Unit-3

Q1.: Define Wages. discuss law relating to payment and deduction from wages
under the payment of wages act 1936.
Answer:
Introduction:
o The Payment of Wages Act, 1936 regulates the payment of wages to certain classes of
employed individuals. Before you delve into understanding the various sections of the
Act, there are some important terms that you must know. In this article, we will look
at the definition of wages and all other important terms from the Act.
o The Payment of Wages Act, 1936 (Act) is essentially meant to benefit industrial
employees who do not have very high salaries. It applies to all employees working in a
factory or working through a sub-contractor or directly with the railway
administration or those employed in the industrial sector as the Act specifies.
o In 2017, the Government of India increased the ceiling limit to Rs. 24,000 per month.
This means that employees with wages u to the ceiling limit are covered under the
Act.
Definition (Section 2(VI): "Wages" means all remuneration (whether by way of salary,
allowances, or otherwise) expressed in terms of money or capable of being so expressed
which would, if the terms 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-
a) any remuneration payable under any award or settlement between the parties or
order of a Court;
b) any remuneration to which the person employed is entitled in respect of overtime
work or holidays or any leave period;
c) any additional remuneration payable under the terms of employment (whether called
a bonus or by any other name);
d) any sum which by reason of the termination of employment of the person employed
is payable under any law, contract or instrument which provides for the payment of
such sum, whether with or without deductions, but does not provide for the time
within which the payment is to be made;
e) any sum to which the person employed is entitled under any scheme framed under
any law for the time being in force,
but does not include-
1. any bonus (whether under a scheme of profit-sharing or otherwise) which does not
form part of the remuneration payable under the terms of employment or which is
not payable under any award or settlement between the parties or order of a Court;
2. the value of any house-accommodation, or of the supply of light, water, medical
attendance or other amenity or of any service excluded from the computation of
wages by a general or special order of] [the appropriate Government];
3. any contribution paid by the employer to any pension or provident fund, and the
interest which may have accrued thereon;
 4. any travelling allowance or the value of any travelling concession;
5. any sum paid to the employed person to defray special expenses entailed on him by
the nature of his employment; or
6. any gratuity payable on the termination of employment in cases other than those
specified in sub-clause (d).
••Objectives of Act-
1. Regulate payment of wages to specific class of workers employed in industry without
any wrongful deductions apart from what is mentioned in the Act
2. Define regulations around fixing of wage period, time and mode of payment of wages
3. Regulates the rights of the workers covered under this Act
••Salient Features of the Act: 
A. Obligations of Employers: (Section3) Every employer is responsible for the payment of
wages to all the employees that he employs. Additionally, apart from the Employer,
all the person so named / person so responsible to the employer / the person so
nominated shall also be responsible for such payment.
B. Wage Period: (Section4) Every person responsible for Wage Payment shall fix periods
in respect of which such wages shall be payable. No wage-period shall exceed one
month.
1. Time of Payment of Wages: (Section5) Every establishment having employees in
excess of 1,000 person shall pay the wages before the expiry of the 10 th day. All other
employers shall make the Wage payment by the expiry of 7th day. Wages in case of
termination of employment shall be paid before the expiry of the 2nd working day
from the day on which his employment is terminated. All payment of wages shall be
made on a working day.
C. Mode of Payment of Wages: (Section 6) Employers shall make the payment of wages
in current currency notes i.e. cash or via Bank transfer.
D. Deductions from Wages: (Section 7-13) Employers shall ensure that wages are paid to
all employees without deduction of any kind except those authorized by or under this
Act. Deduction which are acceptable according to act are:
 Fines
 Absence from duty
 Damage to or loss of goods including loss of money where such damage or loss
is directly attributable to employee’s neglect or default
 Recovery of advances / loans and the interest due in respect thereof
 Adjustment of over-payments of wages
 Payments made by the employed person to the employer or his agent shall
also be deemed to be a deduction from wages.
Conclusion: The Code endeavours to bind together the meaning of ‘wages’, which is a stage
towards giving better clarity. Nonetheless, the arrangement of independent definitions for
’employee’ and ‘worker’ and their use inside the Code leaves space for confusion. Further,
the Code looks to change the ‘Inspector Raj’ perception in connection to the Government’s
guideline of work by presenting monitors cum-facilitators rather than simply examiners. 
Q2. Q Definition:
Answer: Definition of Wages and Other Important Terms
Section 2 of the Payment of Wages Act, 1936 offers the definition of wages and many other
important terms as follows:
 Appropriate Government: According to section 2(i) of the Act, Appropriate
Government means: The Central Government in relation to railways, air transport
service, mines, and oilfields The State Government in relation to all other cases
 Employed Person: According to section 2(ia) of the Act, an employed person also
includes the legal representative of the deceased employed person
 Employer: According to section 2(ib) of the Act, an employer also includes the legal
representative of the deceased employer.
 Factory: According to section 2(ic) of the Act, a factory means a factory which the
clause (m) of Section 2 of the Factories Act, 1948 (63 of 1948) defines. Further, it
includes any place to which the provisions of the Act have been applied under sub-
section (1) of Section 85 thereof.
 Industrial or Other Establishment: According to section 2(ii) of the Act, an Industrial or
Other Establishment means any:
o A motor transport service or tramway service which carries passengers
or goods or both by road for hire or reward;
o Air transport service other than that belonging to or exclusively
employed in the military, naval, or air forces of the Union or the Civil
Aviation Department of the Government of India.
o Jetty or dock wharf
o A mechanically propelled inland vessel
o Mine, quarry, or oil-field
o Plantation
o Workshop or any other establishment which produces or
manufactures articles or adapts them for their use, transport, or sale.
o An establishment which carries on any work relating to the
construction, development, or maintenance of buildings, roads,
bridges or canals. Also, establishments having operations connected
with navigation, irrigation, or supply of water, or generation,
transmission, and distribution of electricity.
o The Central or State Government might include any other
establishment or class of establishments for the protection of the
employees under the Act.

Q.3 Deductions from Wages

Answer:
Introduction-
 The Payment of Wages Act, 1936 regulates the payment of wages to certain classes of
employed individuals.
  The Payment of Wages Act, 1936 is essentially meant to benefit industrial employees
who do not have very high salaries. It applies to all employees working in a factory or
working through a sub-contractor or directly with the railway administration or those
employed in the industrial sector as the Act specifies.
Definition of Wages (Section 2(VI): "Wages" means all remuneration (whether by way of
salary, allowances, or otherwise) expressed in terms of money or capable of being so
expressed which would, if the terms 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-
 Amount payable under the terms of employment
 Payable under any award / settlement or order of a Court
 Paid as Overtime work or for holidays / leave period
 Payable on account of Termination of employment
But does not include-
 Bonus which does not form a part of remuneration
 Value of any house accommodation, supply of light, water, medical assistance etc.
 Any traveling concession
 Contribution payable by employer to any pension or provident fund
 Any sum paid to defray special expenses incurred as requirement of the Employment
 Gratuity payable on termination of employment.
DEDUCTIONS FROM WAGES (SECTION 7 TO 13)- The wages of an employed person shall be
paid to him without deductions of any kind except those authorized by or under this Act.
Deductions from the wages of an employed person shall be made only in accordance with the
provisions of this Act. The list given under Section7(2) is exhaustive and no other deduction
from wages is permissible.
Case Laws- (1)Modi Industries v. State of Uttar Pradesh, (1992): If the workman did not work,
although the work was offered to him, he is not entitled to wages; (2) Municipal Council v.
Khubilal, (1992): Compensation up to 10 times cannot be granted in case of back wages
awarded by the Industrial Tribunal.; (3) Nagar Palika v. Prescribed Authority, (1992) : The
requirement of making deposit at the time of filing of appeal does not destroy the remedy of
the appeal
Deductions under the Act- The act allows the following deductions:
(1) Deduction for Fines[Sec8] - Section 7(2)(a) of the said Act authorizes deduction by way of
fines. Section 8 Lays down the rules for the imposition of such fines. Section 8 says that:
 No fine shall be imposed on any employed person in respect of such acts and
omissions on his part as the employer may have specified by notice. (8(1))
 A notice specifying such acts and omissions shall be exhibited in the prescribed
manner on the premises in which the employment is carried out.(8(2))
 No fine shall be imposed on any employed person until he has been given an
opportunity of showing cause against the fine.(8(3))
 The total amount of fine which may be imposed in any one wage-period on any
employed person shall not exceed an amount equal to three per cent of the wages
payable to him in respect of that wage-period.(8(4))
  Every fine shall be deemed to have been imposed on the day of the act or omission in
respect of which it was imposed.(8(7))
 All fines and all realizations thereof shall be recorded in a register to be kept by the
person responsible for the payment of wages.(8(8))
(2) Deductions for absence from duty[Sec9] - Section 7(2)(b) of the Act permits deductions for
absence from duty. Section 9 authorizes the employer to make deduction for absence from
duty:
1. Deductions may be made under clause (b) of sub section (2) of section 7 only on
account of the absence of an employed person from the place or places where by the
terms of his employment, he is required to work
2. The ratio between the amount of deduction and the wages payable shall not exceed
the ratio between the period of absence and the total period within such wage period.
 Case: Kothari(Madras) Ltd. V. Second A.J. cum Appellate Authority & others: It was
held that if the Tribunal finds that an employee was not responsible for absence from
duty or he was preventing from attending duty, the Management is not entitled to
deduct wages.
(3) Deductions for damage to or loss of goods[Sec10]-
 According to Section 7(2)(c) If any money or goods entrusted to the employee is lost
by his negligence or default, the employer is entitled to deduct such loss.
 Sec 7(2)(m): Acceptance by the employed person of counterfeit or base coins or
mutilated or forged currency notes
 Sec 7(2)(n): Failure of the employed person to invoice to bill to collect or to account
for the appropriate charges due to that administration
 Sec 7(2)(o): Any rebates or refunds incorrectly granted by the employed person
Section 10 lays down:
1. The deduction shall not exceed the amount of the damage or loss caused to the
employer.
2. A deduction shall not be made until the employed person has been given an
opportunity of showing cause against the deduction.
3. All such deductions and all realizations thereof shall be recorded in a register to be
kept by the person responsible for the payment of wages.
(4) Deductions for services rendered[Sec11]- According to Section (2)(d) The Act authorizes
the employer to make deductions for house accommodation supplied by the government or
any housing board set up under any law for the time being in force (whether the government
or the board is the employer or not) or any other authority engaged in the business of
subsidizing house-accommodation which may be specified in this behalf by the State
Government by notification in the Official Gazette.
 Section 11: Deductions shall not be made from the wages, unless such house
accommodation amenity or services have been accepted by the employed person
under the terms of employment or otherwise.
 Case: M.Balasundaram v. Financial Adviser S. Rly: It was held that a condition
precedent for the exercise of the power conferred on the employer under Section 11
(c) of the Payment of Wages Act is that there should be requisition in writing by the
 local authority calling upon the employer to deduct the professional tax from the
salary or wages of the employee.
(5) Deductions for recovery of advances[Sec12] - Section 7(2)(f) The Act authorizes the
employer to make deductions for the advances made by him. (including advances for
traveling allowance or conveyance allowance)
(6) Deductions for recovery of loans[Sec 12A] – Section 7(2)(fff) the deductions are also
permitted to be made for the recovery of loans and interest granted for house-building or
other purposes in accordance with the rules approved by the State Government. Section 12A:
Deductions shall be subject to any rules made by the State Government regulating the extent
to which such loans may be granted and the rate of interest payable thereon.
(7) Deductions for payments to co-operative societies & insurance scheme[Sec13]-
 Section 7(2)(j): Deductions for payments to co-operative societies approved by the
State Government or to a scheme of insurance maintained by the Indian Post Office.
 Section 7(2)(k): Deductions made with the written authorization of the person
employed for payment of any premium on his life insurance policy to the Life
Insurance Corporation Act of India or for the purchase of securities of the Government
of India or for being deposited in any Post Office Saving Bank.
(8) Other Deductions-
••(g):Deductions of income-tax payable by the employed person. ••(h):Deductions required
to be made by order of a court or other authority. ••(i):Deductions for subscriptions to and
for repayment of advances from any provident fund to which the Provident Funds Act 1952
applies or any recognized provident funds or any provident fund approved by the State
Government. ••(l):Deductions for payment of insurance premium on Fidelity Guarantee
Bonds. ••(p):Deductions made with the written authorization of the employed person for
contribution to the Prime Minister's National Relief Fund. ••(q):Deductions for contributions
to any insurance scheme framed by the Central Government.
LIMIT ON DEDUCTIONS [SECTION 7(3)]-
 In cases where such deductions are wholly or partly made for payments to co-
operative societies under clause (j) of sub-section (2) seventy-five per cent of such
wages.
 In any other case fifty per cent of such wages.
 The excess may be recovered in such manner as may be prescribed.
Conclusion- Section 7 of the PoW Act is one of the most important provisions of the Act
which protects the employees from any unauthorized deductions and provides an effective
mechanism for the employees to claim against such deductions. Therefore, employers must
exercise caution before making any kind of deductions from the employees’ wages and
ensure that the deductions are within the prescribed limits of the PoW Act.

#Payment of Wages
Rules for Payment of Wages- The four sections which detail the rules for payment of wages
under the Payment of Wages Act, 1936 are:
 Responsibility for payment of wages – Section 3
 Fixation of wage periods – Section 4
  Time of payment of wages – Section 5
 Wages to be paid in currency notes or currency coins – Section 6
 Section 3 – Responsibility for Payment of Wages
1. Every employer is responsible for the payment of all wages to all
the employees that he employs. In any other case, if the
employer names a person, or if there is a person responsible to
the employer or is nominated, then such a person is responsible
for the payment of wages.
2. Notwithstanding anything contained in sub-section (1), the
employer is responsible to make the payment of all wages which
the Act requires him to make. In fact, if the contractor or the
person that the employer designates to make the payment fails
to do so, then the responsibility lies with the employer.
Case Law: Case Law: In Cominco Binani Vs. Pappachan:  The appellant company was obliged
to provide and maintain a canteen for its employees. The company entrusted the running of a
canteen to the contractor. It was held that the responsibility to provide and maintain a
canteen under Section 46 of the Factories Act cannot make the management the ultimate
employer for the worker engaged in the canteen for all purposes. They are not workmen of
the management. Therefore, the liability of the principal employer is restricted only to pay
wages if contractor fails to pay the same by virtue of Contract Labour Act, 1970.

 Section 4 – Fixation of Wage Periods

1. The person responsible for the payment of wages under Section 3 must fix
periods in respect of which he shall make the payment of wages. This period
is called the wage period.
2. A wage period will not exceed one month under any circumstance
 Section 5 – Time of Payment of Wages
1. Every person employed upon or in:
a) Any railway, factory or industrial or other establishments upon or in
which the total number of employed persons is less than one
thousand, must receive his wages before the expiry of the seventh day
from the last day of the wage period for which the wages are payable.
b) Any other railway, factory or industrial or other establishments, must
receive his wages before the expiry of the tenth day from the last day
of the wage period for which the wages are payable.
2. If the employer terminates the employment of a person, then he must ensurethat
the terminated employee receives his wages before the expiry of the second working
day from the date of termination of employment.
3. The Appropriate Government can exempt to such an extent and also subject to such
conditions in the order the person responsible for the payment of wages to employed
persons.
4. The employer or the person responsible for paying wages must ensure that the wages
are paid on a working day.
Section 6 – Payment of wages in currency notes or currency coins
The employer or the person responsible for making the payment of wages must pay in
currency coins or currency notes or in both. Further, he cannot pay in kind.
Also, the employer can pay the wages via a cheque or a direct deposit to the bank account of
the employee after taking a written authorization from him.
Conclusion- The Payment of Wages Act, 1936, defines several rules under Section 3-6 to
regulate the payment of wages to certain classes of employed persons in India.

Authorities under the Act

Inspectors under PWA 1936 (Section 14)
Introduction- The state government may designate a monitor for the purpose of Payment of
Wages Act 1936. Each Inspector will be regarded to be a community worker or public servant
inside the importance of the Indian Penal Code, 1860 [Section 14(5)]. An inspector plays an
important role and is provided certain rights under the Act.
Appointment-An inspector is a person appointed by the appropriate government under
Section 14 of Payment of Wages Act, 1936. The Act empowers the appropriate government to
appoint three kinds of inspectors, namely,
 According to the sub-section (1) of the Factories Act, 1948, ‘The State Government can
appoint individuals who possess the prescribed qualification as Inspectors for the
purposes of the Act.’
 Further, the State Government needs to give a notification in the Official Gazette and
may assign to the inspectors such local limits as it may think fit.’
 In the Payment of Wages Act, 1936, the Inspector of Factories appointed as per the
sub-section mentioned above is an Inspector in respect of all factories within local
limits assigned to him.
 Further, the Appropriate government  can appoint Inspectors for the purposes of this
Act in respect of all employed persons in railways (except those in a factory) to whom
this Act applies.
 Also, the Appropriate Government must give a notification in the Official Gazette
before appointing such persons as Inspectors.
POWERS Of INSPECTOR- An inspector may :
 Make such examination and inquiry as it thinks fit in order to ascertain whether the
provisions of this Act and rules made there under are being observed.
 With such assistance, if any, as he thinks fit, enter, inspect and search any premises of
any railway, factory or industrial or another establishment at any reasonable time for
the purpose of carrying out the object of this Act.
 Supervise the payment of wages to persons employed upon any railway or in any
factory or industrial or other establishments.
 Require by a written order the production at such place, as may be prescribed, of any
register or record maintained in pursuance of this Act and take in the spot or
otherwise statements of any persons which he may consider necessary for carrying
out the purposes of this Act.
  Seize or take copies if such registers or documents or portions thereof as he may
consider relevant in respect of an offence under this Act which he has reason to
believe has been committed by an employer.
 Exercise such other power as may be prescribed.
Functions of Inspectors-
a. Make an examination and/or inquiry which he thinks fit to ascertain whether the
employer is observing the rules and/or provisions of the Act.
b. Enter, inspect, and also search for any premises of any railway, factory, industrial  or
other establishments. Further, the Inspector must ensure that he does so at a
reasonable time and uses assistance as he deems fit.
c. Supervise the payment of wages to persons employed upon any railway or in any
factory or industrial or other establishments.
d. Ask the employer to produce any register that he maintains in pursuance of the Act.
e.  The Inspector can also seize the records or registers.
f. While an Inspector can enter, inspect, search, and also seize registers/documents on
the premises, any such search or seizure will have the same provisions as applied to
the search and seizure made under the authority of a warrant under section 94 of the
Code of Criminal  Procedure. 1973. It is also important to remember that every
Inspector is a deemed public servant.
Facilities to be afforded to Inspectors. [Sec 14A]: Every employer shall afford an Inspector all
reasonable facilities for making any entry, inspection, supervision, examination or inquiry
under this Act.
Conclusion- Every Inspector shall be deemed to be a public servant within the meaning of the
Indian Penal Code. Inspector has many functions and powers given under Section 14 of
Payment of Wages Act,1936.

#Authority to hear the claim ( Section 15)

To hear and decide all claims arising out of deductions from the wages, or delay in payment
of the wages, of persons employed or paid, including all matters, incidental to such claims,
there will be a officer mentioned below appointed by the appropriate government.
(a) any Commissioner for Workmen's Compensation; or
(b) any officer of the Central Government exercising functions as –
(i) Regional Labour Commissioner; or
(ii) Assistant Labour Commissioner with at least two years' experience; or
(c) any officer of the State Government not below the rank of Assistant Labour Commissioner
with at least two years' experience; or
(d) a presiding officer of any Labour Court or Industrial Tribunal, constituted under the
Industrial Disputes Act, 1947 (14 of 1947) or under any corresponding law relating to the
investigation and settlement of industrial disputes in force in the State; or
(e) any other officer with experience as a Judge of a Civil Court or a Judicial Magistrate, as the
authority to hear and decide for any specified area all claims arising out of deductions from
the wages, or delay in payment of the wages, of persons employed or paid in that area,
including all matters incidental to such claims:
Appropriate Government considers it necessary so to do, it may appoint more than one
authority for any specified area and may, by general or special order, provide for the
distribution or allocation of work to be performed by them under this Act.
[Sec 15(2)]: If any employer does opposite to the provisions of this act, any unreasonable
deduction has been made from the wages of an employed person, or any payment of wages
has been delayed, in such case any lawyer or any Inspector under this Act or official of a
registered trade union authorized to write an application to the authority appointed by
government for direction of payment of wages according to this act. Every such application
shall be presented within 12 months from the date on which the deduction from the wages
was made or from the date on which the payment of the wages was due to be made. Time of
making an application can be accepted if there is reasonable cause.
[Sec 15(3)] : After receiving of the application the authority shall give an opportunity to hear
the applicant and the employer or other person responsible for the payment of wages and
conducts the enquiry if necessary. It is found that there is mistake with employer; authority
shall order the employer for payment of the wage or refund to the employee of the amount
deducted unreasonably or the payment of the delayed wages, together with the payment of
such compensation as the authority may think fit. There will not be any compensation
payable by employer if there is a reasonable and genuine cause in delay in the payment of
wages.

#Appeal Section 17
In the following situation the parties who ever dissatisfied can appeal to the district court
 If the application dismissed by above authorities
 Employer imposed with compensation exceeding 300/- rupees by the authorities.
 If the amount exceeding 25/- rupees withheld by the employer to single unpaid
employee. 50/- in case of many unpaid employees

Minimum Wages Act,1948

Definitions under Minimum Wages Act,1948
1. Wages-Section 2(h) "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 Pension Fund or Provident Fund or under any scheme of social
insurance; (iii) any travelling 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;
2. Minimum wages, Fair wages, Living wages- Fixation of wage is no doubt a subtle task,
which requires a device for balancing the demand of social justice and the need for
improving the sources of national income from the pint of raising he standard of
 living. Payment of wages, is mandatory. Living wage: The wage received for normal
needs of an average employee regarded as a human being living in a civilised
community. A living wage enables worker to enjoy comfort in life. Fair wage: It is said
to be a mean between minimum wage and living wage. Every attempt was made to
introduce a fair wage, but then it could not be fixed at the upper limit. Hence,
sometimes, fair wage also descends to the level of minimum wage. Minimum wage:
It is said to be the starting stage from the point of view of offering social security to
workmen. Labourer's demand should always be viewed with sympathy and hence
minimum wages must be paid compulsorily. If an employer is unable to pay even
minimum wages or it becomes impossible on his part to carry on his business, then it
would be better for him to close his business.
3. Cost of living Index-Section2(d) “cost of living index number", in relation to employees
in any scheduled employment in respect of which minimum rates of wages have been
fixed, means the index number ascertained and declared by the competent authority
by notification in the Official Gazette to be the cost of living index number applicable
to employees in such employment;
4. Employer-Section 2(e) "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 scheduled employment in respect of which minimum rates
of wages have been fixed under this Act, and includes, except in sub- section (3) of
section 26
 in a factory where there is carried on any scheduled employment in
respect of which minimum rates of wages have been fixed under this
Act, any person named under [6] [clause (f) of sub-section (1) of
section 7 of the Factories Act, 1948 (63 of 1948)], as manager of the
factory;
 in any scheduled employment under the control of any Government
in India in respect of which minimum rates of wages have been fixed
under this Act, the person or authority appointed by such
Government for the supervision and control of employees or where
no person or authority is so appointed, the head of the department;
 in any scheduled employment under any local authority in respect of
which minimum rates of wages have been fixed under this Act, the
person appointed by such authority for the supervision and control
of employees or where no person is so appointed, the chief
executive officer of the local authority;
 in any other case where there is carried on any scheduled
employment in respect of which minimum rates of wages have been
fixed under this Act, any person responsible to the owner for the
supervision and control of the employees or for the payment of
wages;
5. Employee-Section2(i) "employee" means any person who is employed for hire or
reward to do any work, skilled or unskilled, manual or clerical, in a 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, altered, ornamented, finished, repaired,
adapted or otherwise processed for sale for the purposes of 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.
6. Scheduled Employment-Section2(g) "scheduled employment" means an employment
specified in the Schedule, or any process or branch of work forming part of such
employment;
Q1#Fixing & Revising Minimum Wage Rates
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 dependant 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
Wages-Under Section 2(h)“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 9 [and includes house rent allowance].
Minimum wages-Minimum wage is said to be the starting stage from the point of view of
offering social security to workmen. Labourer's demand should always be viewed with
sympathy and hence minimum wages must be paid compulsorily. If an employer is unable to
pay even minimum wages or it becomes impossible on his part to carry on his business, then
it would be better for him to close his business.
Wage Act-According to Section 3(1)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.
 (1A) Notwithstanding anything contained in sub-section (1), the appropriate
Government may refrain from fixing minimum rates of wages in respect of any
scheduled employment in which there are in the whole State less than one thousand
employees engaged in such employment,
OUTSTANDING COMPONENTS FOR FIXING OF MINIMUM WAGE-
Section 3(2):The appropriate government may fix
a) A minimum time rate(a minimum rate of wages for time work)
b) Minimum piece rate(a minimum rate of wages for piece work)
c) 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.)
 d) 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.)
Section 3(3): While revising or freshly fixing the wage rate under the Minimum wages act
(a) Different rates of minimum wage shall be fixed for
i. Different scheduled employment
ii. Different classes of work under the same scheduled employment
iii. Apprentices, children, adolescents, and adults
iv. Different localities
(b) Minimum wage rate can either be fixed by one or more of these wage periods:
i. By Hour
ii. By day
iii. By Month
iv. By Any other larger wage-period which is deemed appropriate.
Case Laws-
 Woolcombers of India v. Workers Union, 1973: The minimum wages must be paid by
the employer notwithstanding the want of financial capacity.
 Hydro (Engineers) Put. Ltd. v. The Workmen, 1969: In order to make the wages realistic
they must be commensurate with the price rise in essential commodities. The apology
that the employer may be constrained to shut his business if minimum wages are to
be paid is simply untenable.
 Bidi, Bidi Leaves and Tobacco Merchants Association v. State of Bombay, 1962: Section
3 empowers the appropriate Government to fix the minimum rates of wages, thereby
enabling the appropriate Government to alter the existing legal condition between
the employer and employee which is not commensurate with the provisions of the
Act.
 Unichoyi (U) v. State of Kerala, 1961:Employer's capacity to pay is no bearing in fixing
the minimum wages of the employees. Such consideration is antilogs to the to
principles enshrined within the Constitution of India.
Minimum rates of Wages [Section 4]- Any minimum rate of wages fixed or revised by the
appropriate Government in respect of scheduled employments under section 3 may consist
of:
i. Basic wage rate and special allowance which should be in harmony with the cost of
living index of its workers.
ii. 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 subsidised rates.
iii. A comprehensive wage rate comprising of the cash value of the concessions, cost of
living allowance and the basic rate.
FACTORS CONSIDERED AS IRRELEVANT IN FIXATION OF MINIMUM WAGES-
1. The fact that an employer may have difficulties in business
2. Financial abilities of the employer
3. Losses that may have been incurred by the company in the previous year
4. The inability of the employer to import raw materials
 5. The regional industrial principles.
Procedure To Fix Or Revise Minimum Wage (Section 5)-
1. When the minimum wage rate of scheduled employment is fixed, or revised for the
very first time under this act,
a) As many committees and sub-committees can be appointed as necessary.
b) 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.
2. 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.
Case Laws-
 Krishna Flour Mills v. Commissioner of Labour, 1997: The State issued a notification to
pay separate allowance in addition to the basic wages, which was not challenged as to
its validity by the appellants. Held, they have to pay the 'wages' now being paid and in
addition to that the minimum rate of "cost of living allowance" is to be paid by them
separately, as per the notification, even if they are paying higher rate of wages.
 T.G. Lakshmaiah Setty & Sons, Adoni v. State of Andhra Pradesh, 1981 : What is
contemplated by the Act to be notified under section 5(1)(b) is no doubt draft
proposals. The objection to draft proposals can be made both by employers and
employees as well. Thus, if the employees had exercised their privilege to represent
and ask for higher wages and if eventually the State authorities had adopted higher
rates of minimum wages, that cannot be found fault with.
Conclusion-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.

Q2. #Minimum Wage Act,1948- Objective & Salient Features

Introduction-Minimum Wages Act was first enacted by the Central Legislative Assembly in the
year a 1948. The primary intention behind this Act was to bridge the wage disparity between
different work personals in an employment. This Act fixes the minimum rates of wage in
certain types of employments. That is, the wage paid for the work done should not be lesser
than the amount suggested by the Act.
Development of the Concept of Act-
 The genesis of the Minimum Wages Act, 1948, took place with the set-up of a Labour
investigation committee. Standing Labour Committee and Indian Labour Conference
spearheaded this movement in 1943. It aimed at observing the matters related to
working conditions and minimum wages.
 Later, in 1946, they put forward a suggestion for specific legislation exclusive to the
issue of minimum wages. This lead to the enactment of the Minimum Wages Act,
1948.
  The Minimum Wages Act, 1948, was one of India’s first legislation related to the
working rights of labourers. The Central and State level government were responsible
for fixing wages for different scheduled employments.
 During the British era, the wages were fixed by an agreement between the employer
and employee and was mostly arbitrary. The workmen have been victims of
exploitation.
 The Tripartite Committee, established in 1948 on Fair Wages, laid down three
different types of wages: a fair wage, a living wage, and a minimum wage. According
to this, wage levels should take into account the industrial capacity of the nation.
 The committee propounded an equilibrium between employee subsistence and
general productivity. These observations later formed the essence of the Minimum
Wage Act.
Applicability of Act-
 The Minimum Wages Act '1948 is applicable to the entities that provide employment
opportunities to 1,000 employees in the respective States of India.
 However, the Minimum Wages Act doesn't apply to the entities situated in Jammu
and Kashmir.
 Also, the Act does not apply to the employees in an undertaking owned by the Central
Government or with the central Government's consent.
Objectives Of The Minimum Wages Act- The primary objective of the Act is to ensure that the
Government duly recognizes the labor's rights.However, the Act looks forward to several
objectives to ensure the protection of the labor.The objectives of the Minimum Wages
Act'1948 are mentioned below:
1. To prohibit the exploitation of labor in the workplace.
2. To fix the minimum rates of wages that are to be provided to the employees and
revise such rates of wages every five years.
3. To fix the daily working hours of the employees.
4. To ensure that the employee can have the basic physical needs, good health and a
level of comfort.
5. To ensure a secure and adequate living wage for all labourers in the interest of the
public.
6. Ensuring a decent life standard that pertains to the social comfort of the employee.
7. To penalise the employers when they fail to provide minimum wages to the workers.
8. To establish advisory boards to regulate and administer the provisions of the Act.
9. To lay down the powers and duties of the inspectors for the purposes of this Act.
10. To prevent any employer from wrongfully infringing the right of any employees.
11. To establish appropriate authorities where the employees can seek redressal when
the employer has failed to pay the daily wage.
12. To authorise the Central and state governments to make rules and regulations for the
purposes of this Act.
 Case Laws: The Honourable Supreme Court in Chandra Bhavan Boarding and Lodging
Bangalore v. the State of Mysore and Another, laid down the purpose of the Act. Its
main objective is to prevent sweated labour as well as the exploitation of unorganised
labour. It proceeds on the basis that the State must see that at least minimum wages
 are paid to the employees irrespective of the capacity of the industry or unit to pay
the same.
Features of the Act-
1. The Act applies to the employments listed in the schedule. Therefore, the
governments at the State and Central level has to fix the minimum wage. They should
also add any employment to the schedule if they satisfy the criteria of 1000 workers,
at least.
2. Minimum wage means all remuneration in cash includes HRA(declared minimum
wage + special allowance).
3. The Act lays down for fixation of the following: •A minimum time rate of wages •A
minimum piece rate. •A guaranteed time rate and. •An overtime rate
4. Classes of fixing minimum rates of wages: (a) different scheduled employments (b)
different classes of work in the same scheduled employment (c) adults, adolescents,
children and apprentices and (d) different localities
5. The minimum rate of wages consists of :
 A basic rate of wages and the cost of living allowance or
 A basic rate of wages with or without the cost of living allowance and the cash
value of the concessions in respect of essential commodities supplied at
subsidised rates.
 A comprehensive wage rate comprising of the cash value of the concessions,
cost of living allowance and the basic rate.
6. The appropriate Government has to revise the minimum wages every five years.
7. The appropriate Government has to provide special allowance once in six months. (1st
April and 1st October of every year).
8. The appropriate Government is empowered to fix the number of hours of work per
day, to provide for a weekly holiday and the payment of overtime wages under
Section 13(1).
9. The establishments are required to maintain registers and office records as prescribed.
10. Regional Labour Commissioner (C) is the authority declared by Central Government to
decide claims (less than minimum wages) made under section 20 of the Act.
11. Section 20(1) empowers the Appropriate Government to appoint, by notification in
the official Gazette, in authority to hear and decide for any specified area the
following claims:
 Any claims arising out of payment ofless than the minimum rates of wages.
 Claim in respect of payment of remuneration for days of rest.
 Anyclaim in respect of payment of remuneration of work done on such days
under clause (b) or (c) or Section 13(1).
 Any claims of wages under overtime rate under Section 14
12. On non-payment of wages, section 20 will be applicable. The authority has to pay ten
times the difference amount for defaulting.
13. Not paying of Minimum Wages is an offence punishable upto six months
imprisonment or with fine up to Rs. 500 or with both.
 14. Contracting Out: Any contract or agreement whereby an employee either relinquished
or reduces his right to a minimum rate of wages or any privilege or concession
accruing to him under this Act shall be null and void.
Conclusion-The Minimum Wages Act, 1948 was enacted to safeguard the rights and interests
of the workers working in some scheduled class of employment which is laid down under the
Act. The Act seeks to provide equal employment opportunities and adequate remuneration
for maintaining a decent standard of livelihood for the workers.

Q3. #Constitutional Validity of Minimum Wages Act, 1948

Introduction-Our country is facing the problem of unemploymentand this lead to work on
wages which are even not able to fulfil the basic needs of workers and their family. Thus, the
Minimum Wages Act, 1948 has been enacted to prevent exploitation of workers and to fix
minimum wages in certain employments. The Minimum Wages Act, 1948 came into force on
15th March, 1948. The Act extends to whole of India.
Minimum Wages Act,1948-
 India introduced the Minimum Wages Act in 1948, giving both the Central government
and State government jurisdiction in fixing wages,The act is legally non-binding, but
statutory.
 Payment of wages below the minimum wage rate amounts to forced labour.
 Wage Boards are set up to review the industry’s capacity to pay and fix minimum
wages such that they at least cover a family of four’s requirements of food, shelter,
clothing, education, medical assistance, and entertainment.
 Under the law, wage rates in scheduled employments differ across states, sectors,
skills, regions and occupations owing to difference in costs of living, regional
industries' capacity to pay, consumption patterns, etc. Hence, there is no single
uniform minimum wage rate across the country and the structure has become overly
complex.
Meaning of Constitutional Validity-Every Law or Act must conform to the the provisions of
the Constitution. The Constitution is the organic law of the land. It defines the basic
framework of the Government and its powers. If a Law transgress the boundaries of the
Constitution it is liable to be declared unconstitutional and void to the extent of the
transgression. The power to test the constitutionality of any Law has been conferred upon
the superior Judiciary i.e. The Supreme Court and High Courts in India. The Court test the Law
on the touchstone of the Constitution to assess its constitutionality.
Constitutional Validity of the Act-India in it's obligation to ratify the International Convention
has incorporated a Minimum Wages for the scheduled employments mentioned in the act.
But repeatedly the employer class has challenged the validity of the said act in the halls of the
supreme court.
A. The act is not unreasonable
 Individual employers might find it difficult to carry on the business on the basis of
minimum wages fixed under the Act but this must be not be the entire premise and
reason to strike down the law itself as unreasonable.
  Shamrao vs State of Bombay, 1962:The restrictions, though they interfere to some
extent with the freedom of trade or businessguaranteed under Article 19(1)(g) of the
constitution, are reasonable and , being imposed on the general interest of the
general public, are protected by theterms of the clause (6) of the article 19.
 The determination of the minimum wage is for the preservation of public order, and if
there is no minimum wage set, it will cause employers to be arbitrary and this will
undoubtedly lead to a confrontation between the employer and labour which will
create “friction in society”.
B. The Act doesn't violate Article 14 of the Indian Constitution
 The article 14 of the Indian Constitution which relates to equality before the law, it
must be noted that minimum wages are not fixed equally across the whole nation but
they vary from occupation to occupation and industry to industry and from place to
place.
 Bhikusa Yamasa Kshatriya v. Sangamner Akola Bidi Kamgar Union : “On a careful
examination of the various Acts and the machinery set up by this Act, Section 3(3)(iv)
neither contravene Article 19(1) of the constitution nor does it infringe the equal
protection clause of the constitution. the Courts have also held that the constitution
of the committees and the Advisory Board did not contravene the statutory provisions
in that behalf prescribed by the legislature.”
 The case of Uchinoy vs State of Kerala ,1962 , It quotes the following, “ As regards to
the procedure for fixing of the minimum wages, the ‘appropriate government’ has
undoubtedly been given very large powers , but it has to take into consideration,
before fixing wages, the advice of the committee if one is appointed on the
representations on proposals made by persons who are likely to be affected thereby.
The various provisions constitute an adequate safeguard against any hasty or
capricious decision by the ‘appropriate government’.”
C. Notification fixing different rates of minimum wages for different localities is not
discriminatory.
 It was stated that where the determination of wage rates and their revision was
detected by detailed survey and investigation and the rates were implemented after
considering the representation made by a section of the employer,it was based on
rational deliberation with the purpose of the Act, and thus violated Article 14.
 As pointed out by one of the India’s Union Labour and Employment Minister Shri
Mallikarjuna Kharge, “The variation of minimum wages between the states is due to
differences in socioeconomic and agro- climatic conditions, prices of essential
commodities, paying capacity, productivity and local conditions influencing the wage
rate. The regional disparity in minimum wages is also attributed to the fact that both
the Central and the State Governments are the appropriate Governments to fix, revise
and enforce minimum wages in Scheduled employments in their respective
jurisdictions under the Act”. Thus the proviso of constitution is wrong.
 N.M.Wadia Charitable Hospital v. State of Maharashtra , 1993:“Fixing different
minimum wages for different localities is permitted under the constitution and under
labour laws, hence the question that any proviso of the Minimum Wages Act is in any
way against the proviso of constitution is wrong.
D. Sanctity of The Minimum Wage Act
 Non payment of minimum wages is tantamount to ‘forced labour’ prohibited under
Article 23 of theConstitution.
 In the case of Sanjit Roy Vs. State of Rajasthan, the Supreme Court has decided that
‘The Exemption Act in so far as it excluded the applicability of the Minimum Wages
Act, 1948 to the workmen employed in famine relief work is “clearly violative” of
Article 23. Thus, even public works ostensibly initiated by the Government for the
sole purpose of providing employment are subject to the Minimum Wage Act.
 Union for Democratic Rights v. Union of India : Where a person provides labour or
service to another for remuneration which is less than the minimum wages, such
labour is forced labour within the meaning of article 23 of the Constitution and
thereby entitles the person to invoke article 32 or article 226 of the Constitution of
India.
 In the view of the Directive Principles of State Policy as contained in the Article 43 of
the Indian Constitution, it is beyond doubt that securing of living wages to labourers
which ensures not only bare physical subsistence but also the maintenance of health
and decency, it is conducive to the general interest of the public.
 Bijay Cotton Mills Ltd v/s The State Of Ajmer:The employers cannot be heard to
complain if they are compelled to pay the minimum wages to their labourers even
though the labourers, on account of their poverty and helplessness are willing to
work on lesser wages.
Conclusion- It seems necessary for such law not only appears on paper but serve some
assurance from exploitation to gain the trust of people. Governments are bound to comply
with the socio-economic laws, failure of which will be a violation of Article 21 of the
Constitution of India. India is considered to be the highly regulated and most rigid labour laws
countries in the world . They need to be flexible for their properimplementation and should
be reviewed from time to time according to the need of labour and economy’s dynamics.