Wages
• Children education, medical requirement, minimum recreation including festivals/ceremonies
and provision for old age, marriage etc. should further constitute 25% of the total Minimum
Wage.

Cost of Living Allowance:

The Minimum basic wages fixed are linked to consumer price index as a counter measure against
inflation. The cost of living is set twice in a year. The Commissioner of Labour notifies the rate
1st of April and 1st of October. The rates are fixed on the basis of the average rise in the State
industrial workers consumer price index numbers for half year ending December and June
respectively.

Variable Dearness Allowance:

Dearness Allowance is payable to monthly, daily and piece rate earners. Every six months the
respective State Governments issues the Cost of Living Index number for each and every
scheduled employment.

12. What are the duties of employer under Minimum Wages Act, 1948 ?

Ans: The employer must pay every employee wages as fixed by the Government.

(a) Wages must be paid in cash (current coins or currency notes, or both)/ after obtaining the
authorization, it can even be paid either by cheque or by crediting the wages in employee’s bank
account.

(b) For the fixation of Minimum Wages, the employment must have been in Schedule originally
or added to the Schedule by a notification under Section 27 of the Act.<

(c) The employer can take actual work on any day up to 9 hours in a 12 hours shift, but he must
pay double the rate for any hour or part of an hour of actual work in excess of 9 hours or for more
than 48 hours in any week.

(d) Once a Minimum Wage is fixed according to the provisions of the Act, the employer must pay
to every employee engaged in a Scheduled employment, Minimum Wages notification for that
class of employees.

(e) The employer should fix wage-period for the payment of wages at intervals not exceeding one
month or such other larger period as may be prescribed.

(f) Where less than 1000 persons are employed, it would be paid before the expiry of the 7th day
of the following month. And where more than 1000 workers, it would be paid before the expiry of
the 10th day of the following month.

(g) The employer should pay the wages to a person discharged not later than the second working
day after his discharge.

(h) Every employer should maintain a register of wages at workplace specifying the following
particulars for each wage period in respect of each employed person:

i. Minimum rate of wages payable;

ii. The number of days in which overtime was worked;

iii. The gross wages;

iv. The wages actually paid and the date of payment.

(i) Every employer should get the signature or the thumb impression of every person employed on
the wage book and the wage slips.

(j) The employer should exhibit at main entrance to the establishment and its offices, a notice in
respect of the following in English and local language:

i. Minimum rate of Wages;

ii. Abstracts of the Acts and rules made there under;

iii. Name and address of the Labour Inspector/ Asst. Commissioner of Labour etc.

13. What is Variable Dearness Allowance ?

Ans: It was recommended in the Labour Ministers' Conference held in 1988, to evolve a
mechanism to protect wages against inflation by linking it to rise in the Consumer Price Index.
The Variable Dearness Allowance came into being in the year 1991. The allowance is revised
twice a year, once on 1st April and then on 1st October. In the State Sphere, 26 States/Union
Territories have provisions for Variable Dearness Allowance, at present.
Minimum Wages Act, 1948
Minimum Wages Act 1948 came into force in India when India had
recently gained its freedom. Labour laws made by the Britishers were
exploitative in nature. Wages were low and different in every part of the
country. There was no such thing as “Minimum Wages” and times were
pretty bad for sweat labour.

Minimum Wages Act 1948

It came to bring equality and justice to the blue-collar people.  Pay fixing
experts were guided by the standards recommended by the Fair Wage
Committee in the settlement of issues identifying with wage problems in
organized industries.

The Fair Wage committee explained the core of minimum wages, but

they didn’t say how to evaluate the minimum wage. The  15th session of
the Indian Labour Conference explained the necessary physical
requirements and health maintenance of the labours.

Scope and Objective of the Minimum Wages Act

1.    To safeguard that the employee has a basic physical necessity,

proper health, and comfort.
2.     Ensure that the labour gets fair wages.
3.    To ensure that the labour lives a decent life and have a
respectable name in society.

Criteria for Fixing Minimum Wages

According to section 3 of the Minimum Wages Act 1948 “The

Appropriate Government” will fix minimum wages. Appropriate
Government can include local, State and Central Government.  This
section sets the rate according to hours, days, months or any other wage
period may be prescribed.

The rates to be fixed need not be uniform. Diverse rates can be fixed for
various zones or areas. If the wages are fixed according to section 4 of
the Payment of the Wages Act, 1936, the fixing will be done according
to the Act.

Minimum Wages are fixed according to the following criteria

1.    Time Rate – The minimum rate is fixed according to the

duration of the work done by the labour.
2.    Piece Rate – Here the minimum wage is fixed by the total
number of pieces manufactured in the factory.
3.    Overtime Rate – Here the minimum rate is fixed by the
overtime done by the labour regardless of the time or piece rate.
Wage Committee    

A wage committee shall be formed by the appropriate government,

which shall consist of members from both the employer and employee
side. Therefore, an independent person with having no interest in the
employment scheme shall be appointed as the chairman of the wage
committee. The appointment process in the Minimum Wages Act is
made in this way so that there is no scope of discrimination to the
labours.  

Advisory Board

Section 7 of the Minimum Wages Act, the Advisory Board, which

proposes recommendations and changes to be brought in labour laws.
The advisory board proposes a recommendation to the State and Central
Government in fixing the minimum wages.

According to Section 9 of the Act, it talks about the appointment of

committees and subcommittees. The included members are:

1.    A person appointed by the Appropriate Government.

2.    Employers and employees, who belong to the scheduled
employment and they shall be equal in number.
3.    Independent persons and they shall not exceed one-third of the
total number of members. An independent person will be
appointed as chairman of the committee.
Wages in Kind

Section 11 says that the wages shall be paid in cash. If somewhere, the
payment is done either wholly or partly and if it is a customary process,
then in that the case, the government through a notification in the official
gazette shall enforce the payment partly or wholly.

Consequences of Non – Compliance

Non- compliance of the Minimum wages act, i.e not paying minimum

wages is a culpable offense.  Hence, violation of fixing hours also
attracts the penal provision.

Imprisonment up to 5 years and a fine up to 10,000 is the maximum

punishment that can be awarded. Section 22 of the Act defines the
sanctions.
 Object of the Minimum Wages Act of 1948

The concept of minimum wages is based on the principles of equity and social
justice. Its underlying idea is that "he who works is entitled to a fair remuneration
which may enable him to live a life consistent with human dignity"
In the case of Edwards Mill Company Limited, the Honourable Supreme Court has described the
purpose of this Act as follows.:
1- To ensure that the payment is not as low as to put the labour at disadvantage.
2-The wages should be given equal to the amount of work done and should not be exploited.
3-Ensuring that unorganized labour does not suffer from unfair bargaining and that their rights are
protected.
4-To root out evils like strike and lockout by making fair payment to the labour.
In other words, the objectives of this act can be described as reduced. --:
The object of this Act is to promote the welfare of workers by fixing minimum rates of wages in
certain industries where labour is not organised and sweated labour is most prevalent. The Act
seeks to prevent exploitation of workers by ensuring that they are paid the minimum wages which
would provide for their subsistence and preserve their efficiency.
When the constitutionality of this Act was challenged in 1955 in the case of Bejoy Cotton Mills
V. State of Ajmer before the Supreme Court the Court rejected the contention and upheld the
constitutionality of the Act observing that securing of living wage to workers which ensures not
only bare subsistence but also maintenance of health and decency, is conducive to general interest
of the public, and it is also in conformity with the Directive Principles of State Policy embodied in
Article 43 of the Constitution.
The objectives of the Act may be made much clear with the help of the following cases.
H.D. Singh vs Indian Reserve Bank Supreme Court observed that greater possibility that workers
may offer and be ready to work on starvation, wages in under developed country like ours which
is facing acute problem of unemployment. This is the reason that there is no need to consider the
employer’s capacity in fixing the minimum wages.
The Supreme Court of India has observed that the object of this act is directed against exploitation
of the ignorant, less organised less privileged members of the society by the capitalist class.
Thus, the anxiety of the State for improving the general economic condition of some of its less
favoured members appears to be in supersession of the old principle of absolute freedom of
contract and the doctrine of laisez faire and in recognition of new principle of social welfare and
common good.
In the case of Kamani Metals, the Supreme Court made it clear that it is necessary to give
minimum wages and in this the economic condition of the industry benefits is of no importance
today.
In the case of a Hydro engineer, the court considered that the employer does not have the capacity
to pay wages when determining the minimum wages because every employer should pay
minimum wages to his employee.
In the case of Unichoi vs State of Kerala, the Supreme Court has made it clear that the Act is not
contrary to the provisions of the Constitution. In the end, it would be right to say object of the
minimum wages act of the1948 is to solve the problem relating to the minimum living and fair
wages in India.