It will explain minimum wages and its jurisprudence in labour law.

1. Adv. Vijay Jayshwal
Kathmandu University School of Law
Minimum Wages and Payments
12/27/2019

2. Minimum wages
 Minimum wages have been defined as the minimum
amount of remuneration that an employer is required
to pay wage earners for the work performed
during a given period, which cannot be reduced
by collective agreement or an individual contract.
 Minimum wages have been a subject at the ILO since
its creation in 1919.
 Based on the view that “universal and lasting peace
can be established only if it is based upon social
justice”, the 1919 ILO Constitution called in its
Preamble for an urgent improvement of conditions of
labour, including “the provision of an adequate
living wage”.
 In 1944, the ILO Declaration of Philadelphia referred
to the importance of “a minimum living wage to all
employed and in need of such protection”.
 This was reiterated in the 2008 ILO Declaration on
Social Justice for a Fair Globalization. 12/27/2019

3.  The purpose of minimum wages is to protect
workers against unduly low pay. They help ensure
a just and equitable share of the fruits of progress to
all, and a minimum living wage to all who are
employed and in need of such protection.
 Minimum wages can also be one element of a policy
to overcome poverty and reduce inequality,
including those between men and women.
 Minimum wage systems should be defined and
designed 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.
 Historically, the purpose of minimum wages has
evolved from a policy tool to be used selectively in
a few low-wage sectors to an instrument of much
broader coverage.
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4. Forms of wages and other consideration
 Fair wage (sec.91.Compliance of fair labour
practice)
 Living wage
 Need based minimum wage
 Constitutional validity of minimum wages
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5. ILO & Minimum Wages
 ILO Conventions reflect this evolution:
 The Minimum Wage Fixing Machinery Convention,
1928 (No. 26) , encouraged countries to implement
minimum wages where “no arrangements exist for the
effective regulation of wages by collective agreement
or otherwise and wages are exceptionally low”.
 Later, the Minimum Wage Fixing Convention, 1970
(No. 131) called for coverage of “all groups of wage
earners whose terms of employment are such that
coverage would be appropriate”. The principle of full
consultation with social partners lies at the heart of
this Convention.
 Some countries have only one minimum wage applied
to all employees in the country; others have multiple
minimum wage rates by sector of activity, occupation,
or geographical region.
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6. Governing principle
 “Compliance with the principle of equal
remuneration for work of equal value should be
ensured, particularly when minimum wages are
set by sector or occupational category”.
 In principle, minimum wages should afford
adequate protection to all workers in an
employment relationship, including women, youth
and migrant workers, regardless of their
contractual arrangements. Exclusions should be
kept to a minimum, particularly in relation to
vulnerable categories of workers.
 In practice, certain employees are excluded from
minimum wage protection for a variety of reasons– for
instance, domestic workers, workers in the
informal economy, or workers in non-standard
forms of employment. Home-based workers or
workers in agriculture are also frequently
excluded.
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7.  With respect to domestic workers, the ILO Domestic
Workers Convention, 2011 (No. 189) considers
that: “Each Member shall take measures to ensure
that domestic workers enjoy minimum wage
coverage, where such coverage exists, and that
remuneration is established without
discrimination based on sex” (Article 11).
 According to recently adopted Transition from the
Informal to the Formal Economy
Recommendation, 2015 (No. 204) , countries should
also progressively extend minimum wage protections,
in law and in practice, to workers in the informal
economy through the process of formalization.
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8. Minimum wage setting mechanisms
 Regimes involving an expert body: Systems with
an expert body involved in setting the minimum wage
are now the most prevalent.
 Government-set minimum wages: In some
countries, the central government sets the national
minimum wage. The most notable example of this
approach is the US, where Congress votes on
changes to the minimum wage. The US has tended to
change the national minimum wage infrequently, with
changes depending largely on the political balance of
power at the federal level.
 Formulaic approaches : Other countries follow a rule
or formula for fixing the minimum wage. In France, the
interprofessional minimum wage (salaire minimum
interprofessionnel de croissance) is tied to the
consumer price index and uprated annually).
 Collective bargaining : The influence of trade unions
and other employee organizations varies considerably
across countries
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9. Approaches of Minimum Wages
 A balanced and evidence-based approach is
necessary which takes into account, on the one hand,
the needs of workers and their families and, on the
other, economic factors.
 An evidence-based approach also implies that there
should be clear criteria to guide discussions on the
level of minimum wages, as well as reliable statistical
indicators to support governments and social partners
in their deliberations.
 Right based approach :- Most economists and
policymakers have concluded that a minimum wage,
set at the right level, can have positive effects on the
labor market.
 In countries with strong in-work welfare systems, it
can shift some of the costs of tackling low incomes
from government to firms.
 It can also tackle fairness in the labor market, which
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10. Purpose of Minimum Wage Fixing
1. Minimum wage fixing should constitute one
element in a policy designed to overcome poverty
and to ensure the satisfaction of the needs of all
workers and their families.
2. The fundamental purpose of minimum wage
fixing should be to give wage earners necessary
social protection as regards minimum permissible
levels of wages.
 R135 - Minimum Wage Fixing
Recommendation, 1970 (No. 135)
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11. Criteria for Determining the Level of Minimum
Wages
 In determining the level of minimum wages,
account should be taken of the following criteria,
amongst others:
(a) the needs of workers and their families;
(b) the general level of wages in the country;
(c) the cost of living and changes therein;
(d) social security benefits;
(e) the relative living standards of other social
groups;
(f) economic factors, including the requirements of
economic development, levels of productivity and
the desirability of attaining and maintaining a high12/27/2019

12. Minimum Wage Fixing
Machinery
(a) statute;
(b) decisions of the competent authority, with or
without formal provision for taking account of
recommendations from other bodies;
(c) decisions of wages boards or councils;
(d) industrial or labour courts or tribunals; or
(e) giving the force of law to provisions of collective
agreements.
 C131 - Minimum Wage Fixing Convention,
1970 (No. 131)
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13. Enforcement measures
 In some countries more than half of all wage earners who
are entitled to the minimum wage are paid wages below
the legal floor.
 High rates of non-compliance have negative
consequences not only for workers and their families,
whose rights are violated, but also for compliant
employers, as it gives non-compliant enterprises an
illegitimate cost advantage.
 Information and awareness raising campaigns
 Capacity building activities for employers’ and workers’
representatives
 Empowering workers to claim their rights through individual
complaints as well as collective action
 Measures to formalize the informal economy
 Targeted labour inspections
 Sanctions that function as a deterrent to non-compliance
 Monitoring and responsible purchasing practices within
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14. Nepal and Minimum Wage Law
 Fixation of minimum wage (section 106 of Labour Act 2018)
 The Ministry, at the recommendation of Minimum Wage Fixation
Committee formed pursuant to section 107, shall fix the minimum
wage for workers every two years.
 Notwithstanding anything contained in sub-section (1), the
Ministry may fix minimum wage, in case the Minimum Wage
Fixation Committee formed pursuant to section 107 fails to
recommend the minimum wage due to lack of consensus.
 The minimum wage fixed pursuant to this section, shall be
published in the Nepal Gazette.
 The minimum wage fixed pursuant to sub section (3) shall be
effective from the 1st of new financial year.
 Provided that if any agreement is entered between a trade union
and employer concerning the effective date for the
implementation of the minimum wage, it shall be followed
accordingly.
 When fixing minimum wage in accordance with other prevailing
laws of Nepal, the fixation of such minimum wage lesser than the
wage fixed pursuant to this Act is prohibited. 12/27/2019

15. Minimum Wage Fixation
Committee
 The Ministry shall constitute a permanent Committee
consisting of representatives from the Government of
Nepal, trade unions and employers' associations for
the purpose of recommending minimum wage in the
prescribed manner.
 The committee formed pursuant to sub-section (1),
when recommending minimum wage for workers, may
do so for the whole country or specific region or
specific nature of enterprises or industries or
employment sector.
 Grounds for the recommendation of minimum wage
shall be determined by the Minimum Wage Fixation
Committee itself as formed under sub section (1).
 The Minimum Wage Fixation Committee formed
pursuant to sub section (1), shall, in every two years,
commence the process of reviewing the minimum
wage from the month of Baishak. 12/27/2019

16. Thank you..
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