MINIMUM WAGES ACT,

1948
LEC - 1
 Introduction
In recent years, India has made significant progress in industrial and commercial
development, despite its predominantly agricultural economy.
The surge in salaried and wage employment due to the industrial development has
led to the emergence of labor issues such as wage concerns, a common occurrence
in both developed and developing nations.
For handling these problems the Government has already undertaken a number of
statutory and other measures.
There is need to formulate a suitable wage policy which may help to maintain
industrial peace, which is so essential for maintaining and promoting the economic
growth of the country
The Minimum Wages Act, 1948 was brought into force by the
Parliament of India in order to provide due remuneration to the
workers and to prevent unfair exploitation of the workers by the
employers.
The concept of minimum wages is based on the principles of equity and
social justice
Its underlying idea is that “the one who works, is entitled to a fair
remuneration which may enable him to live a life consistent with
human dignity. "
The Act lays down the minimum rates of wages and fixing of minimum
wage rates for both skilled and unskilled labour and aims to provide a
decent standard of living for them.
The Act grants power to both the Central and State governments to
regulate, review and revise the rate of minimum wages paid to the
employees employed in the scheduled employment under their
respective jurisdiction.
 MINIMUM WAGES AND ILO
The issue of regulating minimum wages has garnered significant attention from
governments of both developing and developed countries, as well as from the
International Labour Organisation (ILO) at Geneva.
Since its inception after the First World War, the ILO has been formulating
International Labour Standards for its member countries, underscoring the
importance of this matter.
As early as 1921, the International Labour Organisation (ILO) recognized the
significance of establishing minimum wages.
In 1928 the outcome of its investigation led to the implementation of Convention
No. 20 and Recommendation No. 30 for determining minimum wages in
non-agricultural sectors.
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.
Objectives of the Act
To fix the minimum rates of wages that are to be provided to the
employees and revise such rates of wages every five years.
To secure an adequate living wage for all the labourers in the
interest of the public.
To fix the daily working hours of the employees.
To prevent exploitation of the workers by the employers.
To ensure that the labourers can maintain a decent standard of
living.
To provide basic physical needs, good health and a level of comfort
to the employees.
To penalise the employers when they fail to provide minimum wages to the
workers.
To establish advisory boards to regulate and administer the provisions of the Act.
To lay down the powers and duties of the inspectors for the purposes of this Act.
To prevent any employer from wrongfully infringing the right of any employees.
To establish appropriate authorities where the employees can seek redressal when
the employer has failed to pay the daily wage.
To authorise the Central and state governments to make rules and regulations for
the purposes of this Act.
 Scope and Applicability
The Act applies to the whole of India. This Act has 31 sections.
It requires the appropriate Government to fix, within a specified period, minimum
rates of wages payable to employees in the Scheduled Employment.
The appropriate Government is empowered to extend this Act to any other
employment in respect of which it is of the opinion that minimum rates of wages
should be fixed under the Act.
State Governments have used this power to bring within the purview of the Act not
a few other employments with the result than now the Act covers more than three
hundred employments.
Some Important Definitions
Sec 2(b) Appropriate Government :
(i) in relation to any scheduled employment carried on by or under the authority of
the Central Government, or a railway administration, or in relation to a mine,
oilfield or major port, or any corporation established by a Central Act, the Central
Government, and
(ii) in relation to any other scheduled employment, the State Government;
Sec 2 (c )Competent Authority :
It means the authority appointed by the appropriate Government by notification in
the official gazette to ascertain from time to time the cost of living index number
applicable to the employees employed in the scheduled employments specified in
such notifications.
Sec 2(d) :Cost of Living Index Number
It is the index number which is 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.
A cost of living price index measures the changing cost of a constant standard of
living. The index is a scalar measure for each time period.
Sec 2( e) Employer
It 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.
(i) 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,
as manager of the factory under sec 7(1) (f) of the Factories Act, 1948,
(ii) 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;
(iii) 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;
(iv) 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;
Sec 2(g) : Scheduled Employment
“Scheduled Employment" means an employment specified in the Schedule, or any process or branch
of work forming part of such employment;
Sec 2(h) : Wages
“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, it 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;
Types of Wages
In 1948, a significant milestone was achieved with the establishment of a tripartite committee
called the 'Committee on Fair Wages.' This committee's report served as the cornerstone for
shaping wage policy in India. It not only provided crucial guidelines for determining wage rates
across the country but also introduced three distinct categories of wages, namely
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.
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.
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.
 Difference between the Payment of Wages
Act, 1936 and Minimum Wages Act, 1948
Basis Payment of Wages Act of 1936
The objective behind the introduction of
this Act was to prevent delays in the
Objective of the Act
payment of wages that led to a debt trap
for the informal sector workers.
Payment of Wages Act of 1936 applies
Application and scope of uniformly to the whole territory of India,
the Act including the State of Jammu and
Kashmir.
Payment of Wages Act of 1936 defines
Definition of Wages
“wages” under Section 2 (VI) of the Act.
Minimum Wages Act of 1948
The objective behind the
introduction of this Act was to
ensure that every worker receives
at least a minimum amount of
money as wages and to avoid the
exploitation of the informal sector
workers.
Minimum Wages Act of 1948 is
applicable to the whole of India.
However, its scope varies
depending on states and regions.
Minimum Wages Act of 1948
defines “wages” under Section 2 (h)
of the Act.
 The Act is designed to set up the
The Act aims to control how certain types of
minimum wage determining
people who work in the industry are paid
mechanism in industries where there
Purpose of the Act their wages. Its goal is to guarantee the
is no plan in place for the absolute
regular payment of wages free from any
management of wages. It prevents
unlawful deductions.
the exploitation of workers.

Wages include a housing rent

Inclusion of housing The housing allowance is not a part of wages
allowance under the Minimum
allowance under the Payment of Wages Act of 1936.
Wages Act of 1948.
Regardless of whether it is referred to as a
monetary incentive or by another name, any The additional payments due under
Additional remuneration additional compensation due under the the conditions of employment to the
conditions of employment is not considered employee are not considered wages.
as “wages.”
“Wages” encompasses compensation for Compensation for extra hours,
Scope of wages
extra hours, holidays, and leave time. holidays, and leave time is excluded.
 Any compensation that is due
It excludes any compensation due
under a court’s orders, judgments,
Compensation by the court in accordance with a court’s
or settlements is considered
decision, settlement, or decree.
wages.
Wages under the Minimum
Wages also comprise any amount Wages Act of 1948 does not
that is payable by the employer to comprise any amount that is
Other monetary amounts
the employee related to his or her payable by the employer to the
payable regarding employment
termination of work under any employee related to his or her
law, etc. termination of work under any
law, etc.
Any amount that the employee is Any amount that the employee is
eligible to receive under a scheme eligible to receive under a scheme
Scheme-related monetary benefit
created in accordance with law is created in accordance with a law
included in wages. is not included in the wages.