The Minimum Wages Act, 1948

Unit III
Labour Laws [Open Elective]
SS B. Com. III
The Minimum Wages Act, 1948
 The Minimum Wages Act, 1948 was enacted to secure the welfare of the workers in a
competitive market by providing for a minimum limit of wages in certain employments.

 The object of this act is to prevent exploitation of the workers and for this purpose, it aims
at fixation of minimum wages which the employer must pay.

 The Act contemplates that minimum wage rate must ensure not merely physical need of
the worker which would keep him/her just above starvation but must ensure for him not
only his subsistence and that of his/her family but also preserve his efficiency as a
workman.
The Minimum Wages Act, 1948
 The Minimum Wages Act, 1948 empowers the appropriate Government** for fixation of
minimum wages for employment enumerated in the Schedule to the Act.

 The fixation of minimum wages relates to the industries where sweated labour is most prevalent
or where there is inevitable chance of exploitation.

 In prescribing the minimum wage rates, the capacity of the employer need not to be considered as
the State assumes that every employer must pay the minimum wages before he employs labour.

**Central Government would be an appropriate Government in case of railway, mine, oilfield or

major port or any corporation established by a Central Act and the State Government for other
employments covered by the Schedule of the Act.
The Concept of Minimum Wage
 The Minimum Wages Act, 1948 does not define minimum wages as it would not be
possible to lay down a uniform minimum wage for all industries throughout the country
on account of different and varying prevailing conditions from industry to industry and
from one part of the country to another.

 Wage as defined in the Act means all remuneration, capable of being expressed in terms
of money which would, if the terms of the contract of employment, expressed or implied,
were fulfilled, be payable to a person employed in respect of his employment or work
done in such employment, and includes house rent allowance, but wages do not include
The Concept of Minimum Wage
Wages do not include

 The value of

a. Any house accommodation, supply of light, water, medical attendance

b. Any other amenity or any service excluded by general or special order of the appropriate government.

 Any contribution paid by the employer to any pension fund or provident fund or any scheme of social
insurance.

 Any travelling allowance or the value of any travelling concession

 Any sum paid to the persons employed to defray special expenses entailed on him by the nature of his
employment.

 Any gratuity payable on discharge.

Wage-Structure
Broadly speaking, the wage structure can be divided into three parts

a. Minimum Wage

b. Living Wage

c. Fair Wage
Wage-Structure
a. Minimum Wage
 The minimum wage is the lowest wage in the scale below which the efficiency of a worker is likely
to be impaired.

 The minimum wage, includes not only the bare physical necessities but also conventional
necessities

 Necessities of life – food, clothing and shelter

 Necessities of Efficiency – to maintain and increase energy and ability to work – milk, vegetable,
eggs, , table chair

 Conventional Necessities – those which are forced to use either because of social customs or our
society expects us to do so. For example, dowry and entertaining relatives at marriage.
Wage-Structure
b. Living Wage

Living wage should enable the wage earner to provide for himself and his
family not merely the bare essentials of food, clothing and shelter but
measure of frugal comfort including education for the children, protection
against ill health, requirement for essential social needs and a measure of
insurance against the more important misfortune including old age.
Wage-Structure
c. Fair Wage
 Fair wage is a mean between the living wage and the bare minimum wage.

 A fair wage is related to the earning capacity and the work load.

 The minimum wage is the lower limit of the fair wage.

Following factors are to be considered.

 Productivity of the labour

 Prevailing wage rate in the similar or same occupation in the same or neighbouring localities

 Level of national income and its distribution

 The place of the industry in the economy of the country.

Applicability of the Act

 The Act came into force from 15th March, 1948 and was
amended in 1954,1957,1961,1982,1983,1987,1990 and 1993.

 It extends to the whole of India.

Employee
 Means employee employed

 To do any work (skilled, unskilled, manual, clerical) for hire or reward of a

scheduled employment (for which MRW have been fixed) and includes

 An out worker (who does the work of scheduled employment at any other
premises)

 A person declared to be employee by the appropriate government

 Does not include member of Armed Forces

Scheduled Employment (Not Exhaustive List)
Schedule I [Not exhaustive list]
1. Employment in any woollen carpet making or shawl weaving establishment.
2. Employment in any rice mill, flour mill or dal mill.
3. Employment in any tobacco (including bidi making) manufactory.
4. Employment in any plantation, that is to say, any estate which is maintained for the purpose of
growing cinchona, rubber, tea or coffee.
5. Employment in any oil mill.
6. Employment under any local authority.
7. Employment on the construction or maintenance of roads or in building operations.]
8. Employment in stone breaking or stone crushing.
9. Employment in any lac manufacturing
10. Employment in any mica works.
11. Employment in public motor transport.
12. Employment in tanneries and leather manufactory.
13. Employment in iron ore mines, manganese mines, gypsum mines, copper mines, quarts mines,
china clay mines, silica mines and bauxite mines
Schedule II – Agriculture
Fixation and Revisions of Minimum Rates of Wages (Section 3)

 The act empowers the appropriate government to fix the minimum wages for the employment
specified in Schedule I and Schedule II of the Act.

 Further, the appropriate government can revise or review the minimum rates of wages at such
intervals as it deems fit but not exceeding 5 years.

 The Minimum rates of wages may be fixed by the government for time-work, piece work,
overtime work.

 In fixing or revising minimum rates for wages, different rates of wages may fixed for different
scheduled employments, different class of work in the same scheduled employment, adults,
adolescents, children, apprentice, different localities or may be fixed by one or more for these
wages period (a) by the hour (b) by the day (c) by the month or (d) such other larger period.
Minimum Rates of Wages (Section 4)
 A basic rate of wages to be adjusted in accordance with the variations in the cost of
living index number (cost of living allowance) [Basic Rate + Cost of Living
Allowance]

 A basic rate of wages with or without a cost of living allowances and the cash value of
the concessions in respect of essential commodities supplied at concession rates or
[Basic Rate + Cash value of Concessions of Essential Commodities (with or without
Cost of Living Allowance)

 An all inclusive rate allowing for the basic rate, the cost of living allowance and the
cash value of the concessions, if any [Basic Rate + Cost of Living Allowance + Cash
Value of Concessions of Essential Commodities]
Procedure for Fixation and Revision of Minimum Rates of Wages (Section 5)

 Committee Method

 Notification Method
Procedure for Fixation and Revision of Minimum Rates of Wages (Section 5)

 In fixing minimum rates of wages in respect of any scheduled employment for the first
time under this act or in revising minimum rates of wages so fixed, the appropriate
government shall either

(a) 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

(b) Or, by notification in the Official Gazette publish its proposals for the information of
persons likely to be affected thereby and specify a date not less 2 months from the
date of notification, on which the proposals will be taken into consideration.
Procedure for Fixation and Revision of Minimum Rates of Wages (Section 5)

 After considering the advice of the said committees or the representation,

the appropriate government will by notification in the Official Gazette fix
or revise the minimum rates of wages.

 Such notification shall come into force on the expiry of three months from
the date of issue.
Advisory Board (Section 7)

 The Act empowers the government to constitute advisory board

comprising equal number of representatives of employers and
employees in the scheduled employments, to coordinate the work of
committees and sub-committees appointed by it for fixing and revising
minimum rates of wage.
Central Advisory Board (Section 8)

 The Central Government is empowered to constitute a Central Advisory

Board for advising the Central and State Governments in the matter of
fixation and revision of minimum wages and to coordinate the work of
advisory boards and committees.
Composition of Committees etc. (Section 9)

 Under the Act, it is specified that advisory board, committee or sub-committees shall consists of
persons nominated by the appropriate government.

 Person who can be appointed to these committees shall be representatives of the employees and
employers in the scheduled employment and shall be equal in number .

 Independent persons not exceeding one third of the total numbers in such bodies shall also be
appointed.

 The appropriate government is empowered to appoint one of such independent person as the
Chairman.

 The Act does not prescribe any method which is to be adopted by the advisory board before making
its recommendations to the State Government.

 The advisory board is free to devise its own procedure.

Correction of Errors (Section 10)

 The appropriate government may at any time by notification in the

Official Gazette, can clarify clerical or arithmetical errors in any order
pertaining to fixing or revision of minimum wages
Wages in Cash / Kind (Section 11)

 As per the Act, wages are required to be paid in cash.

 Where it has been customary to pay wages wholly or partly in kind

(essential commodities at concessional rate), the appropriate government
by notification in Official Gazette authorize the payment of wages either
wholly or partly in kind.
 Payment of Minimum Rates of Wages (Section 12)

 The employer shall pay wages to employees engaged in scheduled employment, wages at a rate
not less than the minimum wages as notified by the Government.

 The wages of a worker in any scheduled employment shall be paid on a working day.

 In case of establishments in which less than 1000 persons are employed, the wages shall be paid
before the expiry of the 7th day.

 In all other factories, wages must be paid before the expiry of the 10th day.

 When the employment of any person is terminated, the wages shall be paid before the expiry of
the second working day after the termination of the employment. All wages shall be paid in
current coin or currency notes or both.

 The wages shall be paid without deductions of any kind except those allowed by rules and
notifications.
Maintenance of Registers and Records (Section 18)

 A register of wages and muster roll shall be maintained by every employer.

 It shall give particulars of employees employed by him, the work performed by them,
the wages paid to them, over-time work, the minimum rates of wages, gross wages,
deductions made and wages actually paid and the receipt given by them.

 The signature or thumb impressions of the employee on wage book and wage slip is
required to be taken by the employer.

 The registers and muster rolls shall be preserved for a period of three years after the
date of the last entry made therein and they shall be produced for inspection when so
required by the concerned authorities.
Authorities under the Act – Inspectors (Section 19)

 The act authorizes the appropriate government to appoint, such persons as

it think fit to be the inspector for the enforcement of the act.

 The government is also required to lay down the local limits under which
inspectors are expected to carry out their functions.
Authorities under the Act – Inspectors (Section 19)

POWERS OF INSPECTORS

The Inspector is empowered to

a. enter, at all reasonable hours, any premises or place where employees are employed
or work is given out to workers in any scheduled employment in respect of which
minimum rates of wages have been fixed, for the purpose of examining any register,
record of wages or notice required to be kept or exhibited, and required the
production thereof, for inspection.

b. Examine, any person whom he finds in any such premises or place and who, he has
reasonable cause to believe, is an employee employed therein or an employee to
whom is given out therein.
Authorities under the Act – Inspectors (Section 19)

POWERS OF INSPECTORS
The Inspector is empowered to

c. Require any person given out work and any outworker to give any information which is
in his power to give, with respect to names and addresses of the person to, for and from
whom the work is given out or received and with respect to the payments to be made for
the work.

d. Seize or take copies of such register, record of wages or notice 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.

e. Exercise any other powers as may be prescribed.

Penalties (Section 22)

 An employer who pays to any employee less than the prescribed minimum rates
of wages or infringes any order or rule, may be punished with imprisonment up to
6 months and/or with fine up to Rs. 500 or with both.

 Further, an employer who fails to maintain a register - a record required to be

maintained under the Act- is punishable with a fine which may extend to Rs. 500.