According to Section 3 of the Minimum wages act, it is the responsibility of the appropriate

government to set a specific yardstick.

Apart from fixing the minimum rate, the appropriate government shall also conduct periodic
reviews within a span of five years of fixing such rates and revise the same if felt necessary.
However, according to section 3(1A), the appropriate government shall not take any such
initiative in regards to scheduled employment having an employee count of less than 1000.

A wage is monetary compensation (or remuneration, personnel expenses, labor) paid by an

employer to an employee in exchange for work done. Payment may be calculated as a fixed
amount for each task completed (a task wage or piece rate), or at an hourly or daily rate (wage
labour), or based on an easily measured quantity of work done.
1. Wages are part of the expenses that are involved in running a business.
2. Payment by wage contrasts with salaried work, in which the employer pays an arranged
amount at steady intervals (such as a week or month) regardless of hours worked, with
commission which conditions pay on individual performance, and with compensation
based on the performance of the company as a whole. Waged employees may also
receive tips or gratuity paid directly by clients and employee benefits which are non-
monetary forms of compensation. Since wage labour is the predominant form of work,
the term "wage" sometimes refers to all forms (or all monetary forms) of employee
compensation.
3. Wages are also a means of providing income for employees and as a cost of doing
business to the employer. In a wider sense, wages mean any economic premium paid by
the employer under some contract to his workers for the services delivered by them. In
this way wages constitute of financial support, family allowance, relief pay and other
benefits. Whereas in the narrow sense, wages are the price paid for the services of labour
in the process of production and it count only the wages proper or performance wages.

Meaning and Definition of Wage

According to Section 2(h) of the Minimum wages Act, 1948 the term 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 person fund or provident fund or under any
scheme of social insurance;
(iii) any traveling allowance or the value of any traveling 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;

Wage Variation / Varieties

Wages levels differ from one to another and relative difference in wage levels is called wage
variation or varieties. Hence, there are differences in wage rates. There are various factors like
political, behavioural, ethical, social and economic factors on which wage levels depends .There
are three types of variations or wage varieties in wage rates.

Regional Variation: Regional Variation means different wage rates in difficult regions for the
same work in the same industry. This may be due to several factor such as demand and supply of
the workers, cost of living index, standard of living and economic development.

Time Variation: When wage rates changes according to time that means changes in wage rates
due to time which is termed as time variation. It is only the economic conditions of the country
which determine the different wage rates time to time. In inflationary pressures the wage rates
are high, whereas in slump period may be low.

Industrial Variation: When one industry may pay more or different wage rates to its workers in
the same region for similar work that is called Industrial Variation. Wages may differ from
industry to industry. Various factors such as nature of work, demand and supply of skilled
labour, place of industry in the national economy and working conditions in the industry etc
influence the wage rates.

Three Types of Wages

Living Wages
Living wages are defined as that wages which are consistent to provide certain facilities as well
as some basic necessities to the employee. So, it means that wage level which is satisfactory to
provide for the basic necessities and such niceties that are advised necessary for the betterment
of the employee as well as his family in accordance with his social status.

Thus, living ages has been defined as follows:

The living wage should enable the male earner to provide himself and his family not merely the
basic essentials of food, clothing and shelter but a measure of frugal comfort including education
for the children, protection against ill-health, requirement of essential social needs and measures
of insurance against old age.
Article 43 of the Constitution of India states that the state shall endeavour to secure by suitable
legislation or economic organisation or in any other way to all workers, agricultural, industrial or
otherwise work, a living wage, conditions of work ensuring decent standard of life and full
enjoyment of leisure and social and cultural opportunities. So, the government of India has
adopted as one of the directives of the principle of state policy to ensure living wages.

Living wage is a wage sufficient to ensure the workman food, shelter, clothing, frugal comfort,
provision for evil days etc. as regard for the skill of an artisan, if he is one.

Thus, Living wages does not mean to fulfill only for the basic necessities of life to employee
such as food ,shelter and clothing, but also it include for some comforts, leisure and amenities
estimated by current human standards such as health, education of children, travelling, old age,
recreation and social needs etc.

Minimum Wages
The term Minimum Wage has not been defined in the Minimum Wages Act, 1948. The
minimum wage is the lowest wage in the scale below which the efficiency of a worker is likely
to be inspired. The minimum wage includes not only the bare physical necessities but also a
modicum of comfort otherwise known as conventional necessities. The Minimum wages must,
therefore, provide not merely for the bare subsistence of life but also for the preservation of the
efficiency of the worker. For this purpose, the minimum wage must also provide for the same
measure of education, medical requirements, and amenities.

Therefore any employer who is unable to pay this minimum wage to workers has no right to
exist. Where a person provides labor or service to another for remuneration which is less than the
minimum wages, such labor is 'forced labour' within the meaning of Article 23 of the Indian
Constitution and thereby entitles the person to invoke Article 32 or Article 226 of the
Constitution of India.

The Concept of fair wages was to be dynamic. There is no reason to assume that fair wages fixed
years ago should continue to be fair wages for al time, and any fixation of minimum wages,
should be taken not as minimum wages but as fair wages because it is above the fair wages once
fixed.

Constituents or Components of Minimum Wage

According to Section 4 of the said Act, (Minimum Wages Act, 1948) consists of the following:
 1. (1) Any minimum rate of wages fixed or revised by the appropriate government in
respect of scheduled employments under section 3 may consist of:
(i) a basic rate of wages and a special allowance at a rate to be adjusted at such intervals
and in such manner as the appropriate government may direct to- accord as nearly as
practicable with the variation in the cost of living index number applicable to such
workers;
(ii) a basic rate of wages with or without the cost of living allowance and the cash value
of the concessions in respect of suppliers of essential commodities at concession rates
where so authorized; or-
(iii) an all-inclusive rate allowing for the basic rate the cost of living allowance and the
cash value of the concessions if any.
2. The cost of living allowance and the cash value of the concessions in respect of supplies
of essential commodities at concession rate shall be computed by the competent authority
at such intervals and in accordance with such directions as may be specified or given by
the appropriate government.

Fair wage
Fair wage means which is something more than the minimum wages. It is a mean between the
minimum wage and the living wage. So, the lower limit of the fair wage must surely be the
minimum wage whereas the upper limit is the fair wage which is capacity of the industry to pay
further the comparisons definitely with the average payment of same work in other occupations
or trades which requires the same amount of ability. Basically, it is economic position and its
future prospects on which fair wage depends.

Further, there are certain factors like minimum wages, capacity of the industry to pay, level of
national income and its distribution, productivity of labour, the place of the industry in the
economy of the country and prevailing wage rates in the same or similar occupations in the same
or neighbouring localities on which fair wage depends.

Fair wages mean the remuneration which is paid to the workers for the jobs requiring equal
efficiency, difficulty and pains.
Procedure for Fixing and Revising Minimum Wage
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
o Varying classes of work under the same scheduled employment
o Different scheduled employment

o Various localities and

o Apprentices, children, adolescents, and adults

 Minimum wage rate can either be fixed by one or more of these wage periods
o Month

o Day
o Hour

o 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

 When the minimum wage rate of scheduled employment is fixed, or revised for the very
first time under this act,
o As many committees and sub-committees can be appointed as necessary.

o 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.
 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.
The Payment of Wages Act, 1936, also offers a set of rules and regulations governing
offences and the penalties thereof

The interest of workers was kept in mind while passing the Minimum Wages Act. This
legislative protection acts as a protective cushion from the exploitations of top-level officials.
They often subject workers to peanut wages in exchange for hard-core labour.