Wage System in India

•Minimum wages need to be fixed in sweated industries &

fair wage agreements need to be promoted in the more
organized industries.
• Equal pay should be ensured for equal work.
• Wage differentials should be provided.
• Remuneration should be linked to productivity.
• There should be compensation for any rise in the cost of
living.
• Fair wages should be determined over & above minimum
wages with due regard to:
Productivity of labour
The prevailing level of wages
The level of national income & its distribution.
The place of industry in the economy of the country.
• The Supreme Court ruled that an employer who cannot
pay minimum wages has no right to exist. The capacity to
pay becomes a subject of consideration to determine fair
wages.
 Wage System in India

Wages should be determined on the basis of the

basic needs of labour.
A living wage should be secured for workers.
 Components of Wage System
(Minimum Wages Act,1948)
Fixing of minimum wages: The appropriate government shall fix the minimum
rates of wages payable to employees employed in the industries specified in the
schedule. Revision can take place once in five years. The minimum wage may be
fixed at a ‘time rate’, ‘piece rate’, ‘guaranteed time rate’ & ‘overtime rate’.

Minimum rate of wages: It consists of

A basic rate of wages & a cost of living allowance.
A basic rate of wages & a cost of living allowance & the cash value of the
concessions in respect of supplies of essential commodities of concession rates.

Working hours: The Government has fixed 48 hours per week.

 Components of Wage System (Cont)
Overtime: Where an employee works on any day in
excess of the number of hours constituting a normal
day, the employer should pay him the overtime rate as
three times the daily wage.

Employers’ obligation: Once the minimum wages are

fixed or revised according to the procedure, it becomes
the legal obligation of the employers to pay the rates.
They cannot plead the incapacity of the industry to pay.

Exemptions: The government may direct that the

provisions of this Act shall not apply in relation to the
wages payable to disabled employees.
 Components of Wage System (Cont)
Content of minimum wages: The Fair Wages
Committee viewed that the minimum wages
must provide not merely for the bare
subsistence of life but also for the preservation
of the worker’s efficiency by providing for
some measure of education, medical aid &
amenities.

Different categories: The Act permits fixation

of different minimum rates of wages for
different classes of work in the same scheduled
employment.
 Components of Wage System (Cont)

Payment of minimum bonus: Every employer

shall be bound to pay every employee in respect
of any accounting year a minimum bonus of
8.33% of the salary earned by him in the whole
year.

Payment of maximum bonus: Where the

allocable surplus exceeds the amount of
minimum bonus payable to the employees, the
employer should be bound to pay every
employee 20% of a month salary.
 Components of Wage System (Cont)

Computation of working days: An employee shall

be deemed to have worked on the days on which
he/she had been laid off under an agreement,
standing orders, or the Industrial Disputes Act
was on leave with salary was absent due to
temporary disablement caused by an accident
arising out of.

Special provisions for new establishments: Bonus

shall be payable only in respect of the accounting
year in which the employer derives profit.