LABOUR LAW

THE MINIMUM WAGES

ACT, 1948

SUBMITTED TO: SUBMITTED BY:

Dr Virender Negi Arushi Dubey

UILS Roll No.- 22/16

Panjab University Semester- 9

Chandigarh Section- A

BA LLB (Hons)

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 ACKNOWLEDGEMENT
I would like to express my thanks to my teacher Dr Virender Negi who gave me the
golden opportunity to do this project on the topic ‘The Minimum Wages Act,1948’,
which helped me do a lot of research and I came to know about many new things.

Secondly, I would like to thank my parents who guided me and helped me a lot in
finishing this project.

Above all I would like to thank God Almighty for giving me wisdom and knowledge
to finish this project.

THANKS AGAIN TO ALL WHO HELPED ME

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 TABLE OF CONTENTS

Sr. No. Index Page No.

1. ACKNOWLEDGEMENT 2
2 TABLE OF CASES 4
3 INTRODUCTION 5
4 CONSTITUTIONAL VALIDITY OF THE ACT 5-6
5 DEVLOPMENT OF THE CONCEPT OF MINIMUM 6
WAGE
6 OBJECTIVES OF THE MINIMUM WAGES ACT 7
7 SALIENT FEATURES OF THE ACT 7-8
8 APPLICATION OF THE ACT 8-16
9 CASE LAWS 16
10 BIBLIOGRAPHY 17

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 TABLE OF CASES
Sr. Judicial Pronouncements Citation Cited at
No.

1. Bhikusa Yamasa Kshatriya vs (1959) 61 6

Sangammar Akola Bidi Kamgar BOMLR 764
Union
2. Cashew Manufacturers and AIR 1999 SC 465 16
Exporters Association v/s State of
Kerala
3. Gulmuhommad Tarasaheb vs State AIR 1962 Bom 5
of Bombay 97
4. S.D. Basha vs. State of Madras AIR 1963 Mad 16
138
5. State of Madras v. P.N. Ram (1957) ILLJ 90 16
Chander Rao Mad
6. U. Unichonoy vs State of Kerala 1962 SCR (1) 946 5

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 INTRODUCTION
India is a labour-intensive country as we have a great amount of human capital to invest in our
industries and other areas of work. Minimum wage is an indispensable part of any such country
because there is a huge chunk of population which is dependent on daily wages for their bread and
butter. The concept of minimum wages in India was brought in by Mr K. G. R. Chaudhary in 1920.
After the International Labour Conference, 1928, the machinery of wage-fixing was brought into
actual policy formulation. The bill regarding the same was brought in 1946 and by the year 1948,
the bill was enforced and we had savior rights for all the blue-collar workers. Blue-Collar Workers
refer to those people whose profession requires them to perform manual labour. There were several
objectives that this Act needed to ensure:

1. Minimum wages need to be ensured to all blue-collar workers in the organized sector.
2. Prohibition of exploitation of labour in the workplace.
3. The Act would empower the government to fix minimum wages and revise those wages
from time to time according to the economic situation of the country.
4. To ensure the application of this Act to a maximum number of organized sector
employers.1

CONSTITUTIONAL VALIDITY OF THE ACT

In view of the Directive Principle of State Policy as contained in Article 43 of our Constitution it
is beyond doubt that the securing of living wages to laborers which ensures not only bare physical
subsistence but also the maintenance of health and decency is conducive to the general interest of
the public. The Minimum Wages Act was passed to fulfill this aspiration.2

1 Elaboration on the procedure contained in The Minimum Wages Act,1948, available at: www.blog.ipleaders.in,
(visited on December 13,2020)
2 S.N.Mishra, Labour and Industrial Laws 724 (Central Law Publications, Allahabad, 29th edn., 2016)

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The constitutionally validity of this Act has been challenged however it can be ascertained that the
Act does not violate Article 19 of the Constitution: The constitutional validity of the Act was
challenged in the cases of U. Unichonoy vs State of Kerala 3 and Gulmuhommad Tarasaheb vs
State of Bombay4. The parties challenged that this law restricted their Article 19(1)(g), as it puts a
restriction on freedom of trade. But, the court held in favour of the Act. It was held that, in the
absence of any such Act, the employers will pay wages, arbitrarily. The Act does not violate Article
14 of the Constitution: It was contended that the Act violates the ‘equal protection of laws’ clause.
However, the court ruled that the Act does not violate Article 14 in the case of Bhikusa Yamasa
Kshatriya vs Sangammar Akola Bidi Kamgar Union 5.

DEVELOPMENT OF THE CONCEPT OF

MINIMUM WAGE
The living wage is defined by the Constitution of India as a level of income for a worker that can
ensure a basic living standard which includes good health, comfort, education, dignity and can
cater for any emergency. In view of the employer’s ability to pay, the concept of a fair wage been
incorporated in the constitution which is a level of wage that which is not only capable of
maintaining a certain employment but can be increased based on the employer’s capacity of
payment.

In a view to setting the concept of the fair wage in motion, the Central Advisory Committee during
her session in November 1948 appointed a working committee of the fair wage. The concept
of Minimum Wage was introduced by this committee to provide the employee’s basic needs and
other requirements like education, medical care and a level of comfort.

The minimum wages Act of 1948 was introduced to give both the Central and State governments
of India a level of jurisdiction in the fixing and payment of wages. Any payment by the employee
be the statutory minimum wage rate is forced labor. Wages boards bear the responsibility of
reviewing the minimum wages periodically so that they can provide for the minimum needs of a

3 1962 SCR (1) 946

4 AIR 1962 Bom 97
5 (1959) 61 BOMLR 764

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family of four with basic requirements like food, shelter, education, clothing, medical care, and
entertainment.6

OBJECTIVES OF THE MINIMUM WAGES

ACT
• To ensure that the employee can have the basic physical needs, good health and a level of
comfort.
• To ensure a secure and adequate living wage for all laborers in the interest of the public.
• To ensure that the employee has enough to provide for his family.
• Ensuring a decent life standard that pertains to the social comfort of the employee. 7

SALIENT FEATURES OF THE ACT

1. The Act specifies for minimum wages for all government sectors employees, both centre
and state.
2. The minimum wages include House Rent Allowances. Therefore, Minimum Wages is
equals to Minimum Payment + Special Allowances
3. There are several kinds of wage-fixing mechanisms:
a. Minimum Wage Rate;
b. Minimum Piece Rate;
c. Guaranteed Time Rate;
d. Time Rate or Piece Rate Applicable to Overtime.
4. Classes of fixing minimum rates of wages :
different scheduled employments;
different classes of work in the same scheduled employment
adults, adolescents, children and apprentices

6 Minimum Wages Act 1948- Objectives, Components, available at: www.lawn.com, (visited on: December
13,2020)
7 Ibid

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 different localities (zone-wise).
5. There is a standard criteria of fixing minimum wage rate. Standard family consists of four
members where it is considered that three consumption units are required on one earner.
6. The food requirement must be ascertained by the regular calorie intake by the family.
7. It is considered that the family requires clothing of 72 yards.
8. The rent is considered to correspond to the minimum area.
9. The expenditure is generally considered to be 20% of the minimum wage earned.
10. The social expenditure is also considered to be 25% of the total minimum wage.
11. The minimum wages must be revised within 5 years and the revised special allowance must
be announced every six months.
12. The regional labour commission shall be the authority for claiming the remedy under
Section 20 of the Act. In Gujarat, Assistant Commissioner of labour shall be the authority.8

APPLICATION OF THE ACT

The application of the Act can be seen in the provisions. The provisions clearly mention all the
procedures and the enactment of the laws laid down.

Definitions

Section 2 provides definitions under the Act. Section 2(b) gives the definition of ‘appropriate
government’ which means concerning any scheduled employment carried on by or under the
authority of the Central Government or a railway administration or concerning a mine, oil-field or
major port, or any corporation established by a Central Act, the Central Government and
concerning any other scheduled employment, the State Government. Section 2(c) gives the
definition of ‘competent authority’ means the authority appointed by the appropriate government
by notification in the official gazette to ascertain from time to time the cost of living index number
applicable to the employees employed in the schedule employments specified in such notification.
Section 2(d) gives the definition of ‘cost of living index number’ concerning employees in any
scheduled employment in any scheduled employment in respect of which minimum rates of wages

8 Supra note 1

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have been fixed, means the index number ascertained and declared in the Official Gazette to be
the cost of living index number applicable to employees in such employment. Section 2(e) gives
the definition of ‘employer’ means any person who employs, whether directly or through another
person, or whether on behalf of himself or any other person, one or more employees in any
schedules employment in respect of which minimum rates of wages have been fixed under this
Act. Section 2(g) gives the definition of Scheduled employment means employment specified in
the schedule or any process or branch of work forming part of such employment. Section 2(h)
gives the definition of ‘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. Section 2(i) gives the definition of ‘employees’ means any person who is employed
for hire or reward t o do any work, skilled or unskilled, manual or clerical, in scheduled
employment in respect of which minimum rates of wages have been fixed and includes an out-
worker to whom any articles or materials are given out by another person to be made up, cleaned,
washed, adapted or otherwise processed for sale for the trade or business of that other person where
the process is to be carried out either in the home of the out-worker or in some other premises not
being premises under the control and management of that other person; and also includes an
employee declared to be an employee by the appropriate Government, but does not include any
member of the Armed Forces of the Union. 9

Fixation of Minimum Rates of Wages, Working Hours and Determination of Wages and Claims,
etc.
Section 3 of the Act mentions all the procedures. Section 3(2) suggests that the appropriate
government shall fix the following keeping all the considerations in the formulation of policies:

1. Minimum piece rate;

2. Minimum time rate;
3. Overtime rate; This must be a substitution of the rate which was pre-decided by the
employer;

9Minimum Wages Act, 1948:History, Objective and Applicability, available at: www.legalbites.com, (visited on:
December 13, 2020)

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 4. Guaranteed time rate system.

The government has to revise the minimum rates. In order to do that, the following things need to
be kept in mind:

1. The rates vary from every locality, Scheduled Employment, apprentices, children,
adolescents and adults.
2. The rates may be fixed, monthly, weekly, daily or hourly. This time may be fixed for a
longer wage period as well.

Fixation of minimum rates of wages

The policy formulation regarding minimum wage happens only after due deliberation on the
following:

1. The minimum wages must be in compliance with the cost of living index of the employees.
2. The basic wage rate with or without the cost of living allowance along with the authorized
cash value of concessions pertaining to the supply of essential basic commodities at
subsidized rates.
3. Comprehensive basic wage rate will include the cash value of the concessions, cost of

living and the basic rate.

Procedure for fixing and revising minimum wages

Section 5 of the Act gives the procedure for fixing and revising the minimum wages. The
appropriate government shall appoint committees and subcommittees that may be able to advice
on the fixation of minimum wages. The appropriate government is also supposed to publish the
minimum wage fixation in the newspapers so as to inform the stakeholders regarding the changes
implemented. This publication has to be done at least before two months of the implementation.
The stakeholders may also raise issues if any after the publication. The ascertainment of the
minimum wage is then published in the Official Gazette. There may also be consultations
regarding the revision of wages, with the Advisory Board.

Advisory Board

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Section 7 of the Act suggests the formation of the Advisory Board. The government requires advice
regarding the living cost indices, the requirements etc. An advisory board helps with the same
requirements that were mandated under Section 5 of the Act.

Central Advisory Board

The Act also provides for the formation of a Board of Boards, for the management and regulation
of all the Advisory Boards of India. This board shall comprise of members elected by the Central
Government and the employees of the advisory boards. The formation of this board is given in
Section 8 of the Act.

Composition of committees
Section 9 of the Act consists of the composition of the committees. It is mentioned that the
committee shall comprise of members, who are elected by the employees of the scheduled
employment. This committee will also contain the members from the scheduled employees but
that must not exceed one-third of the total number of committee members.

Correction of errors

The appropriate government is provided with the liberty of correcting arithmetic and clerical
errors. The correction will be published immediately in the official gazette. The notice will also be
provided to the advisory board. The notice will also be up for suggestions.

Wages in kind
Minimum wages in this Act will be paid in cash only. However, if there are any concessions that
are provided to the stakeholders by the government, shall be paid in the prescribed manner
according to this Act. Section 11 of the Act prescribes the manner.

Payment of minimum rates of wages

The payment shall be made to the employees in order which is prescribed by law under this Act.
However, it is also mentioned that nothing in this Act can affect the provisions laid down in the
Payment of Wages Act, 1936. Section 12 of the Act fixes the payment of minimum wage.

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Fixing hours of normal working days
Section 13 provides for the fixing of normal working hours in a working day. The fixation of
normal working hours includes:

1. The fixed number of working hours will include intervals from time to time.
2. The fixed period must also include a day of rest in every seven days.
3. The rest day must also be included in the pay, payment for not less than the overtime rate.

There are certain exceptions related to those employees whose work is of nature that is irregular.
Such exceptions will be provided only after the consent of the appropriate government.

Overtime
If any employee works for more than prescribed hours then that person is entitled to excess
payment for that period. However, it is also mentioned that nothing in this Act must be prejudicial
to Section 59 of the Factories Act, 1948. Section 14 of the Act provides for overtime.

Wages for two or more classes of work

When two or more classes of work are performed by a single employee, the minimum wage will
be altered according to the time invested in each class of work and remuneration provided in such
work. Section 16 of the Act, this practice is mentioned.

Minimum time-rate wages of piece work

The minimum time rate must be given to those who are employed on the piece-rate system. The
system must not be a minimum piece rate but only minimum time rate. The minimum time rate is
a system, where the wages are paid on the basis of the time worked. Section 17 of the Act provides
for this clause.

Maintenance of registers and records

The employers are supposed to maintain a record register in order to ascertain that all the
employees are being minimum wages. This register also needs to be exhibited and must be
available for perusal at all times. The authorities are supposed to check these registers. Section 18
of the Act provides for this clause.

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Inspectors
Inspectors are appointed by the appropriate government in order to make sure that the
administration is carried out well. There are certain powers which are given to the inspectors,
which are listed below:

1. The inspectors may enter any premises in order to carry out investigations regarding the
minimum wage remuneration.
2. The inspectors may examine or give any information important to the investigation.
3. They also have the seize or make copies of any of the documents important to the
investigation.

Claims
Claims are heard by the authorities appointed under subsection 1 of Section 20 of the Act. Every
authority appointed under sub-section (1) shall have all the powers of a Civil Court under the Code
of Civil Procedure, 1908 (5 of 1908). Claims can be made to the appropriate authority so that the
appropriate action may be taken as soon as possible.

Single application in respect of the number of employees

The maximum level of compensation provided may not exceed 10 times the total excess of the
aggregate. The single application in respect of a number of employees has to comply with Section
21(1) of the Act.

Penalties for certain offences

Section 22 of the Act provides for certain penalties that may be charged if:

1. The employers pay less than minimum wage than specified;

2. The employer does not comply with the provisions given in Section 13 of the Act

The penalties will also be considered if it can be proved that the offence has been committed by
the negligence of the director or secretary or manager of the company.

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General provisions for punishment of other offences
Section 22A states that the offenders will have to pay fines and may have to land up in jail if the
offences are proved under this Act. The offenders may be granted a jail for a term which can extend
to 6 months and/or be imposed with a fine that may extend to 500 rupees.

Cognizance of offences
The courts are not allowed to take cognizance unless there has been an application in front of the
appropriate government. The court can also take cognizance when there is a complaint from the
inspectors.

Offences by companies
Section 22C states that the penalties will also be considered if it can be proved that the offence has
been committed by the negligence of the director or secretary or manager of the company.

Payment of undisbursed amounts due to employees

Section 22D also states about the amount that is due to be paid. The employees may also approach
the court for this relief. If the employer does not pay the given amount in due time, then the
authorities have the power to disburse the amount to the employees in the prescribed manner.

Protection against attachment of assets of the employer with Government

The employers have to detach their personal property for the security of the employees working.
The amount that is kept as security with the government shall be used for the payment of contracts
with the employees. This can be done under any decree by any competent court.

Exemption of employer from liability

The employer may be exempted from liability if he or she is able to satisfy the court regarding the
following contentions:

1. The person took due diligence before taking the action.

2. The action was done without his or her consent or knowledge.

If the employer is discharged from the liability then the person whose fault was that will be held
liable.

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Bar of suits
The suits shall not be maintained if:

1. If the complaint has already been made in the court’s cognizance under Section 20 of the
Act.
2. The sum has already formed a direction in the plaintiff’s favour.
3. Has already been adjudged that the sum will not be awarded in that circumstance.
4. Could have been recovered by an application under that section.

Exemptions and exceptions

The appropriate government may impose such conditions on the employers as they deem fit. Such
official notification may be granted in the official gazette. The employer does not have to comply
with these norms given in the Act if the employee is a family member.

Power of Central and State Government

The appropriate Government, after giving a notification in the Official Gazette at least three
months’ notice before its intention may by notification, add to either Part of the Schedule any
employment in respect of which may be minimum rates of wages should be fixed under this Act,
and thereupon the Schedule shall in its application to the State be deemed to be amended
accordingly. Section 27 of the Act provides for that power to the state. The central government has
the power to give directions for the smooth functioning of implementation of the minimum wages
throughout the country. Section 28 of the Act mentions about this power. Along with the power to
give directions, the Central government has also got the power to formulate rules in favour of the
functioning of the Act. The Central Government may make rules by publishing the news in the
official gazette. The rules may be regarding prescribing the term of office of the members, the
procedure to be followed in the conduct of business, the method of voting, the manner of filling
casual vacancies in membership or the quorum necessary for the transaction of business of the
Central Advisory Board. The Parliament of India has the authority that whenever such a rule is
made regarding this Act, the same shall be laid before parliament for approval by the majority.
This must happen within a period of 30 days

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Validation of fixation of certain minimum rates of wages

The fixed minimum rates of wages shall be valid until the appropriate government revises this
minimum rate of wages. This is provided under Section 31 of the Act. This Act also provides for
the maintenance of itself. The rules and regulations are sufficient for its own sustenance.10

CASE LAWS
In the case between the State of Madras v. P.N. Ram Chander Rao11 the court ruled that any
notification not specifying the manner and what interval special allowance made payable to be
adjusted is a defect and impaired by an apparent error of law.

In the case between Cashew Manufacturers and Exporters Association v/s State of Kerala12, the
high court ruled that the government is not bound by the Advisory Board’s report.

In the case between S.D. Basha vs. State of Madras13, it was held that in a condition where the
members appointed into the committee are bereft of knowledge and experience, such a committee
shall be invalid. A committee with men of no knowledge and experience is illegal.

10 Supra note 1
11 (1957) ILLJ 90 Mad
12 AIR 1999 SC 465
13 AIR 1963 Mad 138

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 BIBLIOGRAPHY
• S.N.Mishra, Labour and Industrial Laws, (Central Law Publications, 29th ed.,
2016)
• Meenu Paul, Labour and Industrial Laws, (Allahabad Law Agency, New
Delhi, 9th ed., 2014)

WEBLIOGRAPHY
• www.blog.ipleaders.in
• www.lawn.com
• www.legalbites.com

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