THE MINIMUM WAGES ACT, 1948

Background

The need for a country of having minimum wage-fixing machinery was stressed by the International
Labour Organisation long back in 1928. Twenty years later our country passed the Minimum Wages
Act, 1948. The reason given by the Government for passing the Act was that workers' organisations
in the country were poorly developed and consequently their bargaining power also was very poor.

Like the Payment of Wages Act, 1936 this Act also is exhaustively amended by many States to widen
its scope and application. The Act is a boon to a large number of poorly paid persons in this country.

Summary of Provisions

1. Object of the Act

To provide for fixing minimum rates of wages in certain employments

2. Fixation of Minimum Rates of Wages

 The appropriate government to fix minimum rates of wages. The employees employed
in Para 1 or B of Schedule either at 2 or either part of notification u/s 27
 To make review at such intervals not exceeding five years the minimum rates or so fixed
and revised the minimum rates.
 Government can also fix Minimum Wages for
 Time work (b) Piece work at piece rate (c) Piece work for the purpose of securing to such
employees on a time work basis (d) Overtime work done by employees for piece work or
time rate workers {Section 3}

3. Minimum Rates ofWages

Such as Basic rates of wages etc.Variable DA and Value of other concessions etc. Sec- 4

4. Fixing Hours for Normal Working

a. Shall constitute a normal working day inclusive of one or more specified intervals.
b. To provide for a day of rest in every period of seven days with remuneration.
c. To provide for payment for work on a day of rest at a rate not less than the overtime
rate {Section 13}

5. Procedure for fixing and revising Minimum Rates of Wages

Composition of Committee
 Representation of employer and employee in schedule employer in equal number and
independent persons not exceeding 1/3rd or its total number one such person to be
appointed by the Chairman. {Section 9}

6. Payment of Minimum Rates of Wages

Employer to pay to every employee negated in schedule employment at a rate not less than
minimum rates of wages as fixed by Notification by not making deduction other than
prescribed. {Section 12

7. Overtime

To be fixed by the hour, by the day or by such a longer wage-period works on any day in
excess of the number of hours constituting normal working day.

Payment for every hour or for part of an hour so worked in excess at the overtime rate
double of the ordinary rate of (1½ times or for agriculture labour) {Section 5}

8. Wages of workers who works for less than normal working days

Save as otherwise hereinafter provided; be entitled to receive wages in respect of work done
by him on that day as if he had worked for a full normal working day. {Section 15}

Wages for two class of work: Where an employee does two or more classes of work to each
of which a different minimum rate of wages is applicable, wages at not less than the
minimum rate in respect of each such class. {Section

9. Maintenance of registers and records

a. Register of Fines - Form 1 Rule 21(4)
b. Annual Returns - Form III Rule 21(4-A)
c. Register for Overtime - Form IV Rule 25
d. Register of Wages - Form X, Wages Slip - Form XI, Muster Roll - Form V Rule 26
e. Representation of Register - for three year Rule 26-A {Section 18}

10. Minimum time rate wages for piece work

Not less than minimum rates wages as fixed {Section 17}

11. Claims by employees

To be filled by before authority constituted under the Act within 6 months.

12. Compensation upto 10 times on under or non-payment of wages {Section 16}

13. Penalties Offences
14. Punishment

As per Section 20

For paying less than minimum rates of wages

 Imprisonment upto 6 months or with fine upto Rs.500.00

Frequently asked questions

1. What is the object of the Minimum Wages Act, 1948?:

The object of the Act is to provide for fixing and revising minimum wages in certain
employments in order to stop sweated labour and prevent the exploitation of unorganized
labour.

2. Which employments are intended to be benefited by fixation of minimum rates of wages?:

The Government is required to fix minimum rates of wages payable to employees employed
in the employments specified in Part I or Part II of the Schedule appended to the Act.
{Section 3}

3. Is the list of employments specified in the Schedule to the Act exhaustive?:

The list is not an exhaustive one. The appropriate Government can add any employment to
either part of the Schedule. {Section 27}

4. Is it competent for a government to bring a teacher within the purview of the Act by
amending the Schedule to the Act?:

A teacher would not come within the definition of "employee" given under Section 2(i) of
the Act. It is beyond the competence of a Government to bring the teachers of an
educational institution under the purview of the Act.

5. Is the Act applicable to daily rated employees?:

The Act is expected to fix the minimum wages in respect of employees whether they are
casual, daily rated, temporary or permanent. The Act is applicable to daily rates employees
also.

6. What is the procedure the Government has to follow for fixing and revising minimum
wages?:

The Government has to fix and revise minimum wages either-

a. by appointing one or more committees and sub-committees consisting of

representatives of employers and employees and also of independent persons to
hold necessary enquiries and by taking into consideration the advice tendered by
the committee or committees; or
 b. by formulating and publishing its proposals and taking into consideration the
representations received in response to the proposals. {Section 5}

7. Is the task of the Government over once it fixes minimum rates of wages payable to
employees employed in a scheduled employment?:

The task of the Government is not over once it fixes minimum rates of wages payable to
employees employed in a scheduled employment. The minimum rates of wages of fixed are
required to be reviewed and, if necessary, revised by the Government at intervals not
exceeding five years. {Section 3(1)(b)}

8. Is it permissible for the employer to pay minimum wages in kind?:

As a rule minimum wages payable under the Act must be paid in cash. The employer,
however, can pay them in kind with the permission of the appropriate Government. {Section
11}

9. Can attendance bonus be treated as part of the minimum wage fixed under the Act?:

Attendance bonus is in the nature of an incentive. It is an additional payment made to the

workmen as a means of increasing production. It cannot be treated as part of the minimum
wage fixed under the Act.

10. Can the supply of essential commodities at concessional rates from part of the minimum
wage?:

Such supply cannot form part of the minimum wage unless it is authorized by the
appropriate Government by a notification in the Official Gazette under section 11(3) of the
Act.

11. What is the obligation of the employer in respect of payment of wages under the Minimum
Wages Act, 1948?:

Where minimum wages are fixed and enforced under section 5 of the act in respect of any
employment covered by the Act, the employer is bound to pay to every employee engaged
in that employment wages at a rate not less than the minimum rate to fixed and enforced.
{Section 12}
12. Is an employer, who is not paying basic wages and cost of living allowance separately as
fixed under the Act but who is paying wages more than prescribed minimum rates under the
Act, committing any illegality?:

The minimum rate of wages fixed under the Act is remuneration payable to the worker as
one package of fixed amount, Neither the scheme of the Act nor any provision of the Act
provides that the rate of minimum wages is to be split into basic wages and cost of living
allowance and therefore where an employer is paying total sum which is higher than the
minimum rate of wages fixed under the Act including cost of living allowance, the employer
is not committing any illegality.

13. What is the number of hours which constitutes a normal working day for the employees
covered by the Act?:

A normal working day prescribed for the employees covered by the Act is of 9 hours.
{Section 13 &Mah. Rule 24}

14. Are the employees covered by the Act entitled to overtime wages?:

If an employee covered by the Act works for more than 9 hours on any day or 48 hours in
any week, he is in respect of overtime work entitled to wages at double the ordinary rate of
wages. {Section 14 &Mah. Rule 26}

15. Can an employee getting wages higher than the minimum wages fixed under the Act claim
overtime wages under Section 20(2) of the Act?:

Where an employee gets wages higher than the minimum wages fixed under the Act he
cannot claim any benefit under the Act.

16. Can an Industrial Tribunal adjudicate upon a dispute relating to the fixation of wages of
employees covered under the Act?:

Section 24 of the Act does not bar the jurisdiction of an Industrial Tribunal to adjudicate
upon a dispute relating to the fixation of wages of employees covered under the Act.

17. Can an Industrial Tribunal fix wages at rates higher than the rates of minimum wages fixed
under the Minimum Wages Act?:

An Industrial Tribunal adjudicating a dispute relating to wages is not bound by the minimum
rates of wages fixed under the Minimum Wages Act and it is open to it to fix wages at rates
higher than the rates of minimum wages fixed under the Act.
18. What is the position of the employer who is unable to pay minimum wages fixed under the
Act?:

The employer is bound pay minimum wages fixed under the Act and it is irrelevant whether
he has the capacity to pay them or not.

19. What is the procedure the employee has to follow for making a claim under the Act?

The procedure for making a claim is as follows:

a. An employee having any claim under the Act has to make an application to the
Authority appointed under the Act.
b. Such application can be made by the employee himself, or any legal practitioner or
any official of a registered trade union.
c. Such application has to be made within six months from the date on which the claim
amount became payable.
d. In appropriate case the Authority can, over and above directing the payment of the
difference between minimum wages payable and wages actually paid, award
compensation upto ten times the amount of the difference.
e. The amount directed to be paid by the Authority can be recovered as if it were a fine
imposed by a Magistrate.
f. Every direction of the Authority will be final. {Section 20}

20. Are the employees of a Students' Hostel entitled to minimum rates of wages fixed for hotels
and restaurants?:

The intension of the Legislature was to include employment on hotels and restaurants under
purview of the Minimum Wages Act. When the Legislature specifically omitted the term
"Students' Hotels" in the Schedule, it thereby excludes it from the purview of the Minimum
Wages Act.

21. Can the Authority appointed under the Act to decide the claims of the employees award
compensation to the tune of ten times of the amount of the difference between wages
payable and wages actually paid, in every case?:

The limit of "ten times the amount of such excess" mentioned in section 20(3)(i) of the Act is
the maximum limit. When the Authority awards heavy compensation under the said section,
it must give reasons for doing so.

22. Has an employee to pay any court-fee for making an application to the Authority?:
 In the State of Maharashtra an employee is exempted from paying any court-fee, other than
the fee for service of process, for making such application; but at the same time the
Government is empowered to recover the amount of such court-fee from the employer if
the employee succeeds in the application. {Section 21A}

23. Can a group of employees make a single application for claiming minimum wages?:

A single application can be made on behalf or in respect of any number of employees.

24. Is an employer required to maintain any register and record?:

Every employer must maintain a muster-roll-cum-wage register and also a bound inspection
book. {Rule 27 & 28}

25. What are the offences under the Act and what is the punishment for them?:

If any employer -

a. pays to any employee less than the minimum rates of wages fixed for that
employees' class of work; or
b. contravenes any rule or order made by the appropriate Government under Section
13 regarding hours of work;
c. he would be punished with imprisonment upto five years or with fine uptoRs.
10000.00 or with both. The offences under Section 22 of this Act shall be cognizable
and non-bailable. {Section 22, 22B}

26. Is it permissible for an employee to recover minimum wages payable under the Act by filing
a suit in a Civil Court?:

The Act prohibits Civil Courts from entertaining any suit for recovery of minimum wages
payable under the Act. {Section 24}

27. Is it permissible for an employee to relinquish his rights under the Act?:

An employee is prohibited from contracting out of the Act, i.e. from giving up any of his
rights under the Act and any contract or agreement made by him relinquishing or reducing
his right to a minimum rate of wages or any privilege or concession accruing to him under
the Act is null and void. {Section 25}
 28. What are some of the issues I respect of the Minimum Wages Act?

42% of all wage earners in India receive wages below the national minimum wage floor rate.
Data used for these statistics includes half of casual labourers and 1/4th of those salaried.
Female workers and those in rural areas are more likely to be paid below a minimum wage.
Those who are illiterate or have no mid-level education are most likely to be paid below a
minimum wage. For salaried workers, if they are employed in agriculture, it is more likely that
they are paid higher than the minimum wage. Whereas casual workers in construction and
unionized workers in production and manufacturing are likely to receive wages at the minimum
wage rate. In sum, the implementation and enforcement of minimum wages is dismal and
marginalized groups and communities suffer the most. The government has announced that
many amendments are underway to improve enforcement such as penal action against
violations and mandatory revision of minimum wages every 5 years.

a. Large unemployment: Ensuring a payment at the minimum wage rate does not ensure
employability to a willing worker. Many workers out of desperation then accept a wage below
the minimum wage. Workers are too weak and vulnerable to demand their rights and after
liberalization, collective rights to have grown weaker with decreasing power of trade unions.
These two factors combined give the employer the capacity to offer employment at wages
below the minimum wage rate. There have also been cases where workers are paid wages
below the minimum wage floor in government funded road and construction projects.
b. Less protection against inflation: Real minimum wage rates may decline in the face of
accelerating inflation for three main reasons. Firstly, wages are not revised as frequently as
prescribed in the norms i.e. not more than five years. In fact it is believed that revision every
three years and even alternate years not only to help workers from increasing costs of living but
also to improve supervision of the act. Secondly, many states do not provide for dearness
allowance, a safeguard against inflation and finally minimum wages are not linked to a cost of
living index.
c. Exemptions from payment of minimum wages: Government projects have been known to
resort to various channels for paying wages below the minimum wage rate. They use methods
such as special notifications and exemption clause (26-2) of the Minimum Wages Act. The
parliamentary sub-committee, 1987 noted that wages of government programs such as NREP
and RLEGP were below the prescribed minimum wage rate. Many professions and industries do
not fall under the coverage of the act, for the simple reason that no minimum wage has yet
been prescribed, hence employers pay wages on their own discretion.
d. Lack of awareness: Many citizens are not aware of the existence of a statutory provision that
ensures a minimum wage rate. "80% of workers earn less than INR 20/day or less than half of
government stipulated minimum wage rate (rural INR 49 and urban INR 67)”. On certain
instances of doubt among workers on existence of a minimum wage rate, officials have denied
claims of any statutory act or legislation.
e. Delays and inaction: There are delays in appointment of committees for fixation, revision and
implementation. A lot of industries and industries do not fall under the purview of the act as
their specific minimum wage rates are yet to be fixed. Permanent Labour Inspectors have not
been posted in many districts and those posted are known to not visit their districts
regularly. For instance in 2008, inspections in Arunachal Pradesh were as low as 7 while
Maharashtra reported to have 71651 inspections.
f. Terminology: The government and its committees have defined three types of wages: 'living
wage', 'minimum wage' and 'fair wage'. These concepts are vague in definition and correspond
to a utopia where the government and industry could afford them.

Other Issues
From the very inception of the idea of minimum wages, the aim of policy makers was to set up a
uniform wage rate across the entire country. However, such a policy would not be connected to
reality due to regional differences over consumption patterns, paying capabilities of employers,
requirements of employees, etc. Hence the modified aim was to achieve floor level minimum wage
for regions and then further it to a national floor minimum wage. However, not everyone supported
this view. In 1955, during the Tripartite Labour Conference, labour representatives demanded
immediate fixation of a minimum wage at national level, at least in agriculture. The most recent
development in this debate involves the Labour Ministry and the Commerce and Industry Ministry at
loggerheads over the introduction of a National floor level minimum wage rate. The Commerce and
Industry Ministry argues that a national rate would further burden the industry that is anyway
incurring heavy costs. On the other hand, the Labour Ministry has given a proposal to the Centre to
impose a national floor to wage rates and most state governments have approved for it. After a two-
day strike ending on 21 February 2013, PM Manmohan Singh announced that all unskilled workers
would be paid the national floor level minimum wage. This would be included in one of the many
amendments of the Minimum Wages Act, 1948 to be introduced this year. Currently the floor level
of minimum wages is 115, though Gujarat, Maharashtra, Andhra Pradesh and Kerala have set lower
floors .

Conflict of MGNREGA wage rates and the Minimum Wages Act[

The Mahatma Gandhi National Rural Employment Guarantee Act is an employment guarantee
scheme that guarantees employment for 100 days at a wage rate of INR120 per day (as fixed in
2009). These benefits can be secured by any household regardless of whether they fall below or
above national poverty line. The central government delinked MGNREGA wage rates from State
specific Minimum wage rates in January 2009 when states like Uttar Pradesh, Rajasthan and
Maharashtra revised and increased their minimum wage rates. This had direct implications on
Central Government's budget set aside for MGNREGA scheme.
The move of freezing MGNREGA scheme created an upheaval of discontent in various parts and
sections of India as the move was considered to breach Minimum Wages Act, 1948. MGNREGA wage
rates were less than the minimum wage rates of respective states and in five states they were even
below the National Floor level of minimum wage. Protests broke out throughout India coupled with
controversies over corruption, under-payment of workers, poor quality of infrastructure, ambiguous
source of funds and unintended negative effect on poverty. Recommendations made by National
Advisory Council and Centre Employment Guarantee Council chaired by Jean Drèze that MGNREGA's
wage rates should be synced with Minimum Wages Act were rejected by the Central Government.
The Central Government stuck to its decision of freezing MGNREGA wages even after an order from
Supreme Court. Eventually, the Prime Minister agreed to accept recommendations and indexed
MGNREGA wages to Minimum wage rates until an expert committee chaired by Late Pranab
Mukherjee made a satisfactory index. He however maintained a clear distinction between
MGNREGA wage rates and Minimum wage rates to avoid inflating budget on revision of state-wise
minimum wages