Introduction

The economic policies and labour laws complement each other in India. To
ensure the social justice and economic well-being of the workers, the Parliament
enacted the Minimum Wages Act, 1948. Enacted to address the growing
concerns of worker exploitation and inequality, the Act has far-reaching
implications for both employees and employers. The primary objective of the
Minimum Wages Act, 1948 is to safeguard the interests of the workers by
providing a mechanism for ensuring a bare minimum level of remuneration.

From agriculture and manufacturing to the service industry, the Act plays a
pivotal role in establishing equitable compensation structures. Additionally,
there are various challenges in implementing and adhering to the stipulated
minimum wages, considering the dynamic nature of economic landscapes and
the diverse needs of an expanding workforce.

The Act categorises the workers into skilled, semi-skilled and unskilled
labourers and provides the mechanism for fixing separate minimum wages for
each class of labour. In this article, an attempt has been made to analyse the
important provisions of the Act, along with the important judicial
pronouncements by various Courts of the country. Further, the provisions of the
Act have been compared with the provisions of the Code on Wages, 2019, in
order to ascertain what changes would be implemented through the new
legislation.

Need for minimum wages

The exploitation of labourers in India became a norm at one point in history. Be

it the Mughal period or the British rule, the labourers have always suffered
economically as well as socially. To improve the situation of the labourers in
the country, the State strives to eliminate poverty. By fixing the minimum
wages for the labourers, the State tries to achieve the social objective of
eradicating poverty of the labourers by guaranteeing a minimum remuneration
for the work done, as well as the economic objective of motivating the workers

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to put in maximum efforts for maximum benefits. These benefits include, but
are not limited to, the following:

1. Protecting workers from exploitation – By providing a minimum wage

for a fixed number of hours, the exploitation of the workers shall be
reduced to a great extent.
2. Ensuring a basic income – Minimum wages are fixed and revised
based on adequate living standards. Thus, fixing minimum wages for
the workers shall ensure a basic income for them.
3. Reducing income inequality – The disparity in income can be reduced
by fixing the minimum wages of the workers.
4. Promoting economic stability – Fixing minimum wages for the
workers shall provide a way to promote economic stability by
improving the standard of living.
5. Setting labour standards – By reducing the exploitation of workers, the
standard of work would improve to a great extent.
6. Addressing poverty – Fixing minimum wages of the employees paves
the way for poverty eradication by encouraging more people to
undertake work of any kind.

History of minimum wages

With the onset of the Industrial Revolution, the gap between the rich and the
poor became wider. The poor were forced to work in factories and
establishments to sustain themselves. This was the period when the need to have
a law to protect the workers was felt. The Industrial Revolution in India arrived
as late as 1854 when India was still a colony of the British. The first discussion
in India regarding minimum wages followed its international counterpart,
i.e., the Draft Convention adopted at the International Labour Conference, 1928,
in the form of the Royal Commission on Labour. The Commission pointed out
the need to adopt a structured wage system for the labourers. The question of
wage-fixing machinery was again raised at the third and fourth meetings of the
Standing Labour Committee held in 1943 and 1944 respectively. Lastly, the
Minimum Wages Bill was introduced in 1946 and enacted in 1948.

Objectives of Minimum Wages Act, 1948

The main objectives of the Minimum Wages Act, 1948 are as follows:

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 1. To fix and revise the minimum wages to be paid by the employer to
the employees in certain employments;
2. To fix an adequate minimum wage for all employees in the interest of
the public;
3. To fix the daily working hours of an employee according to the
employment type;
4. To prevent exploitation of the workers;
5. To resolve any issues pertaining to the non-payment or less payment of
wages;
6. To establish and provide the powers and duties of inspectors;
7. To establish and provide the powers and duties of labour
commissioners and other important labour officers;
8. To provide the powers to make rules to the appropriate government.

Application of Minimum Wages Act, 1948

The Minimum Wages Act, 1948, is applicable to the whole of India as provided
under Section 1 of the Act. The appropriate government may fix minimum
wages for scheduled employment if more than one thousand employees are
employed in the given industry in the whole State, as provided under Section
1A of the Act. However, it is pertinent to note that this is not a mandatory
condition for the application of the Act. The appropriate government may fix
and revise minimum rates of wages for employment wherein less than one
thousand employees are employed.

Important provisions of Minimum Wages Act, 1948

Important definitions

Appropriate Government

Since labour law is a subject under the Concurrent List in the Seventh Schedule
to the Indian Constitution, both the Central Government and the State
governments are authorised to legislate on the subject. Section 2(b) of the
Act defines an appropriate government. In relation to industries such as
railways, oilfields, major ports, or any establishment under central legislation,

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the Central government is the appropriate government. In every other industry,
the State government is the appropriate government for the purpose of the Act.

Cost of Living Index Number

Section 2(d) of the Act defines the cost of living index number as an index
number as ascertained by the appropriate government in the Official Gazette in
relation to the employees. Under the Act, the appropriate government
determines the scheduled employment, in respect of which it notifies the
minimum wages to be paid by the employer to the employees. The minimum
wages are determined on the basis of the cost of living index number. The cost
of living index number signifies the cost of a constantly changing standard of
living.

Wages

Section 2(h) of the Act provides an inclusive definition of wages, including all
remuneration capable of being expressed in terms of money that the employer
pays to the employee during the course of employment. It also includes house
rent allowance. However, it does not include any accommodation, supply of
light, water, medical attendance, or any other amenity as the appropriate
government may deem fit; any contribution of the employer towards the
Pension Fund or Provident Fund; travel allowance; defrayed special expense;
and any gratuity payable on discharge of the employee.

In Workman represented by Secretary v. Reptakos Bret & Company Ltd. & Anr.
(1992), the Hon’ble Supreme Court took into consideration the Tripartite
Committee of the Indian Labour Conference of 1957. The report of the
Committee stated that the structure of the minimum wage policy has to be
nothing more than at a subsistence level.

In Municipal Corporation of Delhi v. Ganesh Razak (1995), the Supreme Court

held that the entitlement to minimum wages under the Act is an existing right of
the workman and does not require any further adjudication than that of the
Labour Court.

Employee

Section 2(i) of the Act defines an employee as any person who is engaged to do
any skilled or unskilled, manual or clerical work, in respect of which minimum
rates of wages have been fixed. It is an important definition under the Act as it

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defines the scope of its application. Not all employer-employee relations are
governed by the Minimum Wages Act. Moreover, not all kinds of employees
would fall under the ambit of claiming the benefits of minimum wages fixed by
the appropriate government.

Fixing Minimum Rates of Wages

Section 3 of the Act provides for fixing the rates of the minimum wage by
the appropriate government. Sub-section (1) provides that the appropriate
government shall fix the minimum rate of wages payable to the employees
in employment mentioned under Part I or Part II of the Schedule to the
Act (Scheduled Employment) and review the minimum wages for a period
of five years. Sub-section (1A) provides that the appropriate government
may refrain from fixing minimum wages for any Scheduled Employment
where the number of employees in the whole State is less than one
thousand until such number remains less than one thousand.

Advisory board under Minimum Wages Act, 1948

Section 7 of the Act establishes the Advisory Board. The scope of the
Advisory Board appointed by the appropriate government is the
coordination of the committees and sub-committees established under
Section 5 of the Act and advising the appropriate government on fixing
and revising the minimum wages for Scheduled Employment. A Central
Advisory Board (CAB) shall be established under Section 8 of the Act.
The Central Government shall establish CAB and appoint its members.
The members shall consist of an equal number of representatives of both
the employers and the employees, along with independent members
nominated by the Central Government. The Chairman of CAB shall be an
independent member. The scope of work of the CAB is to ensure
coordination with the Advisory Board and other matters under the Act.

Mode of payment of wages under Minimum Wages Act, 1948

All the wages shall be paid in cash only, as provided under Section 11 of
the Act. However, where it has been a practice to pay the wages in kind,

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either wholly or partly, authorisation from the appropriate government is
necessary. This includes concessions on essential commodities as
required.

Section 12 of the Act provides the manner in which the employees have to
make the payment of the minimum wages. The provision provides that the
employer shall pay the minimum rates of wages to every employee
working under him within the prescribed time period.

Fixing hours for a normal working day under Minimum Wages Act, 1948
Section 13 of the Act provides that the appropriate government may fix the
working hours in the following manner:

1. Fix the working hours of a normal day, including one or more

specified intervals.
2. Provide a day of rest in every period of seven days to all the
employees or a class of employees, and adequate remuneration
must be provided to the employees during the day of rest.
3. Provide payment to the employees on the day of rest, which shall
not be less than the overtime rate.
Section 14 of the Act provides that where an employee works over the
specified number of hours in a normal working day, he shall be entitled to
receive such overtime wages at the rate fixed under the Act for every hour
after his normal working hours.

In case an employee works for less number of hours in a normal working

day than prescribed, he shall still receive the minimum wages fixed under
the Act. However, this provision shall apply only if the lower number of
hours of work was not caused by the unwillingness of the employee. The
provision has been provided under Section 15 of the Act.

Compliance under Minimum Wages Act, 1948

Section 18 of the Act mandates the maintenance of records and registers
by every employer under the Act. The records shall contain the particulars
of the employees employed by the employer, the work performed by them,
the wages paid to them, the receipts given by them, and any other

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information prescribed by the appropriate government. The employer also
has to keep an exhibit of the factory, workshop, or place where the
scheduled employment is carried out. Such registers and records may be
perused by the inspector appointed by the appropriate government
under Section 19 of the Act. The inspector may:

1. In order to examine the register, a record of wages, etc., the

inspectors may enter the premises or places within the local limits
of their authority where the employees are employed to work and
for which minimum rates of pay have been determined under the
Act.
2. Examine any person whom the inspector may have reasons to
believe is an employee.
3. Require any contractor to provide information relating to the
employees.
4. Seize or make copies of the wage registers, etc., which he may
have reasons to believe were committed by the employer.
5. The appropriate government may provide any other powers or
duties under the Act.
Every inspector under the Act shall be deemed to be a public servant as
prescribed under the Indian Penal Code, 1860.

Claims under Minimum Wages Act, 1948

The appropriate government may, by notification to the Official Gazette,

appoint any Commissioner for Workmen’s Compensation or any officer of the
Central Government exercising functions as a Labour Commissioner for any
region, or any officer of the State not below the rank of Labour Commissioner,
or any other officer with experience as a judge of a Civil Court or as stipendiary
Judicial Magistrate to be the Authority to hear and decide for any specified area
all claims arising out of payment of less than the minimum rates of wages or in
respect of wages not paid within the prescribed time limit. A Block
Development Officer, Tahsildar, Additional Tahsildar, or Naib Tahsildar can
also be appointed as an Authority by the State Government by notification in
the Official Gazette.

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For the procedure under an application under Section 20 of the Act is made to
the Authority, both the employers and the employees shall be granted an equal
opportunity of being heard. Under this Section, every direction of the Authority
shall be binding and final. The Authority appointed under the Act shall have the
powers of a Civil Court under the Code of Civil Procedure, 1908 for the
purposes of taking evidence, enforcing the attendance of witnesses, production
of documents, etc.

Procedure before the Authority

The following is the procedure to be followed before the Authority under the
Act in cases relating to non-payment or payment of less than minimum wages
fixed under the Act, as prescribed under Section 20:

• Both the employers and the employees shall be granted an equal

opportunity to present their case.
• The Authority shall direct the refund of such amount of wages as has
not been paid by the employer to the worker or has delayed in paying
the wages, along with compensation to the extent of damages suffered
by the worker.
• However, if the employer proves that the delay in payment of wages
was due to a bona fide error, the Authority shall not direct any
payment of compensation. An example of a bona fide error could be
that the person authorised to make the payment of wages did not pay
such wages even after due diligence of the employer.

Constitutionality of Minimum Wages Act, 1948

The constitutionality of the Act has been challenged on the grounds of violation
of Article 14 and Article 19 of the Constitution in the following cases:

Bijay Cotton Mills Ltd. v. State of Ajmer (1954)

In this case, there was an industrial dispute between the employers and
employees of the mill regarding the enhancement of wages. The dispute was
taken to the Industrial Tribunal, which dismissed the petition of the employees,
stating that the financial capacity of the mill precludes the enhancement of
wages for the workers. An appeal was preferred before the Appellate Tribunal.
Meanwhile, the Government of Ajmer implemented the provisions of the Act

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and prescribed the minimum wages for industries in Ajmer. The Appellate
Tribunal remanded the case and the final award of the Industrial Tribunal was
passed, wherein the basis on which the minimum wages were fixed was rejected
by the Tribunal. The minimum wages fixed by the Commissioner were
challenged by various industries on the ground that the Act itself was violative
of Article 19(1)(g) of the Constitution, as the employers were unable to carry
out their businesses due to the condition of paying the minimum wages.

The Hon’ble Supreme Court of India, rejecting the contention of the employers,
held that the Minimum Wages Act, 1948, is not violative of the right to freedom
of trade, as it has been implemented as a part of the Directive Principles of State
Policy, specifically under Article 43 of the Constitution. While it may be
difficult for certain employers to start their business while complying with the
payment of minimum wages, the provisions of the Act have been adopted
keeping the larger interests of people in mind. Thus, the Act was held to be
constitutional.

Bhikusa Yamasa Kshatriya v. Sangamner Akola Taluka Bidi Kamgar Union

(1958)

In this case, the validity of the Minimum Wages Act, 1948, was again
challenged before the Hon’ble Bombay High Court. There were various claims
under Section 20 of the Act on the applicability of minimum rates of wages in
certain districts of the State of Bombay. Inter alia other contentions, the
employers challenged the validity of the Act on the grounds that it was violative
of Article 14 and Article 19(1)(g) of the Constitution and that the State of
Bombay did not follow the requisite procedure for determining the minimum
rates of wages.

Rejecting the contentions of the employers, the Court held that the petitioners
failed to establish that the requisite procedure was not followed by the State of
Bombay while determining and revising the minimum wages and that the
provisions of the Act were violative of Article 14 or Article 19(1)(g) of the
Constitution.

N.M. Wadia Charitable Hospital & Ors. v. State of Maharashtra & Ors. (1986)

In this case, the State of Maharashtra appointed a committee to advise on the

matter of the revision of the minimum wages payable to hospital employees.

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However, the government did not adopt the rates of wages recommended by the
committee in its report but rather adopted a higher rate of minimum wages. The
notification was challenged by the petitioners on the ground that there was no
application of mind by the government.

It was held by the Court that fixing different rates of minimum wages for
different localities was permissible under the Act and did not violate any
provisions of the Constitution.

Recent judicial pronouncements

Mohd Imran Ahmad v. Government of NCT of Delhi & Anr. (2023)

In this case, the petitioner filed a Public Interest Litigation (PIL) against the
Government of NCT of Delhi under Article 226 of the Constitution, praying for
the issue of a writ of mandamus. The Government of Delhi maintains a job
portal where several vacancies are posted. It was the case of the petitioner that
the jobs posted under the portal were not in compliance with the provisions of
the Minimum Wages Act, 1948, as well as notifications fixing minimum wages
notified by the Government of Delhi. The portal allowed employers to post
advertisements regarding vacancies.

The Court directed the Government of the NCT of Delhi to not allow any
advertisements that are not in compliance with the provisions of the Minimum
Wages Act, 1948.

Assistant Provident Fund Commissioner v. M/s G4s Security Solutions (India)

Ltd. & Anr. (2023)

In this case, the Assistant Provident Fund Commissioner preferred an appeal

against the order passed by the Hon’ble Punjab and Haryana High Court which
stated that the basic wages under the Employee Provident Fund Act, 1952, are
not required to comply with the minimum wages fixed under the Minimum
Wages Act, 1948. The appellant contended that for the purpose of determining
the liability of the employer towards the employee’s provident fund, the
employers have deliberately reduced the basic wages below the minimum wage
so as to evade liability.

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However, the Hon’ble Supreme Court rejected this contention and upheld the
order of the Hon’ble High Court, stating that there is no need to equate the basic
wages under the EPF Act with the minimum wages under Section 4 of the
Minimum Wages Act, 1948.

Conclusion

The Minimum Wages Act, 1948, is a pivotal piece of legislation under the
labour laws of India. It provides a guarantee of minimum remuneration for the
work done by the employee. Both the Central Government and the State
Governments are appropriate governments under the Act, as labour law is a
subject under the Concurrent List. Accordingly, both governments can fix and
revise minimum wages according to the requirements of the employees falling
thereunder. Moreover, the State Governments can also make amendments to the
Act for application in their respective States.

Apart from providing provisions for minimum wages, the Act also contains
provisions relating to the fixation of work hours, providing a day off after six
days of work, provision for minimum wages for overtime, etc. This ensures that
not only the economic interests but also the social interests of the labourers are
protected.

The Parliament has enacted the Code on Wages, 2019, which shall repeal and
replace the Minimum Wages Act, 1948, to consolidate all the laws related to
wages into one code. However, the Code has not been enforced yet. The Code
will bring along certain important changes, as has been discussed in the article.
The implementation of the Code is expected to overcome the lacunae and
inconsistencies in all the labour legislations relating to wages.

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