MBA: IVth Sem

Employee Relations & Labor Legislations

Dr. Bhavana Singh

Assistant Professor(Stage-III)

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The Payment of Minimum Wages Act, 1948

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 Introduction
Minimum Wages Act was first enacted by the Central Legislative Assembly in the year a
1948. The primary intention behind this Act was to bridge the wage disparity between
different work personals in an employment. 
This Act fixes the minimum rates of wage in certain types of employments. That is, the
wage paid for the work done should not be lesser than the amount suggested by the Act. 
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 bad for sweat labour.
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.
Preamble of the minimum wages act, 1948
The Act aims at making provision for the statutory fixation of minimum rates of wages in a
number of industries where in the sweated labour is most prevalent or where there is a
big chance of exploitation of labour.
The provisions of the Minimum Wages Act are intended to achieve the object by
providing social justice to workmen employed in the scheduled employments by
prescribing minimum rates of wages for them. The Minimum Wages Act was passed for
the welfare of labour
The Minimum Wages Act aims at statutory fixation of minimum wages with a view to
obviate the chance of exploitation of labour. The Act meant to prevent exploitation of
labour for which it authorises the appropriate government to take steps to prescribe
minimum rates of wages in the scheduled industries.
In an underdeveloped country, which faces the problem of unemployment on a large scale,
it is not unlikely that labour may offer to work even on subsistence wages.
Minimum Wages Act Applicability:
The provisions of the Minimum Wages Act are applicable on every employment that
employs more than 1000 personnel in a State. Also, it is applicable on all the States
of India, except Jammu & Kashmir. Unless specifically consented by the Central
Government, the provisions of this Act are not applicable on the employees of the
undertaking owned by the Central Government or Railways.
 Scope and Objective of the Minimum Wages Act,1948

To safeguard that the employee has a basic physical necessity, proper health, and
comfort.
 To ensure that the labour gets fair wages.
To ensure that the labour lives a decent life and have a respectable name in society.
Meaning of Wages:
“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.
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
 Time Rate – The minimum rate is fixed according to the duration of the work done
by the labour.
 Piece Rate – here the total number of pieces manufactured in the factory fixes the
minimum wage.
Overtime Rate –  Here the minimum rate is fixed by the overtime done by the labor
regardless of the time or piece rate.
 Procedure for fixing minimum wage
 
The Act provides two procedures for the fixation and revision of minimum wages. These
two procedures – are substantially similar and the appropriate Government must follow
one of the two methods only.
1. Committee Method: Under the first, the appropriate Government may appoint
Committee or Committees for different areas to hold inquiries and to make advice on the
question of wages fixation in the scheduled employment.
On receipt of the recommendations of the Committee, the appropriate Government is
required to fix or revise minimum rates of wages in respect of the employment
concerned by publishing in a notification in an official gazette for the information of
persons likely to be affected by it.
The notification shall specify a date not less than two months from the date of
notification on which the proposals will be taken into consideration.
2. Notification method: Under the second procedure, the appropriate Government
may publish its own proposals of minimum rates of wages by notification in the
official gazette for information of persons likely to be affected and shall specify the
date not less than two months from the date of notification on which the proposals will
be taken into consideration.
After considering all received representations, the appropriate Government fixes
minimum rates of wages in respect of the scheduled employment by making
notification in the official gazette. The minimum rates of wages fixed under either of
the procedures are to come into force on the expiry of three months from the date of
notification, unless the notification specifies a particular date.
After considering the advice of the committee or committees, all
representations received by it before the date specified in the notification, the
appropriate Government shall, by notification in the Official Gazette, fix, or, as the
case may be, revise the minimum rates of wages in respect of each scheduled
employment, and unless such notification otherwise provides, it shall
come into force on the expiry of three months from the date of its issue.
Provided that where the appropriate Government proposes to revise the minimum
rates of wages, the appropriate Government shall consult the Advisory Board also.
Components of Minimum Wages
In case of fixing or revising the minimum rates of wages, in respect of any scheduled
employment, the appropriate Government must take into account any of the following
Elements.
(i)A basic wage rate and a cost of living allowance (which is based on the cost of
living index number applicable to such workers), or
(ii)a basic rate with or without the cost of living allowance and the case value of
concessions in respect of supplies of essential commodities at concession rates, or
(iii) An all-inclusive rate allowing for the basic rage, the cost of living allowance and
the cash value of the concession, if any.
Payment of Minimum Wages
•The mimimum Wages must be paid irrespective of the extent of Profit or Financial
Condition of the Establishment.
•The Minimum Wages must be paid irrespective of availability of workmen willing to
work on lower wages(Section – 25).
•Deducting payment from minimum wages based on quantum of work done than the
norms is violative of article 23.
•Employee who does work in two different scheduled employments in day shall be
paid based on working hours allocated to each type of job(Section – 16).
Authorities and Remedies under the act
 Advisory Board/Committees and its Composition

The appropriate Government is empowered to appoint an Advisory Board for the

purpose of Coordinating the work of the Committees and Sub-committees appointed
under this Act for advising the appropriate Government in fixing or revising minimum
rates of wages.
The Act also provides a Central Advisory Board whose function is to advice the Central
and State Government in fixation and revision of minimum wages and other matters and
to co-ordinate the working of the Advisory Board.
The composition of the Central and State Advisory Board/Committees and
committees is same and similar. In appointing the number of persons to such
committees or Board by the appropriate Government, the rule of equal representation
is applied.
The Board or Committees consist of equal number of representatives of the employers
and employees in the scheduled employment and independent persons not exceeding
one-third of its total number of members. But one such independent person is also
appointed as Chairman.
Claims
The appropriate Government is empowered to appoint an authority under this Act for
a specified area, by notification in the official gazette. The authority is appointed for
the purpose of hearing all claims arising out of the payment of less than the minimum
rates of wages or in respect of the payment of remuneration for days of rest or for
work done on such day or of wages at the overtime rate of the employees employed in
that specific area.
The Act has mentioned that the following persons are appointed as the Authority
under this Act:
(i) Any Commissioner for Workmen's Compensation.
(ii) Any officer of the Central Government exercising functions as a Labour
Commissioner for any region.
(iii) Any officer of the State Government not below the rank of Labour Commissioner.
(iv)Any other officer with experience as a judge of a civil court as a stipendiary
Magistrate.
An application for a claim can be made:-
(a) by the employee himself, or
(b) by any legal practitioner, or
(c)by any official of a registered trade union, authorized by the employee to act on
his behalf or any Inspector or any person acting with the permission of the Authority
empowered to hear and decide the cases of claims,
Every application is to be made within six months from the date on which the
minimum
wages or other amounts are payable.
The Authority shall hear the applicant and the employer or give them an
opportunity of being heard and also hold an enquiry, if found necessary.
The authority, after hearing the applicant and the employer, may direct for the
payment of minimum wages which is withheld by the employer and may also
order for payment of compensation not exceeding ten times the amount of such
excess withheld by the employer.
The Authority appointed under this Act shall have all the powers of a Civil
Court under the code of Civil procedure. These powers only be utilized for the
purpose of taking evidence and of enforcing the attendance of witness and
compelling the production of documents. Every such Authority shall be deemed
to be a Civil Court for all purpose
Penalties and Procedures
An employer, who pays to any employee less than the minimum rates of wages
fixed for that employee's class of work or less than the amount due to him under
the provisions of the Act or contravenes any rule or order made with respect to
daily hours of work, intervals, weekly rest and overtime, is punishable with
imprisonment for a term, which may extend to six months or with fine which may
extend to five hundred rupees or with both.
No Court shall take cognizance of a complaint against any person for an
offence the following conditions are fulfilled.
(a)In case of an offence for the payment of less than the minimum wages, the
application for claims is to be presented before the Authority and the claim either
wholly or partly must be granted, and thereafter the complaint is to be sanctioned by
the appropriate Government or an officer authorised by it.
(b) In case of an offence for contravention of any rule or order relating to hours of
work or weekly day of rest and overtime or for such offenses for which no penalty is
specified, a complaint shall be made by or with the sanction of an Inspector.
(c)In case of an offence for contravention of less payment than minimum wages,
or any rules or orders relating to working hours, intervals, weekly rest and
overtime, a complaint must be made within one month of the grant or sanction by
the appropriate authority.
(d)In case of an offence for which penalty has not been specified, complaint must
be made within six months of the date on which the offence is alleged to have
been committed.
 Inspectors and their Powers and Functions

The appropriate Government is empowered to appoint any persons to be inspectors,

as thinks it fit, for the purpose of this Act. The appointments are to be made by a
notification in the official gazette. The appropriate Government shall also define the
local limits within which the inspectors shall exercise their functions. The act has
been provided such powers and functions for the inspectors. They are as below:
(1) Inspectors are authorised in all reasonable hours with any assistant to visit any
premises in places, where employees are employed. The places of work includes the
premises where the out workers are working. Workers working in these places must
be within the schedule employment in which minimum rates of wages have fixed
under the Act.
The inspector may enter the place of work for the purpose of examining any register
or record of wages or the notice required to be kept or exhibited. They are also
authorised to require the employer to produce such registers or records or notices.
(2)The inspector may examine any person or any employee to whom he finds in
such premises who are employed in the schedule employment.
(3) The inspector may secure information from employers who give out-work and
the out workers themselves. The information may relate to the names and
addresses of persons to and from whom the work is given and the receipts and the
payments to be made for the work.
(4)The inspector may seize or to take any copies of such registers, records, of
wages, or notices, or portion there of as may be considered relevant in respect of an
offence under this Act which they believe to have been committed by an
employee.
An inspector under the Minimum Wages Act is deemed to be treated as a public
servant under Indian Penal code.
Claims:
1. The appropriate Government may, by notification in the Official Gazette,
appoint any Commissioner for workmen's Compensation or any officer of the
Central Government exercising functions as a Labour Commissioner for any
region, or any officer of the State Government not below the rank of Labour
Commissioner or any other officer with experience as a judge of a Civil Court
or as a stipendiary Magistrate to be the Authority to hear and decide for any
specified area all claims arising out of the payment of less than the minimum
rates of wages or in respect of the payment of remuneration for days of rest for
work done on such days or of wages at the overtime rate to employees employed
or paid in that are.
2. Where an employee has any claim of the nature the employee himself, or any le
practitioner or any official of a registered trade union authorised in writing to act on
his behalf, or anyInspector, or anyperson acting with the permission of
the Authority appointed may apply to such Authority for a direction,
provided that every such application shall be presented within six months from the
date on which the minimum wages or other amounts became payable.
Provided that every such application shall be presented within six months from the
date on which the minimum wages or other amount became payable. Provided further
that any application may be admitted after the said period of six months when the
applicant satisfies the Authority that he had sufficient cause for not making the
application within such period.
3. When anyapplicationis entertainedthe Authority shall hear the applicant a
employer, or give them an opportunity of being heard, and after such further inquiry,
if any, as it may consider necessary, may, without prejudice to any other penalty to
which the employer may be liable under this Act, direct-
(i) in the case of a claim arising out of payment of less than the minimum rates of
wages, the payment to the employee of the amount by which the minimum wages
payable to him exceed the amount actually paid, together with the payment of such
compensation as the Authority may think fit, not exceeding ten times the amount of
such excess;
(ii) in any other case, the payment of the amount due to the employee together w
the payment of such compensation as the Authority may think fit, not exceeding ten
rupees; and the Authority may direct payment of such compensation in cases where
the excess or the amount due is paid by the employer to the employee before the
disposal of the application.
If the authority hearing any application under this section is satisfied that it was
either malicious or vexatious, it may direct that a penalty not exceeding fifty rupees
be paid to the employer by the person presenting the application.
4. Any amount directed to be paid under this section may be recovered-
(a) if the Authority is a Magistrate, by the Authority as if it were a fine imposed
by Authority as a Magistrate, or
(b) if the Authority is not a Magistrate, by any Magistrate, to whom the
Authority makes application in this behalf, as if it were a fine imposed by such
Magistrate.
5. Every direction of the Authority under this section shall be final.
6. Every Authority appointed under shall have all the powers of a Civil Court
under the Code of Civil Procedure, 1908 (5 of 1908), for the purpose of taking
evidence and of enforcing the attendance of witnesses and compelling the
production of documents, and every such Authority shall be deemed to be a
Civil Court for all the purposes of section 195 and Chapter XXXV of the Code
of Criminal Procedure, 1898 (5 of 1898).
Procedure for fixing of Minimum wage

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 Procedure for fixing minimum wage
 
The Act provides two procedures for the fixation and revision of minimum wages. These
two procedures – are substantially similar and the appropriate Government must follow
one of the two methods only.
1. Committee Method: Under the first, the appropriate Government may appoint
Committee or Committees for different areas to hold inquiries and to make advice on the
question of wages fixation in the scheduled employment.
On receipt of the recommendations of the Committee, the appropriate Government is
required to fix or revise minimum rates of wages in respect of the employment
concerned by publishing in a notification in an official gazette for the information of
persons likely to be affected by it.
The notification shall specify a date not less than two months from the date of
notification on which the proposals will be taken into consideration.
2. Notification method: Under the second procedure, the appropriate Government
may publish its own proposals of minimum rates of wages by notification in the
official gazette for information of persons likely to be affected and shall specify the
date not less than two months from the date of notification on which the proposals will
be taken into consideration.
After considering all received representations, the appropriate Government fixes
minimum rates of wages in respect of the scheduled employment by making
notification in the official gazette. The minimum rates of wages fixed under either of
the procedures are to come into force on the expiry of three months from the date of
notification, unless the notification specifies a particular date.
After considering the advice of the committee or committees, all
representations received by it before the date specified in the notification, the
appropriate Government shall, by notification in the Official Gazette, fix, or, as the
case may be, revise the minimum rates of wages in respect of each scheduled
employment, and unless such notification otherwise provides, it shall
come into force on the expiry of three months from the date of its issue.
Provided that where the appropriate Government proposes to revise the minimum
rates of wages, the appropriate Government shall consult the Advisory Board also.
Components of Minimum Wages
In case of fixing or revising the minimum rates of wages, in respect of any scheduled
employment, the appropriate Government must take into account any of the following
Elements.
(i)A basic wage rate and a cost of living allowance (which is based on the cost of
living index number applicable to such workers), or
(ii)a basic rate with or without the cost of living allowance and the case value of
concessions in respect of supplies of essential commodities at concession rates, or
(iii) An all-inclusive rate allowing for the basic rage, the cost of living allowance and
the cash value of the concession, if any.
Payment of Minimum Wages
•The mimimum Wages must be paid irrespective of the extent of Profit or Financial
Condition of the Establishment.
•The Minimum Wages must be paid irrespective of availability of workmen willing to
work on lower wages(Section – 25).
•Deducting payment from minimum wages based on quantum of work done than the
norms is violative of article 23.
•Employee who does work in two different scheduled employments in day shall be
paid based on working hours allocated to each type of job(Section – 16).