DR. B. R.

AMBEDKAR NATIONAL LAW

UNIVERSITY, SONEPAT
LABOUR LAW ASSIGNMENT

FIXATION AND MINIMUM WAGES

PROCEDURE & REVISION

SUBMITTED BY : SUBMITTED TO :

SHUBHANKAR PALIWAL DR. RENU SHARMA

Roll No – 2001104 (Asst. Prof)
Batch 2025 DBRANLU
 CONTENTS
UNDERSTANDING THE TERM MINIMUM WAGES ................1

MINIMUM WAGES AND ILO .........................................................2

TYPES OF WAGES ............................................................................2

1) Minimum wage .............................................................................2

2) Fair wage .......................................................................................2

3) Living wage ...................................................................................2

NEED FOR MINIMUM WAGES ACT ............................................3

FIXATION OF MINIMUM WAGES IN INDIA ..............................3

MINIMUM WAGES ACT, 1948: ITS OBJECTIVES .....................4

MINIMUM RATES OF WAGES .......................................................5

PROCEDURE FOR FIXING AND REVISING MINIMUM

WAGES .................................................................................................5

PAYMENT OF MINIMUM RATES OF WAGES ............................6

OFFENCES AND PENALTIES (SEC. 22 AND 22-A).....................6

CONSTITUTIONAL VALIDITY OF MINIMUM WAGES ACT .6

CONCLUSION ....................................................................................6
UNDERSTANDING THE TERM MINIMUM WAGES
The International Labour Organization (ILO) has defined the term minimum wage as the
lowest amount of remuneration that an employer is required to pay wage earners for the work
performed during a given period, that cannot be reduced by collective agreement or an
individual contract. Around 90 member states of the ILO follow the provision of minimum
wage.

The purpose of minimum wage is to protect the workers from unduly low pay. It enables
them to earn adequate wages for the work done by them and to maintain a minimum living
standard. It also acts as a tool to eradicate poverty and to remove discrimination between men
and women. This system has been designed and developed in a way to supplement and
reinforce other social and employment policies, including collective bargaining, which is
used to set terms of employment and working conditions.

In India payment of minimum wages is regulated and administered by the Minimum Wages
Act, 1948. Since, India offers one of the most competitive labour costs in Asia, with the
national-level minimum wage at around INR 176 which amounts to INR 4576 in a month.
However, it is the national-level wage which will vary considering the geographical location
and other relevant factors. In India, a complex method of setting a minimum wage is used
which defines nearly 2,000 different types of jobs for unskilled workers and over 400
categories of employment which provides a minimum daily wage for each type of job.

The philosophy of labour laws including the Minimum Wages Act is that industry is for man
and not man for industry. Industry should, therefore, exist to make life good and comfortable.
Work in industry should be an integrated part of happiness. Employers are, therefore, under
an obligation, call it economic or social, to provide their employees safe, healthy and
comfortable living, employment and working conditions. It is only when\they failed to
honour this obligation that the Government stepped in to safeguard the interest of workmen
by enacting suitable legislation. This has happened all over the world, and in India also the
Government has recognised its duty to undertake legislation to protect workers from being
exploited. If the employers had given a fair deal to their workers, the question of legislative
intervention by the Government would not have arisen.

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MINIMUM WAGES AND ILO
The need for regulating minimum wages has been gaining increasing, attention not only of
the Governments of developing and developed countries but also of the International Labour
Organisation at Geneva (ILO), which is formulating International Labour Standards for its
member countries since its very inception after the First World War. The ILO attached much
importance to the question of fixing minimum wages as far back as 1921, and the result of its
enquiry lea to the adoption of a Convention No. 20 and a Recommendation No. 30 on
minimum wage fixing Machinery 1928 covering only non-agriculture sector of employments.
After 23 years, that is, 1951 the ILO Conference at its 34th Session adopted a Minimum
Wage Fixing Convention No. 99 and a recommendation No. 83 for agricultural employments.
Since then a number of conventions and recommendations have been adopted having
important bearings on the question of minimum wages.

TYPES OF WAGES
In 1948 a tripartite committee, known as the ‘Committee on Fair Wages’ was established. The
committee’s report was the benchmark for the formulation of wage policy in India. The
committee not only set guidelines for wage rates in the country but also laid down three kinds
of wages namely:

1) Minimum wage: This is the type of wage provided for bare subsistence so that the
workers can maintain a decent standard of living such as providing for education,
medical requirements and an adequate level of comfort.
2) Fair wage: Any wage paid to the employees that are more than the minimum wage
is known as a fair wage. It is the wage that seeks to maintain a level of employment in
the industry and also looks after the industry’s capacity to pay sufficient remuneration
to the employees.
3) Living wage: A living wage not only meets the minimum requirement of the
employees provided by the employers but also allows individuals or families to afford
adequate shelter, food, and other necessities. It also includes health, sanity, education,
dignity, comfort, and provide for any contingency.

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NEED FOR MINIMUM WAGES ACT
The Minimum Wages Act, 1948 was enacted by the Indian Legislature to deal with matters
relating to providing the minimum wage to the workers so that they can afford their basic
needs and maintain a decent standard of livelihood. The Act further ensures a secure and
adequate living wage for all labourers and it also guarantees that an employee earns enough
to provide for his family. The Act authorises both Central and state governments in fixing the
rate of minimum wage. The Minimum Wages Act, 1948 has also laid down a provision for
revision of minimum wages in order to cope with the changing prices of basic commodities.

The Act seeks to provide better protection of the rights of the employees by establishing
advisory boards to resolve any dispute between the employer and employee regarding the
payment of minimum wage to the employees. The Act further appoints a Commissioner for
Workmen’s Compensation or any other officer of the Central Government exercising
functions as a Labour Commissioner for any region, with an experience as a judge in order to
hear and decide cases concerning non-payment or payment of less than the minimum wages
to the employees. The Act also states provisions for penalising any employer who fails to
provide the minimum wage to the employer and contravenes any rule or order made under
the Act.

Thereby, it can be said that the enactment of this Act was extremely crucial since it aims to
expand the concept of social justice to the workers of scheduled employment and also
provide them with the rates of minimum wages fixed by the statute. It also protects the rights
and interests of the workers and prevents the workers from being wrongfully exploited by
their employers.

FIXATION OF MINIMUM WAGES IN INDIA

India has ratified the ILO convention on Minimum Wage Fixing Machinery, and has enacted
a central minimum wage legislation, known as Minimum Wages Act, 1948. As in other
countries here also the need for fixing minimum wages arose from the conditions created by
the payment of low and sweated wages in the unorganised and organised sectors of industries,
and consequent need for protecting workers against exploitation. Before achieving the present
status the concept of minimum wages had to pass through several stages. As far back as 1921
a resolution recommending the establishment of Industrial Boards for the determination of

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minimum wages in the Bengal Presidency was debated in the Bengal Legislative Council.
Since then the movement for fixing minimum wages by legislation has been gaining
momentum. It received further impetus from the development of the trade union movement,
and the agitation of workers and their unions for adequate wages. In 1929 the Royal
Commission of Labour recommended a policy of gradual introduction of statutory minimum
wages. This cautious approach was based on their finding that there may be many trades in
which a minimum may be desirable but not practicable. In 1938 the Central legislative
Assembly adopted a resolution urging the payment of sufficient wages and fair treatment for
workers in industries protected and subsidised by the government. Subsequent labour enquiry
committees appointed by the Bihar, Bombay and U.P. governments recommended suitable
minimum. wage fixing machinery, but no action was taken on the basis of these
recommendations, except in U.P. where basic minimum wages were fixed for workers in
textile and electricity undertakings. The sharp rise in prices in 194' and the constant erosion
of real wages compelled the Government to consider the matter at the 3rd and 4th meeting of
the Standing Labour Committee in 1943 and 19x '4. The Indian Labour' conference at its 5th
session approved in principle the enactment of minimum wage legislation. A draft Bill was
prepared and considered at its 6th and 7th session, and at a special sub-committee meeting in
1946. The Bill was introduced in the Central Assembly and it became an Act in March 1948.

MINIMUM WAGES ACT, 1948: ITS OBJECTIVES

Objects: The object of the Act is to promote the welfare of workers by fixing minimum rates
of wages in certain industries where labour is not organised and sweated labour is most
prevalent. The Act seeks to prevent exploitation of workers by ensuring that they are paid the
minimum wages which would provide for their subsistence and preserve their efficiency.

When the constitutionality of this Act was challenged in 1955 in the case of Bejoy Cotton
Mills V. State of Ajmer before the Supreme Court the Court rejected the contention and
upheld the constitutionality of the Act observing that securing of living wage to workers
which ensures not only bare subsistence but also maintenance of health and decency, is
conducive to general interest of the public, and it is also in conformity with the Directive
Principles of State Policy embodied in Article 43 of the Constitution.

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 MINIMUM RATES OF WAGES
Minimum rates of wages fixed and revised under this Act may consist of :

1. a basic rate of wages and a special allowance at a rate to be adjusted to variation in the
cost of living index applicable to such workers at such intervals and in such manner as
the Government may direct; or
2. a basic rate of wages with or without the cost of living allowance, and the cash value of
the concession in respect of supplies of essential commodities at concession rates where
so authorised; or
3. An all inclusive rate allowing for the basic rate, the cost of living allowance the cash
value of the concession, if any. The cost of living allowance and cash value of the
concession shall be computed by the competent authority at such intervals and according
to such directions as may be, given by the appropriate Government. (Section 4)

PROCEDURE FOR FIXING AND REVISING MINIMUM

WAGES
Minimum rates of wages in respect of any scheduled employment can be fixed or revised by
the appropriate Government in either of two methods: (a) It shall appoint as many committees
and sub-committees as it considers necessary to hold enquiries and advise it in respect of such
fixation or revision, as the case may be. Or it shall, by notification in the Official Gazette,
publish its proposal for the information of the persons likely to be affected thereby, and specify
a date, not less than two months from the date of notification , op which the proposal will be
taken into consideration.

After considering the advice of the committee or committees or all representations received by
it before the date specified in the notification, the appropriate Government, by notification in
the official Gazette, shall fix or revise the minimum rates of wages in respect of each scheduled
employment. The fixation or revision shall come into force on the expiry of three months from
the date of issue of notification, unless otherwise directed.

Where the appropriate Government proposes to revise the minimum rates of wages by
notification it shall also consult the Advisory Board appointed under Sec. 7 of the Act. Before
the Government fixes the revised minimum rates of wages it shall take into consideration re-
presentation received by it. Time must be specified for making representation.

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PAYMENT OF MINIMUM RATES OF WAGES
Where in respect of any scheduled employment minimum wages have been fixed, the employer
shall pay to every employee wages at a rate not less than the minimum rate of wages fixed for
that class of employees in the employment. Such wages shall be paid without any deduction
except as may be authorised. Where the contract rate of wages is higher the statutory obligation
does not come into play. (Section 12).

OFFENCES AND PENALTIES (SEC. 22 AND 22-A)

Any employer who:

1) pays to any employee less than the minimum rates of wages fixed for that employees' class
of Work, or less than the amount due to him under the provision of the Act, or
2) contravenes any rule or order made under Sec. 13, shall be punishable with imprisonment
which may extend to six months or with fine which may extend to Rs. 500, or with both.
In imposing any such fine the court shall take into consideration the amount of any
compensation already awarded against the accused in any proceedings taken under Sec. 20.

CONSTITUTIONAL VALIDITY OF MINIMUM WAGES ACT

The constitutional validity of this Act was challenged before the court in various cases.
However, the judiciary played a critical role in determining that the Act was constitutionally
valid and it protects the interests of the workers so that they have access to food, shelter,
clothing, education, medical assistance, etc. The judiciary also stated that failure to pay below
the minimum wage rate amounts to forced labour.

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. The provisions under the Act such as revision
of wages at an interval of every five years and fixing working hours in a normal working day
portray how the Act prevents undue exploitation of the workers. The Act further establishes
advisory boards and committees that the workers can approach to seek redressal regarding

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cases concerning non-payment of wages or delay in the payment of wages by their employers.
The Act also grants adequate powers to the inspectors to look after the welfare of the workers.
Therefore, this Act plays a crucial role in providing the basic needs of the workers of a
scheduled category of employment, to grant adequate wages to the workers to survive with
their livelihood and also to promote the Directive Principles of State Policy laid down
under Article 43 of the Constitution of India.

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