Chapter II

Minimum wages
 Chapter II
Minimum wages- (5-14)

6. Norm for Fixation of 7. Components of 8. Procedure for fixing

5. Payment of minimum wages minimum wages revising minimum wages
minimum rate of wages
.

10. Wages of employee 11. Wages for two or 12. Minimum time rate
9. Central Govt fix floor who works for less than
wage more classes of work wages for piece work
normal working day

13. Fixing hours of work 14. Wages for

for normal working day overtime work
.
 Principles welfare state
Employee Codes
Place of Pride to Social & The competitive Just to employers
wages
economic justice & employees

The Cost of productivity

living, of the Trade

The ability of
the industry to
Harmony, peace pay Progress and prosperity
and Cooperation
 Concept of wage
• Living wage - Wages in in advanced countries Satisfy Comforts

• Fair Wage –A gradual step towards /progressive realization of a living wage

• Minimum wage - Nations where wages are exceptionally low , Non

existence of effective regulation of wages by collective agreement

• Subsistence Theory- To bring up the family- earn more than necessary

• Deduction Theory -What is left to workers out of the product after profit

• Productivity of labor Prevailing rate of wages, national income and place

• Cost of production by theory of labor - depends upon the prices of food,

other costs of needed goods to support family

• Wage fund theory -

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• Demand and supply
 Minimum Wage
• Starting point , a floor below which no employee may be paid ,
wages below which the wages cannot sink

• Irrespective of Extent of profits or Financial conditions of

firms or Availability of workmen at a lower wage lowest

• Fair - Balance earning capacity & work load

• Under no conceivable circumstance, MW wage can be

reduced by the state or any

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 Principle of no exception
• 1. Right to exist No industry has right to exist unless it is
able to pay MW
• 2. Starvation - Employment of labor on the ground of
starvation cannot be encouraged in develop / democra/moder
• 3. Close – If employer cannot maintain an enterprise without
cutting the MW, then let him close the enterprise
• Whether such reduction adequately meets of the needs of
retrenched workers ?
• The request for acceding to the demand for reducing the MW
Are the financial difficulties facing the employers temporary
or likely to be permanent?
•
 Payment of minimum rate of wages.
• 5. No employer shall pay to any employee
wages less than the minimum rate of wages
– Adhere to rate notified
– The manner of calculating the wages shall be as may be
prescribed
– Where the rates of wages are fixed by the hour or by the
day or by the month,
 6. Fixation of minimum wages.
• Basis for the appropriate Government to fix the rate
of MW wages
– Time work- Minimum Time Rate
– Piece work -Minimum Piece Rate
• Where employees are employed on piece work
– To fix a MW. rate of wages on a time work basis i.e Time
Guarded Rate
– Fixed as per any wage periods by the hour or by
the day or by the month.
 6. Fixation of minimum wages.
• Norms to fix minimum rate of wages as prescribed.
• Appropriate Government takes into account
– Skill of workers - Categories
• unskilled, skilled, semi-skilled highly-skilled
– Geographical area
• North, South, East, West, North East
– Both
– Certain category of workers
• Arduousness of work like temperature or humidity
normally difficult to bear, hazardous occupations or
processes or underground work as may be prescribed
 Fixation
• Delicate task to strike balance
• Work men receive their proper share -they produce
• MW independent - irrespective of profits, conditions
• Should be fair –sufficiently high to provide a standard
family with food , shelter, clothing, medical,
education
– not at a rate exceeding wage earning capacity –work load
– Dearness allowance to make up for cost

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 7. Minimum number of Rates
• Number of minimum rates of wages be kept at minimum
by the appropriate Government
– There are about 2000 minimum wages as per different
states as per different classes of jobs
– So now only minimum no of rates
– Ex Delhi Andhra ………….
• Government shall appoint an authority to calculate
– The Cost of living allowance
– The cash value of the concessions
 Components of minimum wages.
• Any minimum rate of wages fixed consist of––
• (a) Basic rate of wages and an allowance at a rate adjusted by
appropriate Government cost of living allowance
• (b) Basic rate of wages
– with or without the cost of living allowance
– Cash value of the concessions in respect of supplies of
essential commodities at concession rates, authorized
• (c) All-inclusive rate allowing for the basic rate, the cost of
living allowance and the cash value of the concessions, if any.
 Salient Features
• Fixation for different classes, industries
– Minimum Rate of wages
– Minimum piece rate
– Guaranteed time rate
– Over time rate
• Structure
– Consists of Basic wages
– Cost of living allowance
– Cash concessions essential commodities
• Others
– Mode is cash
– Maintain registers
– Inspectors and complaints
Components of minimum wages.
• MW does include
– Basic wage - Cost of living
– MW does not include
• Value of services like power facility, accommodation,
medical, traveler, pension , or gratuity etc
 Procedure to Fix or Revise
• 2 modes of procedures -Balanced conclusion to fix or revise
• Mode 1. Committee Method
• Appoint a committees
– To hold enquiries
– To recommend such fixation or revision
• Committee appointed by the appropriate Govt
• (a) Representing employers
• (b) Representing employees-Equal to number of employers
• (c) Independent persons, not exceeding one-third of the total
members of the committee
• Govt servants who are incapable of being independent of
serving, cannot be independent but experts who have the
 Procedure to Fix MW
• Notification Method
– Appropriate govt issues a notification
– Publish its proposals for the information of persons likely
to be affected thereby (employers, employees) in the
official Gazette
– Specifies the date to Respond to proposal in 2 months to
take up any proposals i.e Give representations
• After receiving the representations from the persons
– Fix or revise the rates by notifying them in the Gazette
– Comes into effect from on the expiry of 3 months
• Review or revise minimum rates of wages
– ordinarily at an interval not exceeding five years
• Right to make representation before 2 months –deprivation of
 9. Fix floor wage.
• Central Government shall fix floor wage
– Taking into account minimum living standards of a
worker
– Different floor wage may be fixed for different
geographical areas.
– Obtain the advice of the Central Advisory
– Consult State Governments
• Minimum rates of wages fixed by state Government
– shall not be less than the floor wage
– If the minimum rates of wages fixed by the appropriate
Government earlier is more than the floor wage, then, shall
not reduce such minimum rates of wages fixed by it
 10. Normal working day.
• Wages of employee who works for less than normal
working day.
– Fix the number of working hours which constitute
normal working day
– If an employee whose minimum rate of wages has
been fixed under this Code by day works less than the
requisite number of hours on a normal working day
• Shall be entitled to receive wages in respect of
work done on that day, as if he worked for a full
normal working day
• Provide for the day of rest
 10. Normal working day.
• He shall not be entitled to receive wages for a
full normal working day
– The failure to work is caused by his unwillingness
to work
– Not by the omission of the employer to provide
him with work
• Any other cases and circumstances, as may be
prescribed.
 11. Two or more classes of work.
• An employee does two or more classes of work
• If different minimum rate of wages is applicable to
each of which, the employer shall pay to such
employee
– In respect of the time respectively occupied in each
such class of work
– wages at not less than the minimum rate in force in
respect of each such class
–A+B
 12. Piece work
• A person is employed on
– Piece work
– Wages are fixed by Minimum time rate but not by
minimum piece rate
• Pay wages at not less than the minimum time rate
• 10 Machines -
• Minimum Time rate -100 per hour
• 10 hours spent - 100 x 10 =1000
 Minimum time rate
wages for piece work.
• 12. Where a person is employed on piece
work for which minimum time rate and not
a minimum piece rate has been fixed under
this Code
• The employer shall pay to such person wages
at not less than the minimum time rate.
13. Hours of work for normal working
day
• Appropriate Government
– Fix the number of hours of work which constitute a normal
working day
– Inclusive of one or more specified intervals
• Provide for a day of rest
– Every period of seven days
– payment of remuneration in respect of such days of rest;
• Provide for payment for work done on rest day
– A rate not less than the overtime rate
 Conditions for exemption ???
• (a) Engaged in unforeseen and not preventable emergency
• (b) Engaged in work of the nature of preparatory or
complementary work which must necessarily be carried on
outside the limits laid down for the general working
• (c) Employment is essentially intermittent
• (d) Engaged in any work which for technical reasons has to be
completed before the duty is over
• (e) Engaged in a work which could not be carried on except at
times dependent on the irregular action of natural forces
• Daily hours of duty include periods of inaction during
employee may be on duty but is not called upon to display
either physical activity or sustained attention.
 14. overtime work.
• An employee who Works longer hours than normal
working hours of the day
– If minimum rate of wages has been fixed under this
Code for him by the hour, by the day or by such a
longer period
– Pay him
• For every hour or for part of an hour so worked
in excess
• At the overtime rate which shall not be less than
twice the normal rate of wages.