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SYNOPSIS
1. Introduction
2. Objectives of the Act
3. Procedure for Fixation and revision of rates of wages
4. Concept of dearness allowances and principles for determination
of dearness allowances
5. Offences and penalties
6. Conclusion
Introduction:
The Minimum Wages Act was passed in 1948 and it came into force
on 15th March, 1948. The National Commission on Labour has described
the passing of the Act as landmark in the history of labour legislation in the
country. The philosophy of the Minimum Wages Act and its significance in
the context of conditions in India, has been explained by the Supreme Court
in Unichoyiv. State of Kerala (A.I.R. 1962 SC 12), as follows:
“What the Minimum Wages Act purports to achieve is to prevent
exploitation of labour and for that purpose empowers the appropriate
Government to take steps to prescribe minimum rates of wages in the
scheduled industries. In an underdeveloped country which faces the
problem of unemployment on a very large scale, it is not unlikely that labour
may offer to work even on starvation wages. The policy of the Act is to
prevent the employment of such sweated labour in the interest of general
public and so in prescribing the minimum rates, the capacity of the employer
need not to be considered. What is being prescribed is minimum wage rates
which a welfare State assumes every employer must pay before he employs
labour”.
According to its preamble the Minimum Wages Act, 1948, is an Act to
provide for fixing minimum rates of wages in certain employments. The 3
Law of Wages and Principles of Wage Fixation employments are those
which are included in the schedule and are referred to as ‘Scheduled
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 1
NOTES
“Only for Private Circulation”
UNIT - 1
THE MINIMUM WAGES ACT, 1948
Employments’. The Act extends to whole of India.
Historical Background:
Statutory minimum wage regulation was first introduced in New
Zealand in 1894 and the Australian colony (soon to be a state) of Victoria
in 1896. Some attempt to control wages had been present since 19th century,
through collective agreement.
However, this meant that a uniform minimum was not possible. It was
not until the turn of the twentieth century that the first attempts to do this
were seen. The movement for a minimum wage was initially targeted at
stopping sweatshop labour.
At the international level the International Labour Organization
established Minimum Wage-Fixing Machinery Convention in 1928. Having
decided upon the adoption of certain proposals with regard to minimum
wage-fixing machinery, the principles of the convention were modified and
included in the Minimum Wage Fixing Machinery (Agriculture) Convention
1951 and Minimum Wage Fixing Convention 1970.
In India the question of fixation of minimum wages gained importance
due to the cheap and unorganized labour. The labour as whole in the country
was not able to put a face of collective bargaining and look after their
interests.
The period of acute depression was set in all industries towards the end
of 1922. The Ahmedabad Mill Owners Association thereupon, made the
first organized post war move for wholesale reduction of wages and a cut
of 20% in wages was announced with effect from 1stApril 1923. The strike
of Ahmedabad cotton mill workers, which followed the cut, involved nearly
50,000 workers. Similar situation prevailed in Bombay also. Not satisfied
4 Law of Wages and Principles of Wage Fixation with one cut, some mills
imposed another cut within the short period of few months.
In 1925, however, the Government of India came to the rescue of the
cotton textile workers. As a compromise formula, the wage cut proposal
was dropped after the Government announced the suspension of the excise
duty on the demand of mill owners.
Appointment of Royal Commission on Labour – 1929:
The year 1928 witnessed most disastrous strike of the period there was
complete stoppage of work for over six months in Bombay. Some other
such strikes were also witnessed in Jamshedpur and Sholapur. Continued
labour unrest in the country prompted the Government of India in the
middle of 1929, to appoint Royal Commission on Indian labour to enquire
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 2
NOTES
“Only for Private Circulation”
into and report on the existing conditions of labour including the health,
efficiency and the standard of their living.
The Royal Commission on Labour considered the question of fixing
the minimum wages for bidi making, wool cleaning, mica factories, shellac
manufacturing and tanning. It recommended, “it would be necessary to
create a machinery for fixing minimum rates of wages in those trades in
which wages are lowest and where there is no question of collective
bargaining.” It further recommended that of industries which came within
its terms of reference, those dealing with unregulated factories be examined
in the first instance with a view to the need and possibility of instituting
minimum wage fixing machinery.
The Commission also emphasized on the need of enacting necessary
legislation on the subject. No steps, however, were taken for any legislative
measure to implement the recommendations of the Commission.
The question of setting up of statutory wage fixing machinery was
again discussed at the meetings of the Standing Labour Committee held in
May 5 Law of Wages and Principles of Wage Fixation 1943 and January
1944, respectively and also at the successive sessions of the Tripartite
Labour Conference in September 1943, October 1944 and November 1945.
Appointment of Rege Committee – 1944:
The appointment of Rege Committee in 1944 found after their survey
that the basic wage level in most Indian industries was extremely low.
Appointment of Central Pay Commission – 1946:
Government of India in 1946, appointed the Central Pay Commission
to enquire into and report on the conditions of service of central government
employees. The Pay Commission recommended that the Government
should take some steps forward in giving effect to the “living wage”
principle dealing with the employees who are virtually on the “poverty line”
and came to the conclusion that in no case a man’s wages should be less
than a living wage.
Minimum Wages Bill, 1946:
Simultaneously, with the appointment of the Central Pay Commission,
the Government of India, on February 11, 1946, introduced in the Indian
Legislative Assembly, the Minimum Wages Bill.
The Bill was referred to the Select Committee in March 1947, which
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 3
NOTES
“Only for Private Circulation”
was reconstituted in November 1947. The Bill, as finally passed by the
Dominion Legislature on February 9, 1948 received the assent of the
Governor General on March 15, 1948 and it came to be known as the
Minimum Wages Act, 1948.
Minimum Wages Act, 1948:
The purpose of the Act is to ensure that the payment of wages at rates
not less than the prescribed minimum to those employed in scheduled
employment. The Act was enacted to give effect to the resolutions passed
by the Minimum Wages Fixing Machinery Convention held at Geneva in
1928. 46 Law of Wages and Principles of Wage Fixation
Objectives Of The Act:
The objectives of the Minimum Wages Act, 1948 are as follows:
a) To provide for fixation of minimum wages for the scheduled
employments.
b) To provide for periodical revision of minimum wage fixed.
c) To provide for a summary procedure for recovery of the balance with
penalty and subsequent prosecution of the offending party, in cases
where an employer pays less than the minimum wages fixed by the
government.
d) To provide for the appointment of Advisory Committees and Advisory
Boards, having equal representatives of employers and workers.
M. Unichoyi v. State of Kerala, 1961:
The Court held that the Act purports to prevent exploitation of labour
and for that purpose authorizes the appropriate government to take steps to
prescribe minimum rates of wages in the scheduled industries. In an
underdeveloped country which faces the problem of unemployment on a
very large scale, it is not unlikely that labour may offer to work even on
starvation wages. The policy of the Act is to prevent the employment of
such sweated labour in the interest of general public and so in prescribing
the minimum wage rates the capacity of the employer need not be
considered. What is being prescribed is minimum wage rates which a
welfare state assumes every employer must pay before he employs labour.
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 4
NOTES
“Only for Private Circulation”
DEFINITIONS-[SECTION 2]Appropriate Government [Section 2(b)]:
“Appropriate Government” means :
i. in relation to any scheduled employment carried on by or under the
authority of the Central or a railway administration, or in relation to a
mine, oilfield or major part or any corporation established by a Central
Act, the Central Government, and
ii. in relation to any other scheduled employment, the State Government.
7 Law of Wages and Principles of Wage Fixation
Employee [Section 2(i)]:
“Employee” means any person who is employed for hire or reward to
do any work, skilled or unskilled, manual or clerical in a scheduled
employment in respect of which minimum rates of wages have been fixed;
and includes an outworker to whom any articles or materials are given out
by another person to be made up, cleaned, washed, altered, ornamented,
finished, repaired, adapted or otherwise processed for sale purpose of the
trade or business of that other person where the process is to be carried out
either in the home of the out-worker or in some other premises, net being
premises under the control and management of that person; and also
includes an employee declared to be an employee by the appropriate
Government; but does not include any member of Armed Forces of the
Union.
Employer [Section 2(e)]:
“Employer” 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, and includes,
except, in sub-section (3) of Section 26 –
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 under clause (f) of sub-section (1) of Section 7
of the Factories Act, 1948, as manager of the factory;
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 of
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 5
NOTES
“Only for Private Circulation”
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; 8 Law of Wages and Principles of Wage
Fixation
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 of the supervision and control
of the employees or for the payment of wages.
The definitions of “employees” and “employer” are quite wide. Person
who engages workers through another like a contractor would also be an
employer (1998 LLJ I Bom. 629). It was held in Nathu Ram Shuklav. State
of Madhya Pradesh A.I.R. 1960 M.P. 174 that if minimum wages have not
been fixed for any branch of work of any scheduled employment, the person
employing workers in such branch is not an employer with the meaning of
the Act. Similarly, in case of LoknathNathuLalv. State of Madhya Pradesh
A.I.R. 1960 M.P. 181 an out-worker who prepared goods at his residence,
and then supplied them to his employer was held as employee for the
purpose of this Act.
Scheduled employment [Section 2(g)]:
“Scheduled employment” means an employment specified in the
Schedule or any process or branch of work forming part of such
employment.
Note: The schedule is divided into two parts namely, Part I and Part II.
When originally enacted Part I of Schedule had 12 entries. Part II relates to
employment in agriculture. It was realised that it would be necessary to fix
minimum wages in many more employments to be identified in course of
time. Accordingly, powers were given to appropriate Government to add
employments to the Schedule by following the procedure laid down in
Section 21 of the Act. As a result, the State Government and Central
Government have made several additions to the Schedule and it differs from
State to State.
Wages [Section 2(h)]:
“Wages” means all remunerations capable of being expressed in terms
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 6
NOTES
“Only for Private Circulation”
of money, which would, if the terms of the contract of employment, express
of implied, were fulfilled, be payable to a person employed in respect of
his 9 Law of Wages and Principles of Wage Fixation
employment or of work done in such employment and includes house rent
allowance but does not include:
i. the value of:
a. any house accommodation, supply of light, water medical;
b. any other amenity or any service excluded by general or social
order of the appropriate Government;
ii. Contribution by the employer to any Pension Fund or Provides Fund
or under any scheme of social insurance;
iii. any travelling allowance or the value of any travelling concession;
iv. any sum paid to the person employed to defray special expenses
entailed on him by the nature of his employment;
Definition of “Wages”:
The term wages means payment made for the services of labour. Wage
is the return in cash or kind or partly in cash and partly in kind for the work
done by the employee.
Though Oxford Dictionary defines wage as ‘the amount paid
periodically, especially by day or week or month, for the time during which
workman or servant is at employer’s disposal.
But in the context of Indian legal situation Industrial Disputes Act
1947, Payment of Wages Act and Minimum Wages Act 1948, have enlarged
the conspectus of its meaning by defining it as-
All remuneration capable of being expressed in terms of money, which
would, if the term of employment, express or implied, were fulfilled, be
payable to a workman in respect of his employment or of work done in such
employment.”
Further these Acts clearly states about what is to be included and what
is to be excluded from the definition of “wages” respectively.
Types and kind of wage-[Section 3.1]:
Since 1948, several terms have been used with reference to the wages, viz,
a. Statutory minimum wage;
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 7
NOTES
“Only for Private Circulation”
b. The bare or basic minimum wage;
c. The minimum wage;
d. The fair wage;
e. The living wage; and
f. The need-based minimum wage.
The first term owes its origin to the provision of the Minimum Wages
Act 1948, the second has generally been used in industrial awards and
judicial dicta of the courts, the next three have been introduced in the report
of the Committee on Fair Wages and the last one emerged in the resolution
of the 15th Session of the Indian Labour Conference in July 1957.
In common parlance we mostly refer to the levels of wages defined by
the Committee on Fair Wages, i.e. the living wage, fair wage and the
minimum wage. In an expanding economy, the contents of these expressions
also expand and vary. These levels naturally, do not represent a static,
inflexible concept; they would vary and expand according to the economic
development and compulsions of social justice. It is, therefore, very difficult
to describe accurately, the content of the terms ‘living wage’, ‘fair wage’or
‘minimum wage’. These terms or their variants cannot and do not mean the
same thing in all countries, or even in different industries in the same
country. What may be a fair wage in a particular industry in one country
may be a living wage in the same industry in another country.
Similarly, what may be a fair wage in a given industry today may cease
to be fair and border on the minimum wage, in the future. In other words
these concepts would keep on changing with the circumstances, with the
growth, both of industries and of the economy, the living standards and
circumstances of the industries and the people.
(i) Minimum wage:
(a) Minimum wage in general:
The concept of minimum wage has recently undergone a progressive
change. It is no longer based upon the subsistence theory, according to
which minimum wage equals the cost of commodities necessary to feed and
clothe a worker and his family.
Hindustan Times Ltd. v. Their Workmen, 1962:
In this case Das Gupta J said, ‘at the bottom of the ladder is the
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 8
NOTES
“Only for Private Circulation”
minimum basic wage, which the employer of any industrial labour must
pay in order to be allowed to continue an industry’.
According to the Committee on Fair Wages, the minimum wage must
provide not merely for the sustenance of life, but for the preservation of the
efficiency of the worker. For this purpose, the minimum wage must also
accommodate some measure of education, medical requirements and
amenities.
The Committee had categorically stated that an industry which is
incapable of paying this minimum wage, has no right to exist and in cases
where the continued existence of such an industry is imperative, in the larger
interest of the country, it was the responsibility of the state to take steps to
enable that industry to pay at least the minimum wage. The Committee was
of the definite view that for fixing the minimum wage, no regard should be
paid to the capacity of the industry to pay and it should be based solely on
the requirements of the worker and his family.
In order to calculate the minimum wage, the Tripartite Committee of
the Indian Labour Conference, held in New Delhi in 1957, accepted the
following norms, and recommended that hey should guide all wage fixing
authorities, including Minimum Wage Committees, Wage Boards,
Adjudicators, etc.:
i. In calculating the minimum wage, the standard working class family
should be taken to consist of three consumption units for one earner,
Law of Wages and Principles of Wage Fixation 12 the earnings of
women; children and adolescents should be disregarded.
ii. Minimum food requirements should be calculated on the basis of a net
intake of calories, as recommended by Dr. Aykroyd for an average
Indian adult of moderate activity.
iii. Clothing requirement should be estimated as per consumption of 18
yards per annum which would give for the average worker’s family of
four, a total of 72 yards.
iv. In respect of housing, the norm should be minimum rent charged by
Government in any area for houses provided under the subsidized
Industrial Housing Scheme for low income groups.
v. Fuel, lighting and other ‘miscellaneous’ items of expenditure should
constitute 20 percent of the total minimum wage.
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 9
NOTES
“Only for Private Circulation”
vi. Children’s education, medical requirements, minimum recreation
including festivals/ ceremonies and provision for old age, marriage,
etc. should further constitute 25 percent of the total minimum wage.9
Express Newspapers Pvt. Ltd. v. UOI, 1985:
The standards of minimum wage as laid down by the committees, were
adopted by the Supreme Court also, in holding that the minimum wage must
provide not merely for the bare subsistence of life, but also for the
preservation of the efficiency of the worker and for this purpose, the
minimum wage must also provide for some measure of education, medical
requirements and amenities.
Workmen v. Reptakos Brett and Co. Ltd., 1991:
The Supreme Court finally settled the judicial policy hitherto expressed
in earlier decisions holding that the wage structure which approximately
answers the above six components is nothing more than a minimum wage
at subsistence level. The employees are entitled to the minimum wages at
all times and under all circumstances. An employer who cannot pay the
minimum wage has no right to engage labour and no justification to run the
industry.
(b) Statutory Minimum Wage:
The Statutory Minimum Wage owes its origin to the Minimum Wages
Act 1948, the historical background of which has been discussed earlier.
The statutory minimum wage is the minimum wage which is prescribed by
the relevant provisions of the Minimum Wages Act 1948. This applies to
the employments that are included in Parts 1 and 2 of the Schedule to the
Act.
The passing of Minimum Wages Act 1948 is a landmark in the history
of labour legislation in the country, which recognizes that the wages cannot
be left to be determined entirely by market forces. The main object of the
Act is to prevent ‘sweated’ labour, as well as to prevent the exploitation of
unorganized labour. It proceeds on the basis that it is the duty of the State
that, at least minimum wages are paid to the employees, irrespective of the
capacity of the industry or the unit, to pay the same.
The mandate of Art.43 of the Constitution is that the State should
endeavor to secure, by suitable legislation or economic organization or in
any other way, to all workers, agricultural, industrial or otherwise, work on
living wage, under conditions of work which ensure a decent standard of
life and full enjoyment of leisure and social and cultural opportunities. This
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 10
NOTES
“Only for Private Circulation”
fixing of a minimum wage is just a first step in that direction. In the course
of time, the State has to take many more steps to implement that mandate.13
Bijay Cotton Mills Ltd v. State of Ajmer, 1954:
In this case the Court dealing with a challenge to the constitutional
validity of the provisions of the Minimum Wages Act, relating to fixation
of minimum wages, on the grounds of repugnancy to Art19 (1) (g) observed
that, individual employers might find it difficult to carry on their business
on the basis of the minimum wage fixed under the Act, but this must be due
entirely to the economic conditions of these particular employers. That
cannot be a reason for striking down the law itself, as unreasonable.
14 Law of Wages and Principles of Wage Fixation Kamani Metals & Alloys
Ltd v. Their Workmen
Hidayatullah J remarked in this case that, “minimum wage which, in
any event, must be paid, irrespective of the extent of profits, the financial
condition of the establishment or the availability of workmen on lower
wages.” This minimum wage is independent of the kind of industry and
applies to all alike big or small. It sets the lowest limit below which wages
cannot be allowed to sink, in all humanity.
(c) Non Statutory Minimum Wage:
The minimum wage policy, as it has emerged in this country,
distinguishes between the organized industries and the sweated ones. The
Minimum Wage Act 1948 is an instrument which seeks to protect the
interest of the workers in the latter. In the organized sector, the concerned
authorities fix the wages considering the report of the Committee on Fair
Wages and the norms of the Tripartite Committee which is termed as non-
statutory minimum wage.
Ahmedabad Mill Owner’s Association v. Textile Labour Association,
1965:
The Supreme Court held that a basic minimum wage can be fixed by
an industrial tribunal when the statute has not fixed the minimum wage.
Section 3(2A) of the Minimum Wage Act 1948 does contemplate fixation
of minimum wage by industrial adjudication.
The basic concept on which the provisions of the Minimum Wages Act
are founded, is to prevent the sweating and exploitation of labour, through
payment of unduly low wages. It would, therefore, conceptually follow, that
just as in the case of scheduled industries, the employer in any establishment
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 11
NOTES
“Only for Private Circulation”
not covered by the schedule, also pay to his employees, a minimum wage,
because what applies to the establishments included in the schedule to the
Minimum Wages Act, must, on principles of social justice, apply with equal
force, to industrial establishments not covered in the schedule as well. In
such cases, considerations of social justice play a major
15 Law of Wages and Principles of Wage Fixation role in shaping the social,
economic and industrial policies of a welfare state. This aspect has to be
borne in mind by industrial adjudicators in fixing the level of wages.
Crown Aluminum Works v. Their Workmen, 1955:
The Court held that in fixing the bare minimum wages and subsistence
wages, industrial adjudicators will have to consider the position from the
point of view of the worker, the capacity of the employer to pay such a wage
would be irrelevant.
(ii) Fair wage:
It stands in between the minimum wage and living wage. Fair wage is
said to be step towards the progressive realization of a living wage. A fair
wage is settled above the minimum wage and goes through the process of
approximating towards a living wage. It depends upon the present economic
position as well as the future prospects of that industry.
In the words of Hidayatullah J, ‘a fair wage, lies between the minimum
wage which must be paid in any event and the living wage, which is the
goal’.
Bhagwati J described a ‘fair wage’ as a mean between the living wage
and the minimum wage.Marshall considers the rate of wages prevailing in
an occupation as ‘fair’if it is ‘about one level with the average payment for
tasks in other trades, which are of equal difficulty and disagreeableness,
which require equally rare natural abilities and an equally expensive
training’.
Prof. Pigouapply two degrees of fairness, in judging a wage rate, viz,
‘fair in the narrower sense’, and ‘fair in the wider sense’. A wage rate is
‘fair in the narrower sense’, when it is equal to the rate current for similar
workmen in the same trade and the neighbourhood, and ‘fair in the wider
sense’, when it
16 Law of Wages and Principles of Wage Fixation is equal to the
predominant rate for similar work throughout the country and in the
generality of trades.
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 12
NOTES
“Only for Private Circulation”
The lower limit of the fair wage must obviously the minimum wage;
the upper limit is set out by what may be called, the capacity of the industry
to pay. This will depend not only on the present economic position of the
industry but on its future prospects. Between these two limits the actual
wage will be fixed on a consideration of the following factors:-
a) The productivity of labour;
b) The prevailing rates of wages in the same industry for similar
occupations in the same neighbouring locality;
c) The level of national income and its distribution; and
d) The place of industry in the economy of the country.22
Novex Dry Cleaners v. Workmen, 1962:
The Court observed that it is now well settled principle that in fixing a
minimum wage, the capacity of the industry to pay is not relevant, but in
fixing a fair wage, the capacity of the industry to bear the burden of the said
wage is very relevant and important factor. Where wage structure is being
fixed with reference to those in other similar industries in the region, the
standing of the industries, strength of labour employed, extent of customers,
profits and loss must be taken into account. It is also necessary to assess
whether the employer would be able to meet the additional liability.
Express Newspaper (Pvt.) Ltd. and another v. Union of India and
others, 1985:
The Court held that unusual profit made by the industry for a single
year as a result of adventitious circumstances, or unusual loss incurred by
it for similar reasons, should not be allowed to play major role in the
calculations to the construction of wage structure. Another aspect of the
matter which cannot be ignored is that if a fair wage is construed by the
industrial adjudication, and in course of time if the employer cannot bear
the burden of such wage structure, industrial
17 Law of Wages and Principles of Wage Fixation adjudication can and in
a proper case, should revise the wage structure, though such revision may
result in the reduction of wages paid to the employees. The conflicting
claims of the labour and capital must be harmonized on a reasonable basis.
Crown Aluminium Works v. Their Workmen, 1957:
Gajendragadkar J said: It would not be correct to say that in no
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 13
NOTES
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NOTES
The Minimum Wages Act, 1948 14
Law of Wages And Principles of Wage Fixation
conceivable circumstances, can the wage structure be revised to the
prejudice of workmen. But he added further that, ‘theoretically, no wage
structure can or should be revised to the prejudice of workmen, if the
structure in question falls in the category of the bare subsistence or the
minimum wage’. In connection with the wage structure of a higher category,
the Court said that, ‘it would be open to the employer to claim revision,
even to the prejudice of the workmen, provided a case for such revision is
made out on merits, to the satisfaction of the tribunal’.
(iii) Living wage:
The term living wage has not been defined under the provisions of the
Minimum Wages Act. However, an instance of statutory definition of living
wage is provided in South Australian Act of 1912 which states the “living
wage” means a sum sufficient for the normal and reasonable needs of the
average employee living in a locality where the work under consideration
is done or is to be done.
Justice Higgins, the Australian Commonwealth Court of Arbitration,
while disposing Harvester case visualized a living wage as a sum which is
adequate to satisfy the normal needs of the average employee regarded as
human being in a civilized community.
Another definition of living wage is found in the Queensland Industrial
Conciliation and Arbitration Act which states that a basic (i.e. living) wage
paid to an adult male employee shall not be less than what is sufficient to
maintain a well conducted employee of average health, strength and
18 Law of Wages and Principles of Wage Fixation competence and his wife
and a family of three children in a fair and average standard of comfort,
having regard to the conditions of living prevailing among employees in
the calling in respect of which such wage is fixed, and provided that in
fixing such basic wage the earnings of the children or wife of such employee
shall not be taken into account. Living wage consists of amount of
necessaries, comforts and luxuries, the quantum of goods and services
which an individual considers necessary for decent existence.28
There are several definitions of ‘living wage’, attempted in the recent
past. The quintessence of all these definitions is that a living wage should
enable the male earner to provide for himself and his family, not merely the
bare essentials of food, clothing and shelter, but also a measure of frugal
comfort, including education for the children, protection against ill health,
requirement of essential social needs and a measure of insurance against
the more important misfortunes, including old age.
According to the Committee on Fair Wages, the living wage represents the
“Only for Private Circulation”
NOTES
The Minimum Wages Act, 1948 15
Law of Wages And Principles of Wage Fixation
higher level of wage and naturally, it would include all amenities which a
citizen living in a modern civilized society is entitled to, when the economy
of the country is sufficiently advanced and the employer is able to meet the
expanding aspirations of his workers.29
All India Reserve Bank Employees Assn. v. RBI, 1965:
In this case Hidayatullah J stated that ….our political aim is ‘living
wage’, though in actual practice, living wage has been an ideal which has
eluded our efforts like an ever-receding horizon and will so remain for some
time to come. Our general wage structure has at best, reached the lower
levels of fair wage, though some employers are paying much higher wages
than the general average.
Workmen v. Management of Reptakos Brett & Co. Ltd., 1991:
Kuldip Singh J stated that, a living wage has been promised to the workers
under the Constitution. A ‘socialist’ framework, to enable the working
people
19 Law of Wages and Principles of Wage Fixation a decent standard of life,
has further been promised by the 42nd Amendment. The workers are
hopefully looking forward to achieve the ideal. The promises are piling up
but the day of fulfillment is nowhere in sight. Industrial wage, looking as
whole, has not yet risen higher than the level of minimum wage.
Living wage at present is only a Directive Principle enshrined in the
Constitution which cannot be achieved at one stroke but only after a
continuous and progressive economic development.
(D) Wage determination:
(a) Fixing of minimum rates of wages-[(Section 3)]:
Under Section 3(1) of the Act, the appropriate Government has been
empowered to:
a. Fix the minimum rates of wages payable to employees employed in an
employment specified in Part I or Part II of the schedule.
b. Review and revise at such intervals not exceeding 5 years.
Provided that the appropriate government may, in respect of employees
employed in an employment specified in Part II, instead of fixing minimum
rates for the whole State, fix such rates for a part of the State or for any
specified class or classes.
“Only for Private Circulation”
Provided that where for any reason the appropriate government has not
reviewed the minimum rates of wages fixed by it, within any interval of 5
years, nothing contained in this clause shall prevent it from reviewing and
revising the minimum rates after the expiry of the said period of 5 year.
Until they are so revised, the minimum rates in force immediately before
the expiry of the said period of 5 years shall continue in force.
The appropriate government may refrain from fixing minimum rates
of wages in respect of scheduled employment in which there are in the
whole 20 Law of Wages and Principles of Wage Fixation State, less than
thousand employees are engaged in such employment. If the appropriate
government finds after inquiry that number of employees in any scheduled
employment has risen to 1000 or more, it shall fix minimum rates of wages
in such employment as soon as may be after such inquiry.
It has been provided under Section 3(2) of the Act that the appropriate
government may fix:
a) Time Work Rate –
A minimum rate of wages for time work.
b) Piece Work Rate –
A minimum rate of wages for piece work.
c) Guaranteed Time Rate –
A minimum rate of remuneration for such employees who are
employed on piece work but for the purpose of securing to such
employees a minimum rate of wages on a time work basis.
d) Overtime Rate –
A minimum rate (whether a time rate or a piece rate) to apply in
substitution for the minimum rate which would otherwise be payable, in
respect of overtime work done by employees.
Section 3(2A) of the Act puts a limitation on the powers of appropriate
government to fix or revise minimum rates of wages under certain
circumstances which are as follows:
Section 3(2A)
provides that during the pendency of any proceeding before the
Industrial Tribunal or National Tribunal or any other competent authority
relating to rates of wages, no order can be issued to fix or revise the
minimum rates of wages. It also provides that if an award is in operation
no such order fixing the minimum rates or revising the minimum rates can
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 16
NOTES
“Only for Private Circulation”
be issued.
21 Law of Wages and Principles of Wage Fixation Section 3(3) of the Act
further provides that in fixing or revising the minimum rates of wages under
this section:
(a) Different minimum rates of wages may be fixed for:
(i) Different scheduled employments;
(ii) Different classes of work in the same scheduled employment;
(iii) Adults, adolescents, children and apprentices;
(iv) Different localities
(b) Minimum rates of wages may be fixed by:
(i) The hour
(ii) The day
(iii) The month, or
(iv) Such other longer wage period as may be prescribed.
Where such rates are fixed by the day or by the month, the manner of
calculating wages for a month or for a day, as the case may be, may be
indicated.
Provided that where any wage periods have been fixed under section
4 of the Payment of Wagers Ac, 1936, minimum wages shall be fixed in
accordance therewith.32
M/s The Indure (P) Ltd. v. State of U.P. and others, 2011:
The Court held that when wages of workers are more than the
minimum rates of wages, as fixed and/or revised under the Minimum Wages
Act, no separate VDA (Variable Dearness Allowance) as declared by the
Authorities under Minimum Wages Act will be applicable since the total
pay package is more than the pay package under the said government order.
Jaydip Industries v. Workmen, 1971:
The Court held that the Tribunal is not bound by the fixation of
minimum wage rates by the government and can fix higher rates as
minimum wages in its award. Tribunal can take into account rates of
minimum wages fixed in other awards.
22 Law of Wages and Principles of Wage Fixation Chandra Bhawan
Boarding and Lodging, Bangalore v. State of Mysore, 1969:
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 17
NOTES
“Only for Private Circulation”
The Supreme Court observed that fixing of different rates of minimum
wages for different industries or in different localities by dividing State into
zones is not opposed to Section 3(3) of the Act but the government is not
allowed to fix or revise minimum rates of wages in an arbitrary manner.
(b) Minimum rate of wages-[(Section 4)]:
Section 4(1) of the Minimum Wages Act 1948 provides that any minimum
rates of wages fixed or revised by the appropriate Government in respect
of scheduled employments under Section 3 may consist of:
a. A basic rate of wages and a special allowance at a rate to be adjusted,
at such intervals and in such a manner as the appropriate government
may direct, or
b. A basic rate of wages with or without the cost of living allowance and
the cash value of the concessions in respect of supplies of essential
commodities at concession rates, where so authorized, or
c. An all-inclusive rate allowing for the basic rate, the cost of living
allowance and the cash value of the concessions, if any.
Section 4(2)
The cost of living allowance and the cash value of the concessions in
respect of supplies of essential commodities at concession rates shall be
computed by the competent authority at intervals and in accordance with
the directions issued by the appropriate government.
Karnataka Film Chamber of Commerce v. State of Karnataka, 1986:
The Court observed that Section 4 of the Act is a definite indication
that basic wage is an integral part of the minimum wage. The Minimum
Wages Act 1948 is a beneficial piece of social legislation which protects
the day to day living condition of the workmen employed at the lowest level
of wages in 23 Law of Wages and Principles of Wage Fixation sweated
labour. Though the minimum wages are fixed statutorily, it does not measure
up either to the fair wage or either to the living wage. Therefore the Court
cannot interfere with notifications issued under the Act unless the grounds
are substantial.
Jaswant Rai Beri and others v. State of Punjab, 1958:
The Court held that the Act makes no specific mention of the term
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 18
NOTES
“Only for Private Circulation”
dearness allowance (DA) but it is well known that it refers to an allowance
paid for rise of cost of living.
M. C. Mehta v. State of Tamil Nadu, 1996:
The Court expressed that the children doing the work of “sorting out
manufactured product and processing the same for packing” in a match
factory, should be given at least 60 percent of the prescribed minimum
wages for an adult, for the same job. But indicating the minimum wage does
not stand in the way of prescription of a higher rate if the State is satisfied
that a higher rate is viable.
(c) Procedure for fixing and revising minimum wages-[(Section 5)]:
In fixing minimum rates of wages in respect of any scheduled
employment for the first time or in revising minimum rates of wages, the
appropriate Government can follow either of the two methods described
below.
First Method [Section 5(1)(a)]:
This method is known as the ‘Committee Method’. The appropriate
Government may 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. After considering the advise of the
committee or committees, the appropriate Government shall, by notification
in the Official Gazette fix or revise the minimum rates of wages. The wage
rates shall come into force from such date as may be specified in the
notification. If no date is specified, wage rates Law of Wages and Principles
of Wage Fixation 24 shall come into force on the expiry of three months
from the date of the issue of the notification.
Note: It was held in Edward Mills Co. v. State of Ajmer (1955) A.I.R. SC,
that Committee appointed under Section 5 is only an advisory body and that
Government is not bound to accept its recommendations. As regards
composition of the Committee, Section 9 of the Act lays down that it shall
consist of persons to be nominated by the appropriate Government
representing employers and employee in the scheduled employment, who
shall be equal in number and independent persons not exceeding 1/3rd of
its total number of members. One of such independent persons shall be
appointed as the Chairman of the Committee by the appropriate
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 19
NOTES
“Only for Private Circulation”
Government.
Second Method [Section 5(1)(b)]:
The method is known as the ‘Notification Method’. When fixing
minimum wages under Section 5(1)(b), the appropriate Government shall
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 than 2 months from the date of notification, on which the proposals
will be taken into consideration. The representations received will be
considered by the appropriate Government. It will also consult the Advisory
Board constituted under Section 7 and thereafter fix or revise the minimum
rates of wages by notification in the Official Gazette. The new wage rates
shall come into force from such date as may be specified in the notification.
However, if no date is specified, the notification shall come into force
on expiry of three months from the date of its issue. Minimum wage rates
can be revised with retrospective effect. [1996 II LLJ 267 Kar.].
Section 5(2) –
After considering the advice of the committee or committees so
appointed or after considering all representations received before the date
specified in the 25 Law of Wages and Principles of Wage Fixation
Notification, the appropriate Government shall, by notification in the
Official Gazette, fix or revise the minimum rates of wages in respect of each
scheduled employment, and unless such Notification otherwise provides, it
shall come into force on the expiry of three months from the date of its
issue.
However in case of revision of minimum rates of wages under clause
1(b) mentioned above the appropriate government shall consult the
Advisory Board also.
Chandra Bhawan Boarding and Lodging v. State of Mysore, 1969:
The Advisory Board is constituted to co-ordinate the work of the
committees and sub-committees and to advise the Government generally
in the matter of fixing and revising the minimum rates. However, in the
initial fixation of minimum wages, consultation with the Advisory Board
is not compulsory.
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 20
NOTES
“Only for Private Circulation”
Jaswant Rai Beri v. State of Punjab
The committee appointed under section 5 is only an advisory body and the
government is not bound to accept any of its recommendations.
(d) Advisory board-[(Section 7)]:
The appropriate government shall appoint an Advisory Board for the
purpose of coordinating the work of committees and sub-committees
appointed under section 5 and advising the appropriate government
generally in the matter of fixing and revising minimum rates of wages.
(e) Composition of committees and advisory boards-[(Section 9)]:
Each of the committees, sub-committees and Advisory Board shall
consist of persons to be nominated by the appropriate governments
representing employers and employees in the scheduled employments,
who shall be equal in number and independent persons not exceeding
1/3 of its total number of members, one of such independent persons
shall be appointed as Chairman by the appropriate government.
N. K. Jain v. Labour Commissioner Rajasthan, 1956:
Compliance in procedure must be real and not for the name sake. The
constitution of a committee by the State Government consisting of six of
its officers, with no representation of either employers or of the employees
in the scheduled employment and the notification issued for fixing
minimum wages on the advice of the said committee, was held to be having
no force and effect as in reality there was no committee.
(f) Central advisory board-[(Section 8)]:
The Central Advisory Board is constituted by the Central Government
under section 8 of the Act for the following purposes:
a) To advise the Central and State Governments in the matter of fixation
and revision of minimum rates of wages;
b) To advise on any matters within the scope of this Act and
c) To co-ordinate the work of the Advisory Boards.
Composition of committees etc.-[Section 9]:
The Central Advisory Board shall consist of persons to be nominated
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 21
NOTES
“Only for Private Circulation”
by the Central Government representing employers and employees in the
scheduled employments, who shall be equal in number and independent
persons not exceeding 1/3 of its total number of members, one of such
independent persons shall be appointed the Chairman of the Board by the
Central Government.
K. T. Appanah v. State of Mysore, Section 9 does not require that there
should be on those Boards, representatives of employers and employees in
each of the many employments which were in the schedule or were
subsequently added to it, to insist that it should be so, would be to make the
Advisory Board unmanageable and unwieldy and to make its composition
impracticable.
Eastern Bihar Chamber of Commerce and Industries v. State of Bihar,
1988:
Nomination of representatives from each category of employers is not
necessary.
Ministry of Labour and Rehabilitation v. TiffinsBarytes Asbestos and
Paints Ltd., 1985:
‘Independent persons’ are persons who belong neither to the category of
employers nor to that of employees.
Correction of errors-[Section 10]:
1. The appropriate government may at any time by notification in the
Official Gazette correct clerical or arithmetical mistakes in any order fixing
or revising minimum rates of wages under this Act or errors arising therein
from any accidental slip or omission.
2. Every such notification shall as soon as may be after it is issued be
placed before the Advisory Board for information
Minimum wage – whether to be paid in cash or kind-[Section 11]:
Section 11 of the Act provides that minimum wages payable under the
Act shall be paid in cash. But where it has been the custom to pay wages
wholly or partly in kind, the appropriate Government, on being satisfied,
may approve and authorize such payments. Such Government can also
authorize for supply of essential commodities at concessional rates. Where
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 22
NOTES
“Only for Private Circulation”
payment is to be made in kind, the cash value of the wages in kind or in the
shape of essential commodities on concessions shall be estimated in the
prescribed manner.
Payment of minimum wages is obligatory on employer-[Section 12]:
Payment of less than the minimum rates of wages notified by the
appropriate Government is an offence. Section 12 clearly lays down that
the employer shall pay to every employee engaged in a scheduled
employment under him such wages at a rate not less than the minimum rate
of wages 28 Law of Wages and Principles of Wage Fixation fixed by the
appropriate Government under Section 5 for that class of employment
without deduction except as may be authorized, within such time and
subject to such conditions, as may be prescribed.
Fixing hours for a normal working day-[Section 13]:
Fixing of minimum rates of wages without reference to working hours may
not achieve the purpose for which wages are fixed. Thus, by virtue of
Section 13 the appropriate Government may –
a) fix the number of work which shall constitute a normal working day,
inclusive of one or more specified intervals;
b) provide for a day of rest in every period of seven days which shall be
allowed to all employees or to any specified class of employees and
for the payment of remuneration in respect of such day of rest;
c) provide for payment of work on a day of rest at a rate not less than the
overtime rate.
The above stated provision shall apply to following classes of employees
only to such extent and subject to such conditions as may be prescribed:
a) Employees engaged on urgent work, or in any emergency, which could
not have been foreseen or prevented;
b) Employees engaged in work in the nature of preparatory or
complementary work which must necessarily be carried on outside the
limits laid down for the general working in the employment concerned;
c) Employees whose employment is essentially intermittent;
d) Employees engaged in any work which for technical reasons, has to
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 23
NOTES
“Only for Private Circulation”
be completed before the duty is over; e) Employees engaged in any
work which could not be carried on except at times dependent on the
irregular action of natural forces.
For the purpose of clause (c) employment of an employee is essentially
intermittent when it is declared to be so by the appropriate Government on
29 Law of Wages and Principles of Wage Fixation ground that the daily
hours of the employee, or if these be no daily hours of duty as such for the
employee, the hours of duty, normally includes period of inaction during
which the employee may be on duty but is not called upon to display either
physical activity or sustained attention. There is correlation between
minimum rates of wages and hours of work. Minimum wages are to be fixed
on basis of standard normal working hours, namely 48 hours a week;
BenodeBihari Shah v. State of W.B. 1976 Lab I.C. 523 (Cal).
Payment of overtime-[Section 14]:
Section 14 provides that when an employee, whose minimum rate of
wages is fixed under this Act by the hours, the day or by such longer wage
period as may be prescribed, works on any day in excess of the number of
hours constituting a normal working day, the employer shall pay him for
every hour or part of an hour so worked in excess at the overtime rate fixed
under this Act or under any other law of the appropriate Government for
the time being in force whichever is higher. Payment for overtime work can
be claimed only by the employees who are getting minimum rate of wages
under the Act and not by those getting better wages. (1998 LLJ I SC 815).
Wages of a worker who works less than normal working day-[Section
15]:
Where the rate of wages has been fixed under the Act by the day for
an employee and if he works on any day on which he employed for a period
less than the requisite number of hours constituting a normal working day,
he shall be entitled to receive wages for that day as if he had worked for a
full working day.
Provided that he shall not receive wages for full normal working day –
i. if his failure to work is caused by his unwillingness to work and not
by omission of the employer toprovide him with work, and
ii. such other cases and circumstances as may be prescribed.
Wages for two or more classes of work-[Section 16]:
Where an employee does two or more classes of work to each of which
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 24
NOTES
“Only for Private Circulation”
a different minimum rate of wages is applicable the employer shall pay to
such employee in respect of the time respectively occupied in each such
class of work wages at not less than the minimum rate in force in respect of
each such class.
Minimum time – rate wages for piece work-[Section 17]:
Where an employee is engaged in work on piece work for which
minimum time rate and not a minimum piece rate has been fixed, wages
shall be paid in terms of Section 17 of the Act at minimum time rate.
Maintenance of registers and records-[Section 18]:
Apart from the payment of the minimum wages, the employer is required
under Section 18 to maintain registers and records giving such particulars
of employees under his employment, the work performed by them, the
receipts given by them and such other particulars as may be prescribed.
Every employee is required also to exhibit notices, in the prescribed from
containing particulars in the place of work. He is also required to maintain
wage books or wage-slips as may be prescribed by the appropriate
Government and the entries made therein will have to be authenticated by
the employer or his agent in the manner prescribed by the appropriate
Government.
Inspector
Appointment and power of Inspector-[Section 19]:
TheAppropriate Government can appoint by notification in the Official
Gazette an Inspectorfor the purpose of this Act (section 19), and define the
local limits within which the Inspector shall exercise their function. The
power and function of the Inspectors appointed under this act are very much
similar to those of the Inspectors appointed under The Payment of wages
Act, 1936.
Power and Function of Inspector:
The inspector can within his local limit-
a) enter at all reasonable hours, with such assistant ( if any ) or any local
or other public authority ,as think fit any premises or place of premises
where employees are employed or for the purpose of examining any
register, record of wages or notices required to be kept;
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 25
NOTES
“Only for Private Circulation”
b) examine any person he find in such premises or depending on any
reasonable causes believe is an employee or an employee who given
out his work from therein;
c) require any person giving out work or any out-workers to give any
information, which in his power to give with respect to the names and
addresses of the persons from or to whom the work is given out or
received and with respect to the payment to be made for the work.
d) seize or takes copies of the register, record of wages or notices in
respect of any offence under the Act.
e) exercise such other powers as may be prescribed. Within the meaning
of section 175 and 176 under Indian Penal Code, any document or
information given by the inspector shall be deemed to be legally bound.
The inspector shall be deemed to be a public servant within the
meaning of Indian Penal Code. The employee can claims for minimum
wages (under section 20):
1. The Appropriate Government may by notification in the Official
Gazette, appoint
a) any Commissioner for Workmen’s Compensation, or
b) any officer of the Central Government exercising functions as a
Labour Commissioner for any region,
c) any officer of the State Government not below the rank of the
Labour Commissioner or, any other officer.Such person should
have an experience as a judge of a Civil Court or as a stipendiary
Magistrate to hear or decide any claims arising out of the payment
of less than the minimum rates of wages.
2. Again for any claims of the employees under section 3, the employees
himself or any legal practitioner or any official of a registered trade
union or inspector can apply to such Authority and the application shall
present to them within six month from the date on which the minimum
wages became payable.
3. After the necessary enquiry, the Authority shall hear the applicant and
the employer and give them opportunity of being heard. If the wages
is paid of less than the minimum rates of wages, than the Authority
may asked to the employer to pay exceed the actual amount which has
to pay in addition with compensation not exceeding ten times the
amount of such excess for such act. In any other case, if the payment
become due than the employee will get together with the payment of
such compensation as the Authority may think fit not exceeding ten
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 26
NOTES
“Only for Private Circulation”
rupees.
4. If under this section the Authority hearing any claim and found that it
was either malicious or vexatious, it may direct penalty not exceeding
fifty rupees to the employer by the person presenting the application.
5. Under this section if any amount is directed to be paid than as if it were
a fine imposed by the Authority as a Magistrate or if he is not
Magistrate than to such person whom the Authority makes application
in this behalf as if were a fine imposed by such Magistrate.
6. Every direction is final under this section.
7. Every Authority appointed shall have all powers of a Civil Court under
the Code of Civil Procedure, 1908.
33 Law of Wages and Principles of Wage Fixation
Authority And Claims
[Section 20-21]:
Under Section 20(1) of the Act, the appropriate Government, may
appoint any of the following as an authority to hear and decide for any
specified area any claims arising out of payment of less than the minimum
rate of wages or in respect of the payment of remuneration for the days of
rest or of wages at the rate of overtime work:
a) any Commissioner for Workmen’s Compensation; or
b) any officer of the Central Government exercising functions as Labour
Commissioner for any region; or
c) any officer of the State Government not below the rank of Labour
Commissioner; or
d) any other officer with experience as a Judge of a Civil Court or as the
Stipendiary Magistrate.
The authority so appointed shall have jurisdiction to hear and decide
claim arising out of payment of less than the minimum rates of wages or in
respect of the payment remuneration for days of rest or for work done on
such days or for payment of overtime.
The provisions of Section 20(1) are attracted only if there exists a
disputed between the employer and the employee as to the rates of wages.
Where no such dispute exists between the employer and
employees and the only question is whether a particular payment at the
agreed rate in respect of minimum wages, overtime or work on off days is
due to an employee or not, the appropriate remedy is provided by the
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 27
NOTES
“Only for Private Circulation”
Payment of Wages Act, 1936.
Claims-[Section 20]:
1. The appropriate Government may, by notification in the Official
Gazette, appoint 1[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
Government not below the rank of Labour Commissioner or any] other
officer with experience as a judge of a Civil Court or as a stipendiary
Magistrate to be the Authority to hear and decide for any specified area
all claims arising out of the payment of less than the minimum rates of
wages 2[or in respect of the payment of remuneration for days of rest
for work done on such days under clause (b) or clause (c) of sub-section
(1) of section 13 or of wages at the overtime rate under section 14,] to
employees employed or paid in that area.
2. Where an employee has any claim of the nature referred to in
subsection (1)], the employee himself, or any legal practitioner or any
official of a registered trade union authorised in writing to act on his
behalf, or any Inspector, or any person acting with the permission of
the Authority appointed under sub-section (1), may apply to such
Authority for a direction under subsection (3):
Provided that every such application shall be presented within six
months from the date on which the minimum wages 4[or other
amounts] became payable:
Provided further that any application 5[may be admitted after the said
period of six months when the applicant satisfies the Authority that he
had sufficient cause for not making the application within such period.
3. When any application under sub-section (2) is entertained theAuthority
shall hear the applicant and the employer, or give them an opportunity
of being heard, and after such further inquiry, if any, as it may consider
necessary, may, without prejudice to any other penalty to which the
employer may be liable under this Act, direct-
i. . in the case of a claim arising out of payment of less than the
minimum rates of wages, the payment to the employee of the
amount by which the minimum wages payable to him exceed the
amount actually paid, together with the payment of such
compensation as the Authority may think fit, not exceeding ten
times the amount of such excess;
ii. in any other case, the payment of the amount due to the employee
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 28
NOTES
“Only for Private Circulation”
together with the payment of such compensation as the Authority
may think fit, not exceeding ten rupees; and the Authority may
direct payment of such compensation in cases where the excess
or the amount due is paid by the employer to the employee before
the disposal of the application.
4. If the authority hearing any application under this section is satisfied
that it was either malicious or vexatious, it may direct that a penalty
not exceeding fifty rupees be paid to the employer by the person
presenting the application
a. Any amount directed to be paid under this section may be
recovered-if the Authority is a Magistrate, by the Authority as if
it were a fine imposed by the Authority as a Magistrate,
b. if the Authority is not a Magistrate, by any Magistrate, to whom
the Authority makes application in this behalf, as if it were a fine
imposed by such Magistrate.
5. Every direction of the Authority under this section shall be final.
6. Every Authority appointed under sub-section (1) shall have all the
powers of a Civil Court under the Code of Civil Procedure, 1908 (5 of
1908), for the purpose of taking evidence and of enforcing the
attendance of witnesses and compelling the production of documents,
and every such Authority shall be deemed to be a Civil Court for all
the purposes of section 195 and Chapter XXXV of the Code of
Criminal Procedure, 1898 (5 of 1898).
Single application in respect of a number of employees-[Section 21]:
1. [Subject to such rules as may be prescribed, a single application] may
be presented under section 20 on behalf or in respect of any number of
employees employed in the scheduled employment in respect of which
minimum rates of wages have been fixed and in such cases the
maximum compensation which may be awarded under sub-section (3)
of section 20 shall not exceed ten times the aggregate amount of such
excess, 2[or ten rupees per head as the case may be].
2. The Authority may deal with any number of separate pending
applications presented under section 20 in respect of employees in the
scheduled employments in respect of which minimum rates of wages
have been fixed, as a single application presented under sub-section
(1) of this section and the provisions of that sub-section shall apply
accordingly.
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 29
NOTES
“Only for Private Circulation”
Penalties for certain offences-[Section 22]:
Any employer who
a. Pays to any employee less than the minimum rates of wages fixed for
that employee's class of work, or less than the amount due to him under the
provisions of this Act or
b. Contravenes any rule or order made under section 13 shall be
punishable with imprisonment for a term which may extend to six months
or with fine which may extend to five hundred rupees or with both: Provided
that in imposing any fine for an offence under this section the Court shall
take into consideration the amount of any compensation already awarded
against the accused in any proceedings taken under section 20
.
General provision for punishment of other offences-[Section 22A]:
Any employer who contravenes any provision of this Act or of any rule
or of order made thereunder shall if no other penalty is provided for such
contravention by this Act, be punishable with fine which may extend to five
hundred rupees.
Cognizance of Offences-[Section 22B]:
1. No Court shall take cognizance of a complaint against any person for
an offence-
a. under clause (a) of section 22 unless an application in respect of
the facts constituting such offence has been presented under
section 20 and has been granted wholly or in part, and the
appropriate Government or an officer authorised by it in this
behalf has sanctioned the making of the complaint;
b. under clause (b) of section 22 or under section 22-A, except on a
complaint made by, or with the sanction of, an Inspector.
2. No Court shall take cognizance of an offence –
a. under clause (a) or clause (b) of section 22, unless complaint
thereof is made within one month of the grant of sanction under
this section;
b. under section 22-A, unless the complaint thereof is made within
six months of the date on which the offence is alleged to have been
committed.
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 30
NOTES
“Only for Private Circulation”
Offences by companies-[Section 22C]:
1. If the person committing any offence under this Act is a company,
every person who at the time the offence was committed was in charge
of, and was responsible, to the company for the conduct of the business
of the company as well as the company shall be deemed to
Law of Wages and Principles of Wage Fixation 38 be guilty of the
offence and shall be liable to be proceeded against and punished
accordingly;
Provided that nothing contained in this sub-section shall render any
such person liable to any punishment provided in this Act if he proves
that the offence was committed without his knowledge or that he
exercised all due diligence to prevent the commission of such offence.
2. . Notwithstanding anything contained in sub-section (1), where any
offence under this Act has been committed by a company and it is
proved that the offence has been committed with the consent or
connivance of, or is attributable to any neglect on the part of any
director, manager, secretary or other officer of the company, such
director, manager, secretary or other officer of the company shall also
be deemed to be guilty of that offence and shall be liable to be
proceeded against and punished accordingly.
Explanation -For the purposes of this section-
a. “Company” means anybody corporate and includes a firm or other
association of individuals, and
b. “Director” in relation to a firm means a partner in the firm.
Payment of undisbursed amounts due to employees-[Section 22D]:
All amounts payable by an employer to an employee as the amount of
minimum wages of the employee under this Act or otherwise due to the
employee under this Act or any rule or order made thereunder shall, if such
amounts could not or cannot be paid to the employee on account of his death
before payment or on account of his whereabouts not being known, be
deposited with the prescribed authority who shall deal with the money so
deposited in such manner as may be prescribed.
39 Law of Wages and Principles of Wage Fixation
Protection against attachment of assets of employer with Government-
[Section 22E]:
Any amount deposited with the appropriate Government by an
employer to secure the due performance of a contract with that Government
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 31
NOTES
“Only for Private Circulation”
and any other amount due to such employer from that Government in
respect of such contract shall not be liable to attachment under any decree
or order of any Court in respect of any debt or liability incurred by the
employer other than any debt or liability incurred by the employer towards
any employee employed in connection with the contract aforesaid.
Application of Payment of WagesAct, 1936, to scheduled employments-
[Section 22 F]:
1. Notwithstanding anything contained in the Payment of Wages Act,
1936 (4 of 1936), the appropriate Government may, by notification, in
the Official Gazette, direct that, subject to the provisions of sub-section
(2), all or any of the provisions of the said Act shall with such
notifications, if any, as may be specified in the notification, apply to
wages payable to employees in such scheduled employment as may be
specified in the notification.
2. Where all or any of the provisions of the said Act are applied to wages
payable to employees in any scheduled employment under sub-section
(1), the Inspector appointed under this Act shall be deemed to be the
Inspector for the purpose of enforcement of the provisions so applied
within the local limits of his jurisdiction.
Exemption of employer from liability in certain cases-[Section 23]:
Where an employer is charged with an offence against this Act, he shall
be entitled, upon complaint duly made by him, to have any other person
whom he charges as the actual offender, brought before the Court at the
time appointed for hearing the charge; and if, after the commission of the
offence has been proved, the employer proves to the satisfaction of the
Court-
a. that he has used due diligence to enforce the execution of this act, and
b. that the said other person committed the offence in question without
his knowledge, consent or connivance, that other person shall be convicted
of the offence and shall be liable to the like punishment as if he were the
employer and the employer shall be discharged:
Provided that in seeking to prove, as aforesaid, the employer may be
examined on oath, and the evidence of the employer or his witness, if any,
shall be subject to cross examination by or on behalf of the person whom
the employer charges as the actual offender and by the prosecution.
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 32
NOTES
“Only for Private Circulation”
Bar of suits-[Section 24]:
No Court shall entertain any suit for the recovery of wages in so far as
the sum so claimed-
a. forms the subject of an application under section 20 which has been
presented by or on behalf of the plaintiff, or
b. has formed the subject of a direction under that section in favour of
the plaintiff, or
c. has been adjudged in any proceeding under that section not to be due
to the plaintiff, or
d. could have been recovered by an application under that section.
Contracting out-[Section 25]:
Any contract or agreement, whether made before or after the
commencement of this Act, whereby an employee either relinquishes or
The Minimum Wages Act, 1948 Sec. 26 reduces his right to a minimum
rate of wages or any privilege or concession accruing to him under this Act
shall be null and void in so far as it purports to reduce the minimum rate of
wages fixed under this Act.
Exemptions and Exceptions-[Section 26]:
1. The appropriate Government may, subject to such conditions if any as
it may think fit to impose, direct that the provisions of this Act shall
not apply in relation to the wages payable to disabled employees.
2. The appropriate Government may, if for special reasons it thinks so fit,
by notification in the Official Gazette, direct that [subject to such
conditions and] for such period as it may specify the provisions of this
Act or any of them shall not apply to all or any class of employees
employed in any scheduled employment or to any locality where there
is carried on a scheduled employment.
[(2-A) The appropriate Government may, if it is of opinion that, having
regard to the terms and conditions of service applicable to any class of
employees in a scheduled employment generally or in a scheduled
employment in a local area [or to any establishment or a part of any
establishment in a scheduled employment] it is not necessary to fix
minimum wages in respect of such employees of that class [or in
respect of employees in such establishment or part of any
establishment] as are in receipt of wages exceeding such limit as may
be prescribed in this behalf, direct by notification in the Official Gazette
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 33
NOTES
“Only for Private Circulation”
and subject to such conditions, if any, as it may think fit to impose, that
the provisions of this Act or any of them shall not apply in relation to
such employees;
3. Nothing in this Act shall apply, to the wages payable by an employer
to a member of his family who is living with him and is dependent on
him.
Explanation -In this sub-section a member of the employer's family shall
be deemed to include his or her spouse or child or parent or brother or sister
Power of the appropriate Government to add to Schedule:
Power of State Government to add to Schedule-[Section-27]:
Provides that the appropriate Government may, by notification in the
Official Gazette, add to either part of the schedule any employment in
respect of which it is of opinion that minimum rate of wages should be fixed
– under this Act. But before doing so the Government concerned shall give
three months’ notice by an Official Gazette notification of its intention to
do so. After notice and subsequent addition any employment in the
schedule, the Schedule shall deemed to be amended accordingly in respect
of that state.
Power of Central Government to give directions-[Section 28]:
Central Government may give directions to a State Government as to
the carrying into execution of this Act in the State.
Power Of The Central Government To Make Rules-[Section 29]:
Section 29 provides that Central Government may by notification in the
Official Gazette make rules for carrying out the purpose of this Act in
respect of the following:
a. Prescribe the term of office of the members.
b. The procedure to be followed in conduct of business.
c. The method of voting.
d. The manner of filling up casual vacancies in the membership of the
Central advisory Board and
e. The quorum necessary for a transaction of business of the Central
Advisory Board.
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 34
NOTES
“Only for Private Circulation”
Power of the appropriate Government to make rules-[Section 30]:
The appropriate Government may, subject to the condition of ‘the previous
publication’, by notification in the Official Gazette, make rules for carrying
out the purpose of this Act. [Section 30(1)]. Section 30(2) confers special
powers for making rules for carrying out the purpose of this Act. Such rules
may –
a) prescribe the term of office of the members, the procedure to be
followed in the conduct of business, the method of voting, the manner
of filling up casual vacancies in membership and the quorum necessary
for the transaction of business of the committees, sub-committees, and
the Advisory Board.
b) prescribe the method of summoning witness, production of document
relevant to the subject-matter of the enquiry before the committees,
sub-committees, and the Advisory Board;
c) prescribe the mode of computation of the cash value of wages in kind
and of concessions in respect of supplies of essential commodities at
concessional rates;
d) prescribe the time and conditions of payment of, and the deduction
permissible from wages;
e) provide for giving adequate publicity to the minimum rate of wages
fixed under the Act,
f) provide for a day of rest in every period of seven days and for the
payment of remuneration in respect of such day;
g) prescribe the number of hours of work which shall constitute a normal
working day;
h) prescribe the cases and circumstances in which an employee employed
for a period of less than the requisite number of hours constituting a
normal working day shall not be entitled to receive wages for a full
normal working day;
i) prescribe the form of registers and records to be maintained and the
particulars to be entered in such registers and records;
j) provide for the issued of wage books and wage slips and prescribe the
manner of making and authenticating entries in wage books and wage
slips;
k) prescribe the powers of Inspectors for purpose of this Act; l) regulate
the scale of costs that may be allowed in proceedings under section 20;
m) prescribe the amount of court fees payable in respect of proceedings
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 35
NOTES
“Only for Private Circulation”
under section 20, and
n) Provide for any other matter which is to be or may be prescribed.
Rules made by Central Government to be laid before Parliament-
[Section 30A]:
Every rule made by the Central Government under this Act shall be laid as
soon as may be after it is made before each House of Parliament while it is
in session for a total period of thirty days which may be comprised in one
session or two successive sessions and if before the expiry of the session in
which it is so laid or the session immediately following both Houses agree
in making any modification in the rule or both Houses agree that the rule
should not be made the rule shall thereafter have effect only in such
modified form or be of no effect as the case may be so however that any
such modification or annulment shall be without prejudice to the validity
of anything previously done under that rule.
Validation of fixation of certain minimum rates of wages-[Section 31]:
Where during the period –
a. commencing on the 1st day of April 1952 and ending with the date of
the commencement of the Minimum Wages (Amendment) Act 1954
(26 of 1954); or
b. commencing on the 31st day of December 1954 and ending with the
date of the commencement of the Minimum Wages (Amendment) Act
1957 (30 of 1957); or
c. commencing on the 31st day of December 1959 and ending with the
date of the commencement of the Minimum Wages (Amendment) Act
1961 (31 of 1961) minimum rate of wages have been fixed by an
appropriate government as being payable to employees employed in
any employment specified in the Schedule in the belief or purported
belief that such rates were being fixed under clause (a) of sub-section
(1) of section 3 as in force immediately before the commencement of
the Minimum Wages (Amendment) Act 1954 (26 of 1954) or the
Minimum Wages (Amendment) Act 1957 (30 of 1957) or the
Minimum Wages (Amendment) Act 1961 (31 of 1961) as the case may
be suchLaw of Wages and Principles of Wage Fixation 45rates shall
be deemed to have been fixed in accordance with law and shall not be
called in question in any court on the ground merely that the relevant
date specified for the purpose in that clause had expired at the time the
rates were fixed :
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 36
NOTES
“Only for Private Circulation”
Provided that nothing contained in this section shall extend or be construed
to extend to affect any person with any punishment or penalty whatsoever
by reason of the payment by him by way of wages to any of his employees
during any period specified in this section of an amount which is less than
the minimum rates of wages referred to in this section or by reason of non-
compliance during the period aforesaid with any order or the rule issued
under section 13.
Compliances under the Act:
The establishment must ensure following compliances under the Act. These
compliances are not exhaustive but illustrative.
1. The Establishment is covered by the definition “Scheduled
Employment” with effect from…….
2. The Government revised the minimum wages once/twice/ thrice during
the financial year under reference and the Establishment has paid to
all its employees minimum wages in accordance with the rates at
respective point of time and at the respective rates specified in
notification under Section 5 of the MWA.
3. The Establishment has issued wage slips to all its employees in respect
of each of the wage period………..
4. Where the services of any employee were terminated for any reason
whatsoever, the wages were paid within two working days from the
date of such termination.
5. The Establishment did not make any unauthorized deduction from the
wages of any of its employees. Further, the deductions if any, made
were within the limits of fifty percent (or seventy five percent in case
of cooperatives) of wages earned by such employees during the period
under reference.
6. Where the Establishment was constrained to impose any fine or deduct
wages on account of damages caused by any employee, the latter was
given an opportunity of being heard in the presence of a neutral person
and was also communicated the amount of fine imposed or deduction
made from the wages.
7. The Establishment has eight working hours per day, inclusive of half
an hour of interval.
8. All claims under Section 20 of the MWA were paid within the time
limit specified in the Order.
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 37
NOTES
“Only for Private Circulation”
CONCLUSION:
Wage fixation is a social welfare programme. With the advent of the
doctrine of a welfare state, which is based on notions of progressive social
philosophy the theory of demand and supply which were allowed free scope
under the doctrine of laissez faire, have become obsolete in construing the
wage structure. The conception of minimum wages is based on the
principles of equity and social justice. Its underlying idea is that "he who
works is entitled to a fair remuneration which may enable him to live a life
consistent with human dignity".
Employers are, therefore, under an obligation, (economic or social), to
provide their employees safe, healthy and comfortable living, employment
and working conditions. It is only whenthey 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 recognized its duty to undertake legislation
to protect workers from being exploited
The various advantages of the minimum wage fixation can be summarized
as follows:
a) It increases the standard of living for the poorest and most vulnerable
class in society.
b) Motivates and encourages employees to work harder.
47 Law of Wages and Principles of Wage Fixation
c) It stimulates consumption, by putting more money in the hands of low-
income people, who spend their entire paychecks. d) It decreases the
cost of government social welfare programs by increasing incomes for
the lowest-paid. e) Encourages people to join the workforce rather than
pursuing money through illegal means, e.g., selling drugs.
The minimum wage fixation has played a significant role in getting at least
minimum wages to workers. Let us hope we will reach living wages in short
time which has been guaranteed by Article 43 of the Constitution.
CASE LAWS:
1. President Cinema Workers Union Affiliated to
BharatiyaMazdoorSangh vs. The Secretary Social Welfare and Labor
Department, 2005 LLR 648 (Karn He)
It was held that inaction on the part of the Government in not revising
minimum wages for 13 years will not be justified hence revision be
made within 6 months.
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 38
NOTES
“Only for Private Circulation”
2. Executive Engineer, Rural Works Division, Mayurbhanj vs. Addl.
District Magistrate, Mayurbhanj, 2005 LLR 121 (Ori HC),
It was held that, under the Minimum Wages Act, it is the liability of
principal employer to pay difference of wages to the employees of the
contractor.
3. Agricultural Produce Market Committee vs. Weighmens Association,
Tiptur, 2007 LLR (SN) 333 (Kam He).
It was held that in the absence of relationship of master and servant,
the weigh men will not be entitled to minimum wages.
4. Birla Institute of Technology vs. State of Bihar, 2007 LLR (SN) 330,
It was held that Birla Institute of Technology will be liable to pay the
wages as per The Minimum Wages Act, 1948.
5. Delhi Council for Child Welfare v. Sheela Devi, 2006 LLR 1181 (Del
He),
It was held that A Society is liable to pay minimum wages to its
employees.
6. Sonu vs. Municipal Corporation of Delhi, 2005 LLR 778 (Del He),
It was held that Minimum wages to the safaikaramcharis cannot be
denied on the ground that they work on part-time basis.
7. Security Chamber Pvt. Ltd. vs. Mysore KirloskJIr Ltd., (2006) ( (SC),
It was held that private security guards through contractor will not be
entitled to minimum wages in the absence of scheduled employment.
Lesson round up:
– The Minimum Wages Act empowers the Government to fix minimum
wages for employees working in specified employments. It provides
for review and revision of minimum wages already fixed after suitable
intervals not exceeding five years.
– It extends to the whole of India and applies to scheduled employments
in respect of which minimum rates of wages have been fixed under this
Act. – The appropriate government shall fix the minimum rates of
wages payable to employees employed in a scheduled employment.
– It may review at such intervals not exceeding five years the minimum
rates of wages so fixed, and revise the minimum rates if necessary.
– The employer shall pay to every employee in a scheduled employment
under him wages at the rate not less than the minimum rates of wages
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 39
NOTES
“Only for Private Circulation”
fixed under the Act.
– The Act also provides for regulation or working hours, overtime,
weekly holidays and overtime wages. Period and payment of wages,
and deductions from wages are also regulated.
– The Act provides for appointment the authorities to hear and decide all
claims arising out of payment less than the minimum rates of wages or
any other monetary payments due under the Act. The presiding officers
of the Labour court and Deputy Labour Commissioners are the
authorities appointed.
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 40
NOTES
“Only for Private Circulation”
Questions
1. Discuss the object and scope of the Minimum Wages Act.
2. Who is authorize to fix minimum wages and in what manner?
3. What points should be taken into consideration while fixing minimum
wages?
4. Discuss claims under The Minimum Wages Act, 1948?
5. Enumerate the procedure for fixing and revising the minimum wages.
6. What registers and records are required to be maintained under The
Minimum Wages Act, 1948?
7. Write a note on:
a. Living wages
b. Fixation of minimum rates of wages
c. Wages
Law of Wages And Principles of Wage Fixation
The Minimum Wages Act, 1948 41
NOTES
“Only for Private Circulation”
SYNOPSIS
1. Introduction
2. Objectives of the Act
3. Responsibility for payment of wages.
4. Authorised deductions of wages and delay in payment.
5. Offences, their trial procedure and penalties.
6. Enforcement machinery under the Act- their powers and
functions.
7. Conclusion
Introduction:
In an economy where even minimum wages were not paid to the workers,
the need to protect the wages was felt in the early years of twentieth century.
With a view to achieve this object, a private Bill called “Weekly Payment
Bill” was introduced in the legislature in the year 1925. The bill aimed at
to remove some of the evils prevalent in the economy, e.g., exploitation of
labour by imposing arbitrary fined, delay in payment of wages and
unauthorized deductions from wages. The bill was withdrawn on the
assurance of the Government that the matter was under consideration. The
desirability for putting up legislation was keenly felt in the year 1926 to
regulate the extent of fines and other unauthorized deductions. The question
was again considered by Royal Commission on Labour in India.
The Commission made the following important recommendations:
i. Children should be exempt from fines.
ii. The maximum amount deducted in fines should not exceed in any
month half an anna in the rupee of workers’ earnings.
iii. The sums realized from fines should be utilized from a purpose
beneficial to the employees as a whole and should be approved by
some recognized authority.
iv. A notice clearly mentioning the acts and omissions, in respect of which
Law of Wages And Principles of Wage Fixation
The Payment of Wages Act, 1936 42
NOTES
“Only for Private Circulation”
UNIT - 2
THE PAYMENT OF WAGES ACT, 1936
fines may be imposed, should be posted and other fines shall be
deemed to be illegal.
v. Any deduction made on account of damage or loss to goods should not
exceed the wholesale price of goods damaged.
vi. Deductions may be allowed on account of provision for housing
accommodation and of tools and raw material.
vii. In all cases the amount of deductions should not exceed the equivalent
of service rendered.
viii. Impositions of a deduction not permitted by law should be made penal.
The bill of Payment of Wages Act based on the above recommendations
was passed in 1936.
Thereafter this Act has been amended twice in 1937 and again in 1940,
1964, 1965, 1970, 1976 and the last amendment being made by Payment
of Wages (Amendment) Act, 1982. The Amending act comes into force
w.e.f. 15th October, 1982. The application of the Act is now extended to
cover persons whose average wages are below Rs. 1600. The need for
amending the Act was felt as a large number of workers previously covered
by the Act got exclude with the upward revision of pay scales and increase
in D.A. and other allowances in recent years.
The Payment of Wages (Amendment) Act, 2005
The Act was lastly amended in 2005 (w.e.f 9-772005). The Act applies to
wages payable to an employed person in respect of a wages period if such
wages for that wage period so not exceed six thousand five hundred rupees
per month or such other higher sum which, on the basis of figures of the
Consumer Expenditure Survey published by the National Sample Survey
Organization, the Central Government may, after every five years, by
notification in the Official Gazette, specify.
Section 3 of the Act – Responsibility for payment of wages – was totally
amended.
Section 8(6) was amended and it now reads, “No fine imposed on any
employed person shall be recovered from him by instalments or after the
expiry of 90 days from the day on which it was imposed.”
Penalty was enhanced from Rs. 50 to Rs. 375 for malicious or vexatious
claims uls 15 of the Act.
‘Claims arising out of deductions from wages or delay in payment of wages
and penalty from malicious or vexations claims (Section 15) was thoroughly
Law of Wages And Principles of Wage Fixation
The Payment of Wages Act, 1936 43
NOTES
“Only for Private Circulation”
amended.’
Penalty for offences under the Act was enhanced many times. Object. As
stated in the preamble to the Act, the object of the Act is to regulate the
payment of wages to certain class of persons employed in industry. The
regulation contemplated by the Act is of two kinds:
1. About the date of payment of wages, and
2. About deductions from wages whether fine or otherwise.
The words “certain class of persons” in the preamble are important, for the
Act applies to persons drawing on an average less than one thousand six
hundred rupees an month. [Section 1(6)]
APPLICATION OF THE ACT:
The Payment of Wages Act, 1936 extends to the whole of India. It comes
into force on 28th March, 1937. It applies to the payment of wages to:
1. Persons employed in any factory.
2. Persons (otherwise than a factory) employed in any railway by railway
administration or either directly or through a contractor or by persons
fulfilling a contract with railway administration.
Appropriate Government is empowered to make the Act applicable to any
class of person employed in any industrial establishment or in any class or
group of industrial establishment subject to the following two conditions.
Law of Wages and Principles of Wage Fixation 54
i. Issue of three months notice of its intention of doing so; and
ii. Notification of extension in the Official Gazette.
Provided that in relation to any such establishment owned by the Central
Government, no such notification shall be issued except with the
concurrence of that Government.
This Act applies to wages payable to an employed person in respect of a
wage period if such wages for that wage period do not exceed. Six thousand
five hundred rupees per month or such other higher sum which, on the basis
of figures of the Consumer Expenditure Survey published by the National
Sample Survey Organization, the Central Government may after every five
years, by notification in the Official Gazette, specify.
OBJECT OF THE ACT:
Law of Wages And Principles of Wage Fixation
The Payment of Wages Act, 1936 44
NOTES
“Only for Private Circulation”
The main objects of the Act are-
1. To avoid unnecessary delay in payment of wages to the employees,
2. To prevent unauthorized deduction from the wages,
3. To require to employer to pay wages on working day and not on
holiday,
4. To prevent the employer from making payment of wages in kinds,
5. To regulate the payment of wages to certain class of persons employed
in industries.
DEFINITIONS: SECTION 2
Employed person-[Section 2 (i)]:
Employed person includes the legal representative of a deceased employed
person;
Employer-[Section 2 (ia)]:
Employer includes the legal representative of a deceased employer;
Industrial or other establishment- [Section 2 (ii)]:
According to Section 2 (ii) of this Act Industrial or other establishment
means any –
a) Tramway service or motor transport service engaged in carrying
passengers or goods or both by road for hire or reward; aa)air transport
service other than such service belonging to or exclusively employed
in the military naval or air forces of the Union or the Civil Aviation
Department of the Government of India;
b) Dock wharf or jetty;
c) Inland vessel mechanically propelled;
d) Mine quarry or oil-field;
e) Plantation;
f) Workshop or other establishment in which articles are produced
adapted or manufactured with a view to their use transport or sale;
g) establishment in which any work relating to the construction
development or maintenance of buildings roads bridges or canals or
relating to operations connected with navigation irrigation or to the
Law of Wages And Principles of Wage Fixation
The Payment of Wages Act, 1936 45
NOTES
“Only for Private Circulation”
supply of water or relating to the generation transmission and
distribution of electricity or any other form of power is being carried
on;
h) any other establishment or class of establishments which the Central
Government or a State Government may having regard to the nature
thereof the need for protection of persons employed therein and other
relevant circumstances specify by notification in the Official Gazette.
Wages- [Section 2 (iv)]:
means all remuneration (whether by way of salary allowances or otherwise)
expressed in terms of money or capable of being so expressed which would
if the terms of employment express or implied were fulfilled by payable to
a person employed in respect of his employment or of work done in such
employment and includes –
a) any remuneration payable under any award or settlement between the
parties or order of a court;
Law of Wages and Principles of Wage Fixation 56
b) any remuneration to which the person employed is entitled in respect
of overtime work or holidays or any leave period;
c) any additional remuneration payable under the terms of employment
(whether called a bonus or by any other name);
d) any sum which by reason of the termination of employment of the
person employed is payable under any law contract or instrument
which provides for the payment of such sum whether with or without
deductions but does not provide for the time within which the payment
is to be made;
e) any sum to which the person employed is entitled under any scheme
framed under any law for the time being in force, but does not include-
1. any bonus (whether under a scheme of profit sharing or otherwise)
which does not from part of the remuneration payable under the
terms of employment or which is not payable under any award or
settlement between the parties or order of a court;
2. the value of any house-accommodation or of the supply of light
water medical attendance or other amenity or of any service
excluded from the computation of wages by a general or special
order of the State Government;
3. any contribution paid by the employer to any pension or provident
Law of Wages And Principles of Wage Fixation
The Payment of Wages Act, 1936 46
NOTES
“Only for Private Circulation”
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LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf
LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf

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LAW OF WAGES AND PRINCIPLES OF WAGE FIXATION.pdf

  • 1.
  • 2. SYNOPSIS 1. Introduction 2. Objectives of the Act 3. Procedure for Fixation and revision of rates of wages 4. Concept of dearness allowances and principles for determination of dearness allowances 5. Offences and penalties 6. Conclusion Introduction: The Minimum Wages Act was passed in 1948 and it came into force on 15th March, 1948. The National Commission on Labour has described the passing of the Act as landmark in the history of labour legislation in the country. The philosophy of the Minimum Wages Act and its significance in the context of conditions in India, has been explained by the Supreme Court in Unichoyiv. State of Kerala (A.I.R. 1962 SC 12), as follows: “What the Minimum Wages Act purports to achieve is to prevent exploitation of labour and for that purpose empowers the appropriate Government to take steps to prescribe minimum rates of wages in the scheduled industries. In an underdeveloped country which faces the problem of unemployment on a very large scale, it is not unlikely that labour may offer to work even on starvation wages. The policy of the Act is to prevent the employment of such sweated labour in the interest of general public and so in prescribing the minimum rates, the capacity of the employer need not to be considered. What is being prescribed is minimum wage rates which a welfare State assumes every employer must pay before he employs labour”. According to its preamble the Minimum Wages Act, 1948, is an Act to provide for fixing minimum rates of wages in certain employments. The 3 Law of Wages and Principles of Wage Fixation employments are those which are included in the schedule and are referred to as ‘Scheduled Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 1 NOTES “Only for Private Circulation” UNIT - 1 THE MINIMUM WAGES ACT, 1948
  • 3. Employments’. The Act extends to whole of India. Historical Background: Statutory minimum wage regulation was first introduced in New Zealand in 1894 and the Australian colony (soon to be a state) of Victoria in 1896. Some attempt to control wages had been present since 19th century, through collective agreement. However, this meant that a uniform minimum was not possible. It was not until the turn of the twentieth century that the first attempts to do this were seen. The movement for a minimum wage was initially targeted at stopping sweatshop labour. At the international level the International Labour Organization established Minimum Wage-Fixing Machinery Convention in 1928. Having decided upon the adoption of certain proposals with regard to minimum wage-fixing machinery, the principles of the convention were modified and included in the Minimum Wage Fixing Machinery (Agriculture) Convention 1951 and Minimum Wage Fixing Convention 1970. In India the question of fixation of minimum wages gained importance due to the cheap and unorganized labour. The labour as whole in the country was not able to put a face of collective bargaining and look after their interests. The period of acute depression was set in all industries towards the end of 1922. The Ahmedabad Mill Owners Association thereupon, made the first organized post war move for wholesale reduction of wages and a cut of 20% in wages was announced with effect from 1stApril 1923. The strike of Ahmedabad cotton mill workers, which followed the cut, involved nearly 50,000 workers. Similar situation prevailed in Bombay also. Not satisfied 4 Law of Wages and Principles of Wage Fixation with one cut, some mills imposed another cut within the short period of few months. In 1925, however, the Government of India came to the rescue of the cotton textile workers. As a compromise formula, the wage cut proposal was dropped after the Government announced the suspension of the excise duty on the demand of mill owners. Appointment of Royal Commission on Labour – 1929: The year 1928 witnessed most disastrous strike of the period there was complete stoppage of work for over six months in Bombay. Some other such strikes were also witnessed in Jamshedpur and Sholapur. Continued labour unrest in the country prompted the Government of India in the middle of 1929, to appoint Royal Commission on Indian labour to enquire Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 2 NOTES “Only for Private Circulation”
  • 4. into and report on the existing conditions of labour including the health, efficiency and the standard of their living. The Royal Commission on Labour considered the question of fixing the minimum wages for bidi making, wool cleaning, mica factories, shellac manufacturing and tanning. It recommended, “it would be necessary to create a machinery for fixing minimum rates of wages in those trades in which wages are lowest and where there is no question of collective bargaining.” It further recommended that of industries which came within its terms of reference, those dealing with unregulated factories be examined in the first instance with a view to the need and possibility of instituting minimum wage fixing machinery. The Commission also emphasized on the need of enacting necessary legislation on the subject. No steps, however, were taken for any legislative measure to implement the recommendations of the Commission. The question of setting up of statutory wage fixing machinery was again discussed at the meetings of the Standing Labour Committee held in May 5 Law of Wages and Principles of Wage Fixation 1943 and January 1944, respectively and also at the successive sessions of the Tripartite Labour Conference in September 1943, October 1944 and November 1945. Appointment of Rege Committee – 1944: The appointment of Rege Committee in 1944 found after their survey that the basic wage level in most Indian industries was extremely low. Appointment of Central Pay Commission – 1946: Government of India in 1946, appointed the Central Pay Commission to enquire into and report on the conditions of service of central government employees. The Pay Commission recommended that the Government should take some steps forward in giving effect to the “living wage” principle dealing with the employees who are virtually on the “poverty line” and came to the conclusion that in no case a man’s wages should be less than a living wage. Minimum Wages Bill, 1946: Simultaneously, with the appointment of the Central Pay Commission, the Government of India, on February 11, 1946, introduced in the Indian Legislative Assembly, the Minimum Wages Bill. The Bill was referred to the Select Committee in March 1947, which Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 3 NOTES “Only for Private Circulation”
  • 5. was reconstituted in November 1947. The Bill, as finally passed by the Dominion Legislature on February 9, 1948 received the assent of the Governor General on March 15, 1948 and it came to be known as the Minimum Wages Act, 1948. Minimum Wages Act, 1948: The purpose of the Act is to ensure that the payment of wages at rates not less than the prescribed minimum to those employed in scheduled employment. The Act was enacted to give effect to the resolutions passed by the Minimum Wages Fixing Machinery Convention held at Geneva in 1928. 46 Law of Wages and Principles of Wage Fixation Objectives Of The Act: The objectives of the Minimum Wages Act, 1948 are as follows: a) To provide for fixation of minimum wages for the scheduled employments. b) To provide for periodical revision of minimum wage fixed. c) To provide for a summary procedure for recovery of the balance with penalty and subsequent prosecution of the offending party, in cases where an employer pays less than the minimum wages fixed by the government. d) To provide for the appointment of Advisory Committees and Advisory Boards, having equal representatives of employers and workers. M. Unichoyi v. State of Kerala, 1961: The Court held that the Act purports to prevent exploitation of labour and for that purpose authorizes the appropriate government to take steps to prescribe minimum rates of wages in the scheduled industries. In an underdeveloped country which faces the problem of unemployment on a very large scale, it is not unlikely that labour may offer to work even on starvation wages. The policy of the Act is to prevent the employment of such sweated labour in the interest of general public and so in prescribing the minimum wage rates the capacity of the employer need not be considered. What is being prescribed is minimum wage rates which a welfare state assumes every employer must pay before he employs labour. Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 4 NOTES “Only for Private Circulation”
  • 6. DEFINITIONS-[SECTION 2]Appropriate Government [Section 2(b)]: “Appropriate Government” means : i. in relation to any scheduled employment carried on by or under the authority of the Central or a railway administration, or in relation to a mine, oilfield or major part or any corporation established by a Central Act, the Central Government, and ii. in relation to any other scheduled employment, the State Government. 7 Law of Wages and Principles of Wage Fixation Employee [Section 2(i)]: “Employee” means any person who is employed for hire or reward to do any work, skilled or unskilled, manual or clerical in a scheduled employment in respect of which minimum rates of wages have been fixed; and includes an outworker to whom any articles or materials are given out by another person to be made up, cleaned, washed, altered, ornamented, finished, repaired, adapted or otherwise processed for sale purpose of the trade or business of that other person where the process is to be carried out either in the home of the out-worker or in some other premises, net being premises under the control and management of that person; and also includes an employee declared to be an employee by the appropriate Government; but does not include any member of Armed Forces of the Union. Employer [Section 2(e)]: “Employer” 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, and includes, except, in sub-section (3) of Section 26 – 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 under clause (f) of sub-section (1) of Section 7 of the Factories Act, 1948, as manager of the factory; 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 of Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 5 NOTES “Only for Private Circulation”
  • 7. 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; 8 Law of Wages and Principles of Wage Fixation 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 of the supervision and control of the employees or for the payment of wages. The definitions of “employees” and “employer” are quite wide. Person who engages workers through another like a contractor would also be an employer (1998 LLJ I Bom. 629). It was held in Nathu Ram Shuklav. State of Madhya Pradesh A.I.R. 1960 M.P. 174 that if minimum wages have not been fixed for any branch of work of any scheduled employment, the person employing workers in such branch is not an employer with the meaning of the Act. Similarly, in case of LoknathNathuLalv. State of Madhya Pradesh A.I.R. 1960 M.P. 181 an out-worker who prepared goods at his residence, and then supplied them to his employer was held as employee for the purpose of this Act. Scheduled employment [Section 2(g)]: “Scheduled employment” means an employment specified in the Schedule or any process or branch of work forming part of such employment. Note: The schedule is divided into two parts namely, Part I and Part II. When originally enacted Part I of Schedule had 12 entries. Part II relates to employment in agriculture. It was realised that it would be necessary to fix minimum wages in many more employments to be identified in course of time. Accordingly, powers were given to appropriate Government to add employments to the Schedule by following the procedure laid down in Section 21 of the Act. As a result, the State Government and Central Government have made several additions to the Schedule and it differs from State to State. Wages [Section 2(h)]: “Wages” means all remunerations capable of being expressed in terms Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 6 NOTES “Only for Private Circulation”
  • 8. of money, which would, if the terms of the contract of employment, express of implied, were fulfilled, be payable to a person employed in respect of his 9 Law of Wages and Principles of Wage Fixation employment or of work done in such employment and includes house rent allowance but does not include: i. the value of: a. any house accommodation, supply of light, water medical; b. any other amenity or any service excluded by general or social order of the appropriate Government; ii. Contribution by the employer to any Pension Fund or Provides Fund or under any scheme of social insurance; iii. any travelling allowance or the value of any travelling concession; iv. any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; Definition of “Wages”: The term wages means payment made for the services of labour. Wage is the return in cash or kind or partly in cash and partly in kind for the work done by the employee. Though Oxford Dictionary defines wage as ‘the amount paid periodically, especially by day or week or month, for the time during which workman or servant is at employer’s disposal. But in the context of Indian legal situation Industrial Disputes Act 1947, Payment of Wages Act and Minimum Wages Act 1948, have enlarged the conspectus of its meaning by defining it as- All remuneration capable of being expressed in terms of money, which would, if the term of employment, express or implied, were fulfilled, be payable to a workman in respect of his employment or of work done in such employment.” Further these Acts clearly states about what is to be included and what is to be excluded from the definition of “wages” respectively. Types and kind of wage-[Section 3.1]: Since 1948, several terms have been used with reference to the wages, viz, a. Statutory minimum wage; Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 7 NOTES “Only for Private Circulation”
  • 9. b. The bare or basic minimum wage; c. The minimum wage; d. The fair wage; e. The living wage; and f. The need-based minimum wage. The first term owes its origin to the provision of the Minimum Wages Act 1948, the second has generally been used in industrial awards and judicial dicta of the courts, the next three have been introduced in the report of the Committee on Fair Wages and the last one emerged in the resolution of the 15th Session of the Indian Labour Conference in July 1957. In common parlance we mostly refer to the levels of wages defined by the Committee on Fair Wages, i.e. the living wage, fair wage and the minimum wage. In an expanding economy, the contents of these expressions also expand and vary. These levels naturally, do not represent a static, inflexible concept; they would vary and expand according to the economic development and compulsions of social justice. It is, therefore, very difficult to describe accurately, the content of the terms ‘living wage’, ‘fair wage’or ‘minimum wage’. These terms or their variants cannot and do not mean the same thing in all countries, or even in different industries in the same country. What may be a fair wage in a particular industry in one country may be a living wage in the same industry in another country. Similarly, what may be a fair wage in a given industry today may cease to be fair and border on the minimum wage, in the future. In other words these concepts would keep on changing with the circumstances, with the growth, both of industries and of the economy, the living standards and circumstances of the industries and the people. (i) Minimum wage: (a) Minimum wage in general: The concept of minimum wage has recently undergone a progressive change. It is no longer based upon the subsistence theory, according to which minimum wage equals the cost of commodities necessary to feed and clothe a worker and his family. Hindustan Times Ltd. v. Their Workmen, 1962: In this case Das Gupta J said, ‘at the bottom of the ladder is the Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 8 NOTES “Only for Private Circulation”
  • 10. minimum basic wage, which the employer of any industrial labour must pay in order to be allowed to continue an industry’. According to the Committee on Fair Wages, the minimum wage must provide not merely for the sustenance of life, but for the preservation of the efficiency of the worker. For this purpose, the minimum wage must also accommodate some measure of education, medical requirements and amenities. The Committee had categorically stated that an industry which is incapable of paying this minimum wage, has no right to exist and in cases where the continued existence of such an industry is imperative, in the larger interest of the country, it was the responsibility of the state to take steps to enable that industry to pay at least the minimum wage. The Committee was of the definite view that for fixing the minimum wage, no regard should be paid to the capacity of the industry to pay and it should be based solely on the requirements of the worker and his family. In order to calculate the minimum wage, the Tripartite Committee of the Indian Labour Conference, held in New Delhi in 1957, accepted the following norms, and recommended that hey should guide all wage fixing authorities, including Minimum Wage Committees, Wage Boards, Adjudicators, etc.: i. In calculating the minimum wage, the standard working class family should be taken to consist of three consumption units for one earner, Law of Wages and Principles of Wage Fixation 12 the earnings of women; children and adolescents should be disregarded. ii. Minimum food requirements should be calculated on the basis of a net intake of calories, as recommended by Dr. Aykroyd for an average Indian adult of moderate activity. iii. Clothing requirement should be estimated as per consumption of 18 yards per annum which would give for the average worker’s family of four, a total of 72 yards. iv. In respect of housing, the norm should be minimum rent charged by Government in any area for houses provided under the subsidized Industrial Housing Scheme for low income groups. v. Fuel, lighting and other ‘miscellaneous’ items of expenditure should constitute 20 percent of the total minimum wage. Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 9 NOTES “Only for Private Circulation”
  • 11. vi. Children’s education, medical requirements, minimum recreation including festivals/ ceremonies and provision for old age, marriage, etc. should further constitute 25 percent of the total minimum wage.9 Express Newspapers Pvt. Ltd. v. UOI, 1985: The standards of minimum wage as laid down by the committees, were adopted by the Supreme Court also, in holding that the minimum wage must provide not merely for the bare subsistence of life, but also for the preservation of the efficiency of the worker and for this purpose, the minimum wage must also provide for some measure of education, medical requirements and amenities. Workmen v. Reptakos Brett and Co. Ltd., 1991: The Supreme Court finally settled the judicial policy hitherto expressed in earlier decisions holding that the wage structure which approximately answers the above six components is nothing more than a minimum wage at subsistence level. The employees are entitled to the minimum wages at all times and under all circumstances. An employer who cannot pay the minimum wage has no right to engage labour and no justification to run the industry. (b) Statutory Minimum Wage: The Statutory Minimum Wage owes its origin to the Minimum Wages Act 1948, the historical background of which has been discussed earlier. The statutory minimum wage is the minimum wage which is prescribed by the relevant provisions of the Minimum Wages Act 1948. This applies to the employments that are included in Parts 1 and 2 of the Schedule to the Act. The passing of Minimum Wages Act 1948 is a landmark in the history of labour legislation in the country, which recognizes that the wages cannot be left to be determined entirely by market forces. The main object of the Act is to prevent ‘sweated’ labour, as well as to prevent the exploitation of unorganized labour. It proceeds on the basis that it is the duty of the State that, at least minimum wages are paid to the employees, irrespective of the capacity of the industry or the unit, to pay the same. The mandate of Art.43 of the Constitution is that the State should endeavor to secure, by suitable legislation or economic organization or in any other way, to all workers, agricultural, industrial or otherwise, work on living wage, under conditions of work which ensure a decent standard of life and full enjoyment of leisure and social and cultural opportunities. This Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 10 NOTES “Only for Private Circulation”
  • 12. fixing of a minimum wage is just a first step in that direction. In the course of time, the State has to take many more steps to implement that mandate.13 Bijay Cotton Mills Ltd v. State of Ajmer, 1954: In this case the Court dealing with a challenge to the constitutional validity of the provisions of the Minimum Wages Act, relating to fixation of minimum wages, on the grounds of repugnancy to Art19 (1) (g) observed that, individual employers might find it difficult to carry on their business on the basis of the minimum wage fixed under the Act, but this must be due entirely to the economic conditions of these particular employers. That cannot be a reason for striking down the law itself, as unreasonable. 14 Law of Wages and Principles of Wage Fixation Kamani Metals & Alloys Ltd v. Their Workmen Hidayatullah J remarked in this case that, “minimum wage which, in any event, must be paid, irrespective of the extent of profits, the financial condition of the establishment or the availability of workmen on lower wages.” This minimum wage is independent of the kind of industry and applies to all alike big or small. It sets the lowest limit below which wages cannot be allowed to sink, in all humanity. (c) Non Statutory Minimum Wage: The minimum wage policy, as it has emerged in this country, distinguishes between the organized industries and the sweated ones. The Minimum Wage Act 1948 is an instrument which seeks to protect the interest of the workers in the latter. In the organized sector, the concerned authorities fix the wages considering the report of the Committee on Fair Wages and the norms of the Tripartite Committee which is termed as non- statutory minimum wage. Ahmedabad Mill Owner’s Association v. Textile Labour Association, 1965: The Supreme Court held that a basic minimum wage can be fixed by an industrial tribunal when the statute has not fixed the minimum wage. Section 3(2A) of the Minimum Wage Act 1948 does contemplate fixation of minimum wage by industrial adjudication. The basic concept on which the provisions of the Minimum Wages Act are founded, is to prevent the sweating and exploitation of labour, through payment of unduly low wages. It would, therefore, conceptually follow, that just as in the case of scheduled industries, the employer in any establishment Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 11 NOTES “Only for Private Circulation”
  • 13. not covered by the schedule, also pay to his employees, a minimum wage, because what applies to the establishments included in the schedule to the Minimum Wages Act, must, on principles of social justice, apply with equal force, to industrial establishments not covered in the schedule as well. In such cases, considerations of social justice play a major 15 Law of Wages and Principles of Wage Fixation role in shaping the social, economic and industrial policies of a welfare state. This aspect has to be borne in mind by industrial adjudicators in fixing the level of wages. Crown Aluminum Works v. Their Workmen, 1955: The Court held that in fixing the bare minimum wages and subsistence wages, industrial adjudicators will have to consider the position from the point of view of the worker, the capacity of the employer to pay such a wage would be irrelevant. (ii) Fair wage: It stands in between the minimum wage and living wage. Fair wage is said to be step towards the progressive realization of a living wage. A fair wage is settled above the minimum wage and goes through the process of approximating towards a living wage. It depends upon the present economic position as well as the future prospects of that industry. In the words of Hidayatullah J, ‘a fair wage, lies between the minimum wage which must be paid in any event and the living wage, which is the goal’. Bhagwati J described a ‘fair wage’ as a mean between the living wage and the minimum wage.Marshall considers the rate of wages prevailing in an occupation as ‘fair’if it is ‘about one level with the average payment for tasks in other trades, which are of equal difficulty and disagreeableness, which require equally rare natural abilities and an equally expensive training’. Prof. Pigouapply two degrees of fairness, in judging a wage rate, viz, ‘fair in the narrower sense’, and ‘fair in the wider sense’. A wage rate is ‘fair in the narrower sense’, when it is equal to the rate current for similar workmen in the same trade and the neighbourhood, and ‘fair in the wider sense’, when it 16 Law of Wages and Principles of Wage Fixation is equal to the predominant rate for similar work throughout the country and in the generality of trades. Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 12 NOTES “Only for Private Circulation”
  • 14. The lower limit of the fair wage must obviously the minimum wage; the upper limit is set out by what may be called, the capacity of the industry to pay. This will depend not only on the present economic position of the industry but on its future prospects. Between these two limits the actual wage will be fixed on a consideration of the following factors:- a) The productivity of labour; b) The prevailing rates of wages in the same industry for similar occupations in the same neighbouring locality; c) The level of national income and its distribution; and d) The place of industry in the economy of the country.22 Novex Dry Cleaners v. Workmen, 1962: The Court observed that it is now well settled principle that in fixing a minimum wage, the capacity of the industry to pay is not relevant, but in fixing a fair wage, the capacity of the industry to bear the burden of the said wage is very relevant and important factor. Where wage structure is being fixed with reference to those in other similar industries in the region, the standing of the industries, strength of labour employed, extent of customers, profits and loss must be taken into account. It is also necessary to assess whether the employer would be able to meet the additional liability. Express Newspaper (Pvt.) Ltd. and another v. Union of India and others, 1985: The Court held that unusual profit made by the industry for a single year as a result of adventitious circumstances, or unusual loss incurred by it for similar reasons, should not be allowed to play major role in the calculations to the construction of wage structure. Another aspect of the matter which cannot be ignored is that if a fair wage is construed by the industrial adjudication, and in course of time if the employer cannot bear the burden of such wage structure, industrial 17 Law of Wages and Principles of Wage Fixation adjudication can and in a proper case, should revise the wage structure, though such revision may result in the reduction of wages paid to the employees. The conflicting claims of the labour and capital must be harmonized on a reasonable basis. Crown Aluminium Works v. Their Workmen, 1957: Gajendragadkar J said: It would not be correct to say that in no Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 13 NOTES “Only for Private Circulation”
  • 15. NOTES The Minimum Wages Act, 1948 14 Law of Wages And Principles of Wage Fixation conceivable circumstances, can the wage structure be revised to the prejudice of workmen. But he added further that, ‘theoretically, no wage structure can or should be revised to the prejudice of workmen, if the structure in question falls in the category of the bare subsistence or the minimum wage’. In connection with the wage structure of a higher category, the Court said that, ‘it would be open to the employer to claim revision, even to the prejudice of the workmen, provided a case for such revision is made out on merits, to the satisfaction of the tribunal’. (iii) Living wage: The term living wage has not been defined under the provisions of the Minimum Wages Act. However, an instance of statutory definition of living wage is provided in South Australian Act of 1912 which states the “living wage” means a sum sufficient for the normal and reasonable needs of the average employee living in a locality where the work under consideration is done or is to be done. Justice Higgins, the Australian Commonwealth Court of Arbitration, while disposing Harvester case visualized a living wage as a sum which is adequate to satisfy the normal needs of the average employee regarded as human being in a civilized community. Another definition of living wage is found in the Queensland Industrial Conciliation and Arbitration Act which states that a basic (i.e. living) wage paid to an adult male employee shall not be less than what is sufficient to maintain a well conducted employee of average health, strength and 18 Law of Wages and Principles of Wage Fixation competence and his wife and a family of three children in a fair and average standard of comfort, having regard to the conditions of living prevailing among employees in the calling in respect of which such wage is fixed, and provided that in fixing such basic wage the earnings of the children or wife of such employee shall not be taken into account. Living wage consists of amount of necessaries, comforts and luxuries, the quantum of goods and services which an individual considers necessary for decent existence.28 There are several definitions of ‘living wage’, attempted in the recent past. The quintessence of all these definitions is that a living wage should enable the male earner to provide for himself and his family, not merely the bare essentials of food, clothing and shelter, but also a measure of frugal comfort, including education for the children, protection against ill health, requirement of essential social needs and a measure of insurance against the more important misfortunes, including old age. According to the Committee on Fair Wages, the living wage represents the “Only for Private Circulation”
  • 16. NOTES The Minimum Wages Act, 1948 15 Law of Wages And Principles of Wage Fixation higher level of wage and naturally, it would include all amenities which a citizen living in a modern civilized society is entitled to, when the economy of the country is sufficiently advanced and the employer is able to meet the expanding aspirations of his workers.29 All India Reserve Bank Employees Assn. v. RBI, 1965: In this case Hidayatullah J stated that ….our political aim is ‘living wage’, though in actual practice, living wage has been an ideal which has eluded our efforts like an ever-receding horizon and will so remain for some time to come. Our general wage structure has at best, reached the lower levels of fair wage, though some employers are paying much higher wages than the general average. Workmen v. Management of Reptakos Brett & Co. Ltd., 1991: Kuldip Singh J stated that, a living wage has been promised to the workers under the Constitution. A ‘socialist’ framework, to enable the working people 19 Law of Wages and Principles of Wage Fixation a decent standard of life, has further been promised by the 42nd Amendment. The workers are hopefully looking forward to achieve the ideal. The promises are piling up but the day of fulfillment is nowhere in sight. Industrial wage, looking as whole, has not yet risen higher than the level of minimum wage. Living wage at present is only a Directive Principle enshrined in the Constitution which cannot be achieved at one stroke but only after a continuous and progressive economic development. (D) Wage determination: (a) Fixing of minimum rates of wages-[(Section 3)]: Under Section 3(1) of the Act, the appropriate Government has been empowered to: a. Fix the minimum rates of wages payable to employees employed in an employment specified in Part I or Part II of the schedule. b. Review and revise at such intervals not exceeding 5 years. Provided that the appropriate government may, in respect of employees employed in an employment specified in Part II, instead of fixing minimum rates for the whole State, fix such rates for a part of the State or for any specified class or classes. “Only for Private Circulation”
  • 17. Provided that where for any reason the appropriate government has not reviewed the minimum rates of wages fixed by it, within any interval of 5 years, nothing contained in this clause shall prevent it from reviewing and revising the minimum rates after the expiry of the said period of 5 year. Until they are so revised, the minimum rates in force immediately before the expiry of the said period of 5 years shall continue in force. The appropriate government may refrain from fixing minimum rates of wages in respect of scheduled employment in which there are in the whole 20 Law of Wages and Principles of Wage Fixation State, less than thousand employees are engaged in such employment. If the appropriate government finds after inquiry that number of employees in any scheduled employment has risen to 1000 or more, it shall fix minimum rates of wages in such employment as soon as may be after such inquiry. It has been provided under Section 3(2) of the Act that the appropriate government may fix: a) Time Work Rate – A minimum rate of wages for time work. b) Piece Work Rate – A minimum rate of wages for piece work. c) Guaranteed Time Rate – A minimum rate of remuneration for such employees who are employed on piece work but for the purpose of securing to such employees a minimum rate of wages on a time work basis. d) Overtime Rate – A minimum rate (whether a time rate or a piece rate) to apply in substitution for the minimum rate which would otherwise be payable, in respect of overtime work done by employees. Section 3(2A) of the Act puts a limitation on the powers of appropriate government to fix or revise minimum rates of wages under certain circumstances which are as follows: Section 3(2A) provides that during the pendency of any proceeding before the Industrial Tribunal or National Tribunal or any other competent authority relating to rates of wages, no order can be issued to fix or revise the minimum rates of wages. It also provides that if an award is in operation no such order fixing the minimum rates or revising the minimum rates can Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 16 NOTES “Only for Private Circulation”
  • 18. be issued. 21 Law of Wages and Principles of Wage Fixation Section 3(3) of the Act further provides that in fixing or revising the minimum rates of wages under this section: (a) Different minimum rates of wages may be fixed for: (i) Different scheduled employments; (ii) Different classes of work in the same scheduled employment; (iii) Adults, adolescents, children and apprentices; (iv) Different localities (b) Minimum rates of wages may be fixed by: (i) The hour (ii) The day (iii) The month, or (iv) Such other longer wage period as may be prescribed. Where such rates are fixed by the day or by the month, the manner of calculating wages for a month or for a day, as the case may be, may be indicated. Provided that where any wage periods have been fixed under section 4 of the Payment of Wagers Ac, 1936, minimum wages shall be fixed in accordance therewith.32 M/s The Indure (P) Ltd. v. State of U.P. and others, 2011: The Court held that when wages of workers are more than the minimum rates of wages, as fixed and/or revised under the Minimum Wages Act, no separate VDA (Variable Dearness Allowance) as declared by the Authorities under Minimum Wages Act will be applicable since the total pay package is more than the pay package under the said government order. Jaydip Industries v. Workmen, 1971: The Court held that the Tribunal is not bound by the fixation of minimum wage rates by the government and can fix higher rates as minimum wages in its award. Tribunal can take into account rates of minimum wages fixed in other awards. 22 Law of Wages and Principles of Wage Fixation Chandra Bhawan Boarding and Lodging, Bangalore v. State of Mysore, 1969: Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 17 NOTES “Only for Private Circulation”
  • 19. The Supreme Court observed that fixing of different rates of minimum wages for different industries or in different localities by dividing State into zones is not opposed to Section 3(3) of the Act but the government is not allowed to fix or revise minimum rates of wages in an arbitrary manner. (b) Minimum rate of wages-[(Section 4)]: Section 4(1) of the Minimum Wages Act 1948 provides that any minimum rates of wages fixed or revised by the appropriate Government in respect of scheduled employments under Section 3 may consist of: a. A basic rate of wages and a special allowance at a rate to be adjusted, at such intervals and in such a manner as the appropriate government may direct, or b. A basic rate of wages with or without the cost of living allowance and the cash value of the concessions in respect of supplies of essential commodities at concession rates, where so authorized, or c. An all-inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of the concessions, if any. Section 4(2) The cost of living allowance and the cash value of the concessions in respect of supplies of essential commodities at concession rates shall be computed by the competent authority at intervals and in accordance with the directions issued by the appropriate government. Karnataka Film Chamber of Commerce v. State of Karnataka, 1986: The Court observed that Section 4 of the Act is a definite indication that basic wage is an integral part of the minimum wage. The Minimum Wages Act 1948 is a beneficial piece of social legislation which protects the day to day living condition of the workmen employed at the lowest level of wages in 23 Law of Wages and Principles of Wage Fixation sweated labour. Though the minimum wages are fixed statutorily, it does not measure up either to the fair wage or either to the living wage. Therefore the Court cannot interfere with notifications issued under the Act unless the grounds are substantial. Jaswant Rai Beri and others v. State of Punjab, 1958: The Court held that the Act makes no specific mention of the term Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 18 NOTES “Only for Private Circulation”
  • 20. dearness allowance (DA) but it is well known that it refers to an allowance paid for rise of cost of living. M. C. Mehta v. State of Tamil Nadu, 1996: The Court expressed that the children doing the work of “sorting out manufactured product and processing the same for packing” in a match factory, should be given at least 60 percent of the prescribed minimum wages for an adult, for the same job. But indicating the minimum wage does not stand in the way of prescription of a higher rate if the State is satisfied that a higher rate is viable. (c) Procedure for fixing and revising minimum wages-[(Section 5)]: In fixing minimum rates of wages in respect of any scheduled employment for the first time or in revising minimum rates of wages, the appropriate Government can follow either of the two methods described below. First Method [Section 5(1)(a)]: This method is known as the ‘Committee Method’. The appropriate Government may 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. After considering the advise of the committee or committees, the appropriate Government shall, by notification in the Official Gazette fix or revise the minimum rates of wages. The wage rates shall come into force from such date as may be specified in the notification. If no date is specified, wage rates Law of Wages and Principles of Wage Fixation 24 shall come into force on the expiry of three months from the date of the issue of the notification. Note: It was held in Edward Mills Co. v. State of Ajmer (1955) A.I.R. SC, that Committee appointed under Section 5 is only an advisory body and that Government is not bound to accept its recommendations. As regards composition of the Committee, Section 9 of the Act lays down that it shall consist of persons to be nominated by the appropriate Government representing employers and employee in the scheduled employment, who shall be equal in number and independent persons not exceeding 1/3rd of its total number of members. One of such independent persons shall be appointed as the Chairman of the Committee by the appropriate Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 19 NOTES “Only for Private Circulation”
  • 21. Government. Second Method [Section 5(1)(b)]: The method is known as the ‘Notification Method’. When fixing minimum wages under Section 5(1)(b), the appropriate Government shall 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 than 2 months from the date of notification, on which the proposals will be taken into consideration. The representations received will be considered by the appropriate Government. It will also consult the Advisory Board constituted under Section 7 and thereafter fix or revise the minimum rates of wages by notification in the Official Gazette. The new wage rates shall come into force from such date as may be specified in the notification. However, if no date is specified, the notification shall come into force on expiry of three months from the date of its issue. Minimum wage rates can be revised with retrospective effect. [1996 II LLJ 267 Kar.]. Section 5(2) – After considering the advice of the committee or committees so appointed or after considering all representations received before the date specified in the 25 Law of Wages and Principles of Wage Fixation Notification, the appropriate Government shall, by notification in the Official Gazette, fix or revise the minimum rates of wages in respect of each scheduled employment, and unless such Notification otherwise provides, it shall come into force on the expiry of three months from the date of its issue. However in case of revision of minimum rates of wages under clause 1(b) mentioned above the appropriate government shall consult the Advisory Board also. Chandra Bhawan Boarding and Lodging v. State of Mysore, 1969: The Advisory Board is constituted to co-ordinate the work of the committees and sub-committees and to advise the Government generally in the matter of fixing and revising the minimum rates. However, in the initial fixation of minimum wages, consultation with the Advisory Board is not compulsory. Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 20 NOTES “Only for Private Circulation”
  • 22. Jaswant Rai Beri v. State of Punjab The committee appointed under section 5 is only an advisory body and the government is not bound to accept any of its recommendations. (d) Advisory board-[(Section 7)]: The appropriate government shall appoint an Advisory Board for the purpose of coordinating the work of committees and sub-committees appointed under section 5 and advising the appropriate government generally in the matter of fixing and revising minimum rates of wages. (e) Composition of committees and advisory boards-[(Section 9)]: Each of the committees, sub-committees and Advisory Board shall consist of persons to be nominated by the appropriate governments representing employers and employees in the scheduled employments, who shall be equal in number and independent persons not exceeding 1/3 of its total number of members, one of such independent persons shall be appointed as Chairman by the appropriate government. N. K. Jain v. Labour Commissioner Rajasthan, 1956: Compliance in procedure must be real and not for the name sake. The constitution of a committee by the State Government consisting of six of its officers, with no representation of either employers or of the employees in the scheduled employment and the notification issued for fixing minimum wages on the advice of the said committee, was held to be having no force and effect as in reality there was no committee. (f) Central advisory board-[(Section 8)]: The Central Advisory Board is constituted by the Central Government under section 8 of the Act for the following purposes: a) To advise the Central and State Governments in the matter of fixation and revision of minimum rates of wages; b) To advise on any matters within the scope of this Act and c) To co-ordinate the work of the Advisory Boards. Composition of committees etc.-[Section 9]: The Central Advisory Board shall consist of persons to be nominated Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 21 NOTES “Only for Private Circulation”
  • 23. by the Central Government representing employers and employees in the scheduled employments, who shall be equal in number and independent persons not exceeding 1/3 of its total number of members, one of such independent persons shall be appointed the Chairman of the Board by the Central Government. K. T. Appanah v. State of Mysore, Section 9 does not require that there should be on those Boards, representatives of employers and employees in each of the many employments which were in the schedule or were subsequently added to it, to insist that it should be so, would be to make the Advisory Board unmanageable and unwieldy and to make its composition impracticable. Eastern Bihar Chamber of Commerce and Industries v. State of Bihar, 1988: Nomination of representatives from each category of employers is not necessary. Ministry of Labour and Rehabilitation v. TiffinsBarytes Asbestos and Paints Ltd., 1985: ‘Independent persons’ are persons who belong neither to the category of employers nor to that of employees. Correction of errors-[Section 10]: 1. The appropriate government may at any time by notification in the Official Gazette correct clerical or arithmetical mistakes in any order fixing or revising minimum rates of wages under this Act or errors arising therein from any accidental slip or omission. 2. Every such notification shall as soon as may be after it is issued be placed before the Advisory Board for information Minimum wage – whether to be paid in cash or kind-[Section 11]: Section 11 of the Act provides that minimum wages payable under the Act shall be paid in cash. But where it has been the custom to pay wages wholly or partly in kind, the appropriate Government, on being satisfied, may approve and authorize such payments. Such Government can also authorize for supply of essential commodities at concessional rates. Where Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 22 NOTES “Only for Private Circulation”
  • 24. payment is to be made in kind, the cash value of the wages in kind or in the shape of essential commodities on concessions shall be estimated in the prescribed manner. Payment of minimum wages is obligatory on employer-[Section 12]: Payment of less than the minimum rates of wages notified by the appropriate Government is an offence. Section 12 clearly lays down that the employer shall pay to every employee engaged in a scheduled employment under him such wages at a rate not less than the minimum rate of wages 28 Law of Wages and Principles of Wage Fixation fixed by the appropriate Government under Section 5 for that class of employment without deduction except as may be authorized, within such time and subject to such conditions, as may be prescribed. Fixing hours for a normal working day-[Section 13]: Fixing of minimum rates of wages without reference to working hours may not achieve the purpose for which wages are fixed. Thus, by virtue of Section 13 the appropriate Government may – a) fix the number of work which shall constitute a normal working day, inclusive of one or more specified intervals; b) provide for a day of rest in every period of seven days which shall be allowed to all employees or to any specified class of employees and for the payment of remuneration in respect of such day of rest; c) provide for payment of work on a day of rest at a rate not less than the overtime rate. The above stated provision shall apply to following classes of employees only to such extent and subject to such conditions as may be prescribed: a) Employees engaged on urgent work, or in any emergency, which could not have been foreseen or prevented; b) Employees engaged in work in the nature of preparatory or complementary work which must necessarily be carried on outside the limits laid down for the general working in the employment concerned; c) Employees whose employment is essentially intermittent; d) Employees engaged in any work which for technical reasons, has to Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 23 NOTES “Only for Private Circulation”
  • 25. be completed before the duty is over; e) Employees engaged in any work which could not be carried on except at times dependent on the irregular action of natural forces. For the purpose of clause (c) employment of an employee is essentially intermittent when it is declared to be so by the appropriate Government on 29 Law of Wages and Principles of Wage Fixation ground that the daily hours of the employee, or if these be no daily hours of duty as such for the employee, the hours of duty, normally includes period of inaction during which the employee may be on duty but is not called upon to display either physical activity or sustained attention. There is correlation between minimum rates of wages and hours of work. Minimum wages are to be fixed on basis of standard normal working hours, namely 48 hours a week; BenodeBihari Shah v. State of W.B. 1976 Lab I.C. 523 (Cal). Payment of overtime-[Section 14]: Section 14 provides that when an employee, whose minimum rate of wages is fixed under this Act by the hours, the day or by such longer wage period as may be prescribed, works on any day in excess of the number of hours constituting a normal working day, the employer shall pay him for every hour or part of an hour so worked in excess at the overtime rate fixed under this Act or under any other law of the appropriate Government for the time being in force whichever is higher. Payment for overtime work can be claimed only by the employees who are getting minimum rate of wages under the Act and not by those getting better wages. (1998 LLJ I SC 815). Wages of a worker who works less than normal working day-[Section 15]: Where the rate of wages has been fixed under the Act by the day for an employee and if he works on any day on which he employed for a period less than the requisite number of hours constituting a normal working day, he shall be entitled to receive wages for that day as if he had worked for a full working day. Provided that he shall not receive wages for full normal working day – i. if his failure to work is caused by his unwillingness to work and not by omission of the employer toprovide him with work, and ii. such other cases and circumstances as may be prescribed. Wages for two or more classes of work-[Section 16]: Where an employee does two or more classes of work to each of which Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 24 NOTES “Only for Private Circulation”
  • 26. a different minimum rate of wages is applicable the employer shall pay to such employee in respect of the time respectively occupied in each such class of work wages at not less than the minimum rate in force in respect of each such class. Minimum time – rate wages for piece work-[Section 17]: Where an employee is engaged in work on piece work for which minimum time rate and not a minimum piece rate has been fixed, wages shall be paid in terms of Section 17 of the Act at minimum time rate. Maintenance of registers and records-[Section 18]: Apart from the payment of the minimum wages, the employer is required under Section 18 to maintain registers and records giving such particulars of employees under his employment, the work performed by them, the receipts given by them and such other particulars as may be prescribed. Every employee is required also to exhibit notices, in the prescribed from containing particulars in the place of work. He is also required to maintain wage books or wage-slips as may be prescribed by the appropriate Government and the entries made therein will have to be authenticated by the employer or his agent in the manner prescribed by the appropriate Government. Inspector Appointment and power of Inspector-[Section 19]: TheAppropriate Government can appoint by notification in the Official Gazette an Inspectorfor the purpose of this Act (section 19), and define the local limits within which the Inspector shall exercise their function. The power and function of the Inspectors appointed under this act are very much similar to those of the Inspectors appointed under The Payment of wages Act, 1936. Power and Function of Inspector: The inspector can within his local limit- a) enter at all reasonable hours, with such assistant ( if any ) or any local or other public authority ,as think fit any premises or place of premises where employees are employed or for the purpose of examining any register, record of wages or notices required to be kept; Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 25 NOTES “Only for Private Circulation”
  • 27. b) examine any person he find in such premises or depending on any reasonable causes believe is an employee or an employee who given out his work from therein; c) require any person giving out work or any out-workers to give any information, which in his power to give with respect to the names and addresses of the persons from or to whom the work is given out or received and with respect to the payment to be made for the work. d) seize or takes copies of the register, record of wages or notices in respect of any offence under the Act. e) exercise such other powers as may be prescribed. Within the meaning of section 175 and 176 under Indian Penal Code, any document or information given by the inspector shall be deemed to be legally bound. The inspector shall be deemed to be a public servant within the meaning of Indian Penal Code. The employee can claims for minimum wages (under section 20): 1. The Appropriate Government may by notification in the Official Gazette, appoint a) any Commissioner for Workmen’s Compensation, or b) any officer of the Central Government exercising functions as a Labour Commissioner for any region, c) any officer of the State Government not below the rank of the Labour Commissioner or, any other officer.Such person should have an experience as a judge of a Civil Court or as a stipendiary Magistrate to hear or decide any claims arising out of the payment of less than the minimum rates of wages. 2. Again for any claims of the employees under section 3, the employees himself or any legal practitioner or any official of a registered trade union or inspector can apply to such Authority and the application shall present to them within six month from the date on which the minimum wages became payable. 3. After the necessary enquiry, the Authority shall hear the applicant and the employer and give them opportunity of being heard. If the wages is paid of less than the minimum rates of wages, than the Authority may asked to the employer to pay exceed the actual amount which has to pay in addition with compensation not exceeding ten times the amount of such excess for such act. In any other case, if the payment become due than the employee will get together with the payment of such compensation as the Authority may think fit not exceeding ten Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 26 NOTES “Only for Private Circulation”
  • 28. rupees. 4. If under this section the Authority hearing any claim and found that it was either malicious or vexatious, it may direct penalty not exceeding fifty rupees to the employer by the person presenting the application. 5. Under this section if any amount is directed to be paid than as if it were a fine imposed by the Authority as a Magistrate or if he is not Magistrate than to such person whom the Authority makes application in this behalf as if were a fine imposed by such Magistrate. 6. Every direction is final under this section. 7. Every Authority appointed shall have all powers of a Civil Court under the Code of Civil Procedure, 1908. 33 Law of Wages and Principles of Wage Fixation Authority And Claims [Section 20-21]: Under Section 20(1) of the Act, the appropriate Government, may appoint any of the following as an authority to hear and decide for any specified area any claims arising out of payment of less than the minimum rate of wages or in respect of the payment of remuneration for the days of rest or of wages at the rate of overtime work: a) any Commissioner for Workmen’s Compensation; or b) any officer of the Central Government exercising functions as Labour Commissioner for any region; or c) any officer of the State Government not below the rank of Labour Commissioner; or d) any other officer with experience as a Judge of a Civil Court or as the Stipendiary Magistrate. The authority so appointed shall have jurisdiction to hear and decide claim arising out of payment of less than the minimum rates of wages or in respect of the payment remuneration for days of rest or for work done on such days or for payment of overtime. The provisions of Section 20(1) are attracted only if there exists a disputed between the employer and the employee as to the rates of wages. Where no such dispute exists between the employer and employees and the only question is whether a particular payment at the agreed rate in respect of minimum wages, overtime or work on off days is due to an employee or not, the appropriate remedy is provided by the Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 27 NOTES “Only for Private Circulation”
  • 29. Payment of Wages Act, 1936. Claims-[Section 20]: 1. The appropriate Government may, by notification in the Official Gazette, appoint 1[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 Government not below the rank of Labour Commissioner or any] other officer with experience as a judge of a Civil Court or as a stipendiary Magistrate to be the Authority to hear and decide for any specified area all claims arising out of the payment of less than the minimum rates of wages 2[or in respect of the payment of remuneration for days of rest for work done on such days under clause (b) or clause (c) of sub-section (1) of section 13 or of wages at the overtime rate under section 14,] to employees employed or paid in that area. 2. Where an employee has any claim of the nature referred to in subsection (1)], the employee himself, or any legal practitioner or any official of a registered trade union authorised in writing to act on his behalf, or any Inspector, or any person acting with the permission of the Authority appointed under sub-section (1), may apply to such Authority for a direction under subsection (3): Provided that every such application shall be presented within six months from the date on which the minimum wages 4[or other amounts] became payable: Provided further that any application 5[may be admitted after the said period of six months when the applicant satisfies the Authority that he had sufficient cause for not making the application within such period. 3. When any application under sub-section (2) is entertained theAuthority shall hear the applicant and the employer, or give them an opportunity of being heard, and after such further inquiry, if any, as it may consider necessary, may, without prejudice to any other penalty to which the employer may be liable under this Act, direct- i. . in the case of a claim arising out of payment of less than the minimum rates of wages, the payment to the employee of the amount by which the minimum wages payable to him exceed the amount actually paid, together with the payment of such compensation as the Authority may think fit, not exceeding ten times the amount of such excess; ii. in any other case, the payment of the amount due to the employee Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 28 NOTES “Only for Private Circulation”
  • 30. together with the payment of such compensation as the Authority may think fit, not exceeding ten rupees; and the Authority may direct payment of such compensation in cases where the excess or the amount due is paid by the employer to the employee before the disposal of the application. 4. If the authority hearing any application under this section is satisfied that it was either malicious or vexatious, it may direct that a penalty not exceeding fifty rupees be paid to the employer by the person presenting the application a. Any amount directed to be paid under this section may be recovered-if the Authority is a Magistrate, by the Authority as if it were a fine imposed by the Authority as a Magistrate, b. if the Authority is not a Magistrate, by any Magistrate, to whom the Authority makes application in this behalf, as if it were a fine imposed by such Magistrate. 5. Every direction of the Authority under this section shall be final. 6. Every Authority appointed under sub-section (1) shall have all the powers of a Civil Court under the Code of Civil Procedure, 1908 (5 of 1908), for the purpose of taking evidence and of enforcing the attendance of witnesses and compelling the production of documents, and every such Authority shall be deemed to be a Civil Court for all the purposes of section 195 and Chapter XXXV of the Code of Criminal Procedure, 1898 (5 of 1898). Single application in respect of a number of employees-[Section 21]: 1. [Subject to such rules as may be prescribed, a single application] may be presented under section 20 on behalf or in respect of any number of employees employed in the scheduled employment in respect of which minimum rates of wages have been fixed and in such cases the maximum compensation which may be awarded under sub-section (3) of section 20 shall not exceed ten times the aggregate amount of such excess, 2[or ten rupees per head as the case may be]. 2. The Authority may deal with any number of separate pending applications presented under section 20 in respect of employees in the scheduled employments in respect of which minimum rates of wages have been fixed, as a single application presented under sub-section (1) of this section and the provisions of that sub-section shall apply accordingly. Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 29 NOTES “Only for Private Circulation”
  • 31. Penalties for certain offences-[Section 22]: Any employer who a. Pays to any employee less than the minimum rates of wages fixed for that employee's class of work, or less than the amount due to him under the provisions of this Act or b. Contravenes any rule or order made under section 13 shall be punishable with imprisonment for a term which may extend to six months or with fine which may extend to five hundred rupees or with both: Provided that in imposing any fine for an offence under this section the Court shall take into consideration the amount of any compensation already awarded against the accused in any proceedings taken under section 20 . General provision for punishment of other offences-[Section 22A]: Any employer who contravenes any provision of this Act or of any rule or of order made thereunder shall if no other penalty is provided for such contravention by this Act, be punishable with fine which may extend to five hundred rupees. Cognizance of Offences-[Section 22B]: 1. No Court shall take cognizance of a complaint against any person for an offence- a. under clause (a) of section 22 unless an application in respect of the facts constituting such offence has been presented under section 20 and has been granted wholly or in part, and the appropriate Government or an officer authorised by it in this behalf has sanctioned the making of the complaint; b. under clause (b) of section 22 or under section 22-A, except on a complaint made by, or with the sanction of, an Inspector. 2. No Court shall take cognizance of an offence – a. under clause (a) or clause (b) of section 22, unless complaint thereof is made within one month of the grant of sanction under this section; b. under section 22-A, unless the complaint thereof is made within six months of the date on which the offence is alleged to have been committed. Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 30 NOTES “Only for Private Circulation”
  • 32. Offences by companies-[Section 22C]: 1. If the person committing any offence under this Act is a company, every person who at the time the offence was committed was in charge of, and was responsible, to the company for the conduct of the business of the company as well as the company shall be deemed to Law of Wages and Principles of Wage Fixation 38 be guilty of the offence and shall be liable to be proceeded against and punished accordingly; Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence. 2. . Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer of the company shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation -For the purposes of this section- a. “Company” means anybody corporate and includes a firm or other association of individuals, and b. “Director” in relation to a firm means a partner in the firm. Payment of undisbursed amounts due to employees-[Section 22D]: All amounts payable by an employer to an employee as the amount of minimum wages of the employee under this Act or otherwise due to the employee under this Act or any rule or order made thereunder shall, if such amounts could not or cannot be paid to the employee on account of his death before payment or on account of his whereabouts not being known, be deposited with the prescribed authority who shall deal with the money so deposited in such manner as may be prescribed. 39 Law of Wages and Principles of Wage Fixation Protection against attachment of assets of employer with Government- [Section 22E]: Any amount deposited with the appropriate Government by an employer to secure the due performance of a contract with that Government Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 31 NOTES “Only for Private Circulation”
  • 33. and any other amount due to such employer from that Government in respect of such contract shall not be liable to attachment under any decree or order of any Court in respect of any debt or liability incurred by the employer other than any debt or liability incurred by the employer towards any employee employed in connection with the contract aforesaid. Application of Payment of WagesAct, 1936, to scheduled employments- [Section 22 F]: 1. Notwithstanding anything contained in the Payment of Wages Act, 1936 (4 of 1936), the appropriate Government may, by notification, in the Official Gazette, direct that, subject to the provisions of sub-section (2), all or any of the provisions of the said Act shall with such notifications, if any, as may be specified in the notification, apply to wages payable to employees in such scheduled employment as may be specified in the notification. 2. Where all or any of the provisions of the said Act are applied to wages payable to employees in any scheduled employment under sub-section (1), the Inspector appointed under this Act shall be deemed to be the Inspector for the purpose of enforcement of the provisions so applied within the local limits of his jurisdiction. Exemption of employer from liability in certain cases-[Section 23]: Where an employer is charged with an offence against this Act, he shall be entitled, upon complaint duly made by him, to have any other person whom he charges as the actual offender, brought before the Court at the time appointed for hearing the charge; and if, after the commission of the offence has been proved, the employer proves to the satisfaction of the Court- a. that he has used due diligence to enforce the execution of this act, and b. that the said other person committed the offence in question without his knowledge, consent or connivance, that other person shall be convicted of the offence and shall be liable to the like punishment as if he were the employer and the employer shall be discharged: Provided that in seeking to prove, as aforesaid, the employer may be examined on oath, and the evidence of the employer or his witness, if any, shall be subject to cross examination by or on behalf of the person whom the employer charges as the actual offender and by the prosecution. Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 32 NOTES “Only for Private Circulation”
  • 34. Bar of suits-[Section 24]: No Court shall entertain any suit for the recovery of wages in so far as the sum so claimed- a. forms the subject of an application under section 20 which has been presented by or on behalf of the plaintiff, or b. has formed the subject of a direction under that section in favour of the plaintiff, or c. has been adjudged in any proceeding under that section not to be due to the plaintiff, or d. could have been recovered by an application under that section. Contracting out-[Section 25]: Any contract or agreement, whether made before or after the commencement of this Act, whereby an employee either relinquishes or The Minimum Wages Act, 1948 Sec. 26 reduces his right to a minimum rate of wages or any privilege or concession accruing to him under this Act shall be null and void in so far as it purports to reduce the minimum rate of wages fixed under this Act. Exemptions and Exceptions-[Section 26]: 1. The appropriate Government may, subject to such conditions if any as it may think fit to impose, direct that the provisions of this Act shall not apply in relation to the wages payable to disabled employees. 2. The appropriate Government may, if for special reasons it thinks so fit, by notification in the Official Gazette, direct that [subject to such conditions and] for such period as it may specify the provisions of this Act or any of them shall not apply to all or any class of employees employed in any scheduled employment or to any locality where there is carried on a scheduled employment. [(2-A) The appropriate Government may, if it is of opinion that, having regard to the terms and conditions of service applicable to any class of employees in a scheduled employment generally or in a scheduled employment in a local area [or to any establishment or a part of any establishment in a scheduled employment] it is not necessary to fix minimum wages in respect of such employees of that class [or in respect of employees in such establishment or part of any establishment] as are in receipt of wages exceeding such limit as may be prescribed in this behalf, direct by notification in the Official Gazette Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 33 NOTES “Only for Private Circulation”
  • 35. and subject to such conditions, if any, as it may think fit to impose, that the provisions of this Act or any of them shall not apply in relation to such employees; 3. Nothing in this Act shall apply, to the wages payable by an employer to a member of his family who is living with him and is dependent on him. Explanation -In this sub-section a member of the employer's family shall be deemed to include his or her spouse or child or parent or brother or sister Power of the appropriate Government to add to Schedule: Power of State Government to add to Schedule-[Section-27]: Provides that the appropriate Government may, by notification in the Official Gazette, add to either part of the schedule any employment in respect of which it is of opinion that minimum rate of wages should be fixed – under this Act. But before doing so the Government concerned shall give three months’ notice by an Official Gazette notification of its intention to do so. After notice and subsequent addition any employment in the schedule, the Schedule shall deemed to be amended accordingly in respect of that state. Power of Central Government to give directions-[Section 28]: Central Government may give directions to a State Government as to the carrying into execution of this Act in the State. Power Of The Central Government To Make Rules-[Section 29]: Section 29 provides that Central Government may by notification in the Official Gazette make rules for carrying out the purpose of this Act in respect of the following: a. Prescribe the term of office of the members. b. The procedure to be followed in conduct of business. c. The method of voting. d. The manner of filling up casual vacancies in the membership of the Central advisory Board and e. The quorum necessary for a transaction of business of the Central Advisory Board. Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 34 NOTES “Only for Private Circulation”
  • 36. Power of the appropriate Government to make rules-[Section 30]: The appropriate Government may, subject to the condition of ‘the previous publication’, by notification in the Official Gazette, make rules for carrying out the purpose of this Act. [Section 30(1)]. Section 30(2) confers special powers for making rules for carrying out the purpose of this Act. Such rules may – a) prescribe the term of office of the members, the procedure to be followed in the conduct of business, the method of voting, the manner of filling up casual vacancies in membership and the quorum necessary for the transaction of business of the committees, sub-committees, and the Advisory Board. b) prescribe the method of summoning witness, production of document relevant to the subject-matter of the enquiry before the committees, sub-committees, and the Advisory Board; c) prescribe the mode of computation of the cash value of wages in kind and of concessions in respect of supplies of essential commodities at concessional rates; d) prescribe the time and conditions of payment of, and the deduction permissible from wages; e) provide for giving adequate publicity to the minimum rate of wages fixed under the Act, f) provide for a day of rest in every period of seven days and for the payment of remuneration in respect of such day; g) prescribe the number of hours of work which shall constitute a normal working day; h) prescribe the cases and circumstances in which an employee employed for a period of less than the requisite number of hours constituting a normal working day shall not be entitled to receive wages for a full normal working day; i) prescribe the form of registers and records to be maintained and the particulars to be entered in such registers and records; j) provide for the issued of wage books and wage slips and prescribe the manner of making and authenticating entries in wage books and wage slips; k) prescribe the powers of Inspectors for purpose of this Act; l) regulate the scale of costs that may be allowed in proceedings under section 20; m) prescribe the amount of court fees payable in respect of proceedings Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 35 NOTES “Only for Private Circulation”
  • 37. under section 20, and n) Provide for any other matter which is to be or may be prescribed. Rules made by Central Government to be laid before Parliament- [Section 30A]: Every rule made by the Central Government under this Act shall be laid as soon as may be after it is made before each House of Parliament while it is in session for a total period of thirty days which may be comprised in one session or two successive sessions and if before the expiry of the session in which it is so laid or the session immediately following both Houses agree in making any modification in the rule or both Houses agree that the rule should not be made the rule shall thereafter have effect only in such modified form or be of no effect as the case may be so however that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule. Validation of fixation of certain minimum rates of wages-[Section 31]: Where during the period – a. commencing on the 1st day of April 1952 and ending with the date of the commencement of the Minimum Wages (Amendment) Act 1954 (26 of 1954); or b. commencing on the 31st day of December 1954 and ending with the date of the commencement of the Minimum Wages (Amendment) Act 1957 (30 of 1957); or c. commencing on the 31st day of December 1959 and ending with the date of the commencement of the Minimum Wages (Amendment) Act 1961 (31 of 1961) minimum rate of wages have been fixed by an appropriate government as being payable to employees employed in any employment specified in the Schedule in the belief or purported belief that such rates were being fixed under clause (a) of sub-section (1) of section 3 as in force immediately before the commencement of the Minimum Wages (Amendment) Act 1954 (26 of 1954) or the Minimum Wages (Amendment) Act 1957 (30 of 1957) or the Minimum Wages (Amendment) Act 1961 (31 of 1961) as the case may be suchLaw of Wages and Principles of Wage Fixation 45rates shall be deemed to have been fixed in accordance with law and shall not be called in question in any court on the ground merely that the relevant date specified for the purpose in that clause had expired at the time the rates were fixed : Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 36 NOTES “Only for Private Circulation”
  • 38. Provided that nothing contained in this section shall extend or be construed to extend to affect any person with any punishment or penalty whatsoever by reason of the payment by him by way of wages to any of his employees during any period specified in this section of an amount which is less than the minimum rates of wages referred to in this section or by reason of non- compliance during the period aforesaid with any order or the rule issued under section 13. Compliances under the Act: The establishment must ensure following compliances under the Act. These compliances are not exhaustive but illustrative. 1. The Establishment is covered by the definition “Scheduled Employment” with effect from……. 2. The Government revised the minimum wages once/twice/ thrice during the financial year under reference and the Establishment has paid to all its employees minimum wages in accordance with the rates at respective point of time and at the respective rates specified in notification under Section 5 of the MWA. 3. The Establishment has issued wage slips to all its employees in respect of each of the wage period……….. 4. Where the services of any employee were terminated for any reason whatsoever, the wages were paid within two working days from the date of such termination. 5. The Establishment did not make any unauthorized deduction from the wages of any of its employees. Further, the deductions if any, made were within the limits of fifty percent (or seventy five percent in case of cooperatives) of wages earned by such employees during the period under reference. 6. Where the Establishment was constrained to impose any fine or deduct wages on account of damages caused by any employee, the latter was given an opportunity of being heard in the presence of a neutral person and was also communicated the amount of fine imposed or deduction made from the wages. 7. The Establishment has eight working hours per day, inclusive of half an hour of interval. 8. All claims under Section 20 of the MWA were paid within the time limit specified in the Order. Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 37 NOTES “Only for Private Circulation”
  • 39. CONCLUSION: Wage fixation is a social welfare programme. With the advent of the doctrine of a welfare state, which is based on notions of progressive social philosophy the theory of demand and supply which were allowed free scope under the doctrine of laissez faire, have become obsolete in construing the wage structure. The conception of minimum wages is based on the principles of equity and social justice. Its underlying idea is that "he who works is entitled to a fair remuneration which may enable him to live a life consistent with human dignity". Employers are, therefore, under an obligation, (economic or social), to provide their employees safe, healthy and comfortable living, employment and working conditions. It is only whenthey 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 recognized its duty to undertake legislation to protect workers from being exploited The various advantages of the minimum wage fixation can be summarized as follows: a) It increases the standard of living for the poorest and most vulnerable class in society. b) Motivates and encourages employees to work harder. 47 Law of Wages and Principles of Wage Fixation c) It stimulates consumption, by putting more money in the hands of low- income people, who spend their entire paychecks. d) It decreases the cost of government social welfare programs by increasing incomes for the lowest-paid. e) Encourages people to join the workforce rather than pursuing money through illegal means, e.g., selling drugs. The minimum wage fixation has played a significant role in getting at least minimum wages to workers. Let us hope we will reach living wages in short time which has been guaranteed by Article 43 of the Constitution. CASE LAWS: 1. President Cinema Workers Union Affiliated to BharatiyaMazdoorSangh vs. The Secretary Social Welfare and Labor Department, 2005 LLR 648 (Karn He) It was held that inaction on the part of the Government in not revising minimum wages for 13 years will not be justified hence revision be made within 6 months. Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 38 NOTES “Only for Private Circulation”
  • 40. 2. Executive Engineer, Rural Works Division, Mayurbhanj vs. Addl. District Magistrate, Mayurbhanj, 2005 LLR 121 (Ori HC), It was held that, under the Minimum Wages Act, it is the liability of principal employer to pay difference of wages to the employees of the contractor. 3. Agricultural Produce Market Committee vs. Weighmens Association, Tiptur, 2007 LLR (SN) 333 (Kam He). It was held that in the absence of relationship of master and servant, the weigh men will not be entitled to minimum wages. 4. Birla Institute of Technology vs. State of Bihar, 2007 LLR (SN) 330, It was held that Birla Institute of Technology will be liable to pay the wages as per The Minimum Wages Act, 1948. 5. Delhi Council for Child Welfare v. Sheela Devi, 2006 LLR 1181 (Del He), It was held that A Society is liable to pay minimum wages to its employees. 6. Sonu vs. Municipal Corporation of Delhi, 2005 LLR 778 (Del He), It was held that Minimum wages to the safaikaramcharis cannot be denied on the ground that they work on part-time basis. 7. Security Chamber Pvt. Ltd. vs. Mysore KirloskJIr Ltd., (2006) ( (SC), It was held that private security guards through contractor will not be entitled to minimum wages in the absence of scheduled employment. Lesson round up: – The Minimum Wages Act empowers the Government to fix minimum wages for employees working in specified employments. It provides for review and revision of minimum wages already fixed after suitable intervals not exceeding five years. – It extends to the whole of India and applies to scheduled employments in respect of which minimum rates of wages have been fixed under this Act. – The appropriate government shall fix the minimum rates of wages payable to employees employed in a scheduled employment. – It may review at such intervals not exceeding five years the minimum rates of wages so fixed, and revise the minimum rates if necessary. – The employer shall pay to every employee in a scheduled employment under him wages at the rate not less than the minimum rates of wages Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 39 NOTES “Only for Private Circulation”
  • 41. fixed under the Act. – The Act also provides for regulation or working hours, overtime, weekly holidays and overtime wages. Period and payment of wages, and deductions from wages are also regulated. – The Act provides for appointment the authorities to hear and decide all claims arising out of payment less than the minimum rates of wages or any other monetary payments due under the Act. The presiding officers of the Labour court and Deputy Labour Commissioners are the authorities appointed. Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 40 NOTES “Only for Private Circulation”
  • 42. Questions 1. Discuss the object and scope of the Minimum Wages Act. 2. Who is authorize to fix minimum wages and in what manner? 3. What points should be taken into consideration while fixing minimum wages? 4. Discuss claims under The Minimum Wages Act, 1948? 5. Enumerate the procedure for fixing and revising the minimum wages. 6. What registers and records are required to be maintained under The Minimum Wages Act, 1948? 7. Write a note on: a. Living wages b. Fixation of minimum rates of wages c. Wages Law of Wages And Principles of Wage Fixation The Minimum Wages Act, 1948 41 NOTES “Only for Private Circulation”
  • 43. SYNOPSIS 1. Introduction 2. Objectives of the Act 3. Responsibility for payment of wages. 4. Authorised deductions of wages and delay in payment. 5. Offences, their trial procedure and penalties. 6. Enforcement machinery under the Act- their powers and functions. 7. Conclusion Introduction: In an economy where even minimum wages were not paid to the workers, the need to protect the wages was felt in the early years of twentieth century. With a view to achieve this object, a private Bill called “Weekly Payment Bill” was introduced in the legislature in the year 1925. The bill aimed at to remove some of the evils prevalent in the economy, e.g., exploitation of labour by imposing arbitrary fined, delay in payment of wages and unauthorized deductions from wages. The bill was withdrawn on the assurance of the Government that the matter was under consideration. The desirability for putting up legislation was keenly felt in the year 1926 to regulate the extent of fines and other unauthorized deductions. The question was again considered by Royal Commission on Labour in India. The Commission made the following important recommendations: i. Children should be exempt from fines. ii. The maximum amount deducted in fines should not exceed in any month half an anna in the rupee of workers’ earnings. iii. The sums realized from fines should be utilized from a purpose beneficial to the employees as a whole and should be approved by some recognized authority. iv. A notice clearly mentioning the acts and omissions, in respect of which Law of Wages And Principles of Wage Fixation The Payment of Wages Act, 1936 42 NOTES “Only for Private Circulation” UNIT - 2 THE PAYMENT OF WAGES ACT, 1936
  • 44. fines may be imposed, should be posted and other fines shall be deemed to be illegal. v. Any deduction made on account of damage or loss to goods should not exceed the wholesale price of goods damaged. vi. Deductions may be allowed on account of provision for housing accommodation and of tools and raw material. vii. In all cases the amount of deductions should not exceed the equivalent of service rendered. viii. Impositions of a deduction not permitted by law should be made penal. The bill of Payment of Wages Act based on the above recommendations was passed in 1936. Thereafter this Act has been amended twice in 1937 and again in 1940, 1964, 1965, 1970, 1976 and the last amendment being made by Payment of Wages (Amendment) Act, 1982. The Amending act comes into force w.e.f. 15th October, 1982. The application of the Act is now extended to cover persons whose average wages are below Rs. 1600. The need for amending the Act was felt as a large number of workers previously covered by the Act got exclude with the upward revision of pay scales and increase in D.A. and other allowances in recent years. The Payment of Wages (Amendment) Act, 2005 The Act was lastly amended in 2005 (w.e.f 9-772005). The Act applies to wages payable to an employed person in respect of a wages period if such wages for that wage period so not exceed six thousand five hundred rupees per month or such other higher sum which, on the basis of figures of the Consumer Expenditure Survey published by the National Sample Survey Organization, the Central Government may, after every five years, by notification in the Official Gazette, specify. Section 3 of the Act – Responsibility for payment of wages – was totally amended. Section 8(6) was amended and it now reads, “No fine imposed on any employed person shall be recovered from him by instalments or after the expiry of 90 days from the day on which it was imposed.” Penalty was enhanced from Rs. 50 to Rs. 375 for malicious or vexatious claims uls 15 of the Act. ‘Claims arising out of deductions from wages or delay in payment of wages and penalty from malicious or vexations claims (Section 15) was thoroughly Law of Wages And Principles of Wage Fixation The Payment of Wages Act, 1936 43 NOTES “Only for Private Circulation”
  • 45. amended.’ Penalty for offences under the Act was enhanced many times. Object. As stated in the preamble to the Act, the object of the Act is to regulate the payment of wages to certain class of persons employed in industry. The regulation contemplated by the Act is of two kinds: 1. About the date of payment of wages, and 2. About deductions from wages whether fine or otherwise. The words “certain class of persons” in the preamble are important, for the Act applies to persons drawing on an average less than one thousand six hundred rupees an month. [Section 1(6)] APPLICATION OF THE ACT: The Payment of Wages Act, 1936 extends to the whole of India. It comes into force on 28th March, 1937. It applies to the payment of wages to: 1. Persons employed in any factory. 2. Persons (otherwise than a factory) employed in any railway by railway administration or either directly or through a contractor or by persons fulfilling a contract with railway administration. Appropriate Government is empowered to make the Act applicable to any class of person employed in any industrial establishment or in any class or group of industrial establishment subject to the following two conditions. Law of Wages and Principles of Wage Fixation 54 i. Issue of three months notice of its intention of doing so; and ii. Notification of extension in the Official Gazette. Provided that in relation to any such establishment owned by the Central Government, no such notification shall be issued except with the concurrence of that Government. This Act applies to wages payable to an employed person in respect of a wage period if such wages for that wage period do not exceed. Six thousand five hundred rupees per month or such other higher sum which, on the basis of figures of the Consumer Expenditure Survey published by the National Sample Survey Organization, the Central Government may after every five years, by notification in the Official Gazette, specify. OBJECT OF THE ACT: Law of Wages And Principles of Wage Fixation The Payment of Wages Act, 1936 44 NOTES “Only for Private Circulation”
  • 46. The main objects of the Act are- 1. To avoid unnecessary delay in payment of wages to the employees, 2. To prevent unauthorized deduction from the wages, 3. To require to employer to pay wages on working day and not on holiday, 4. To prevent the employer from making payment of wages in kinds, 5. To regulate the payment of wages to certain class of persons employed in industries. DEFINITIONS: SECTION 2 Employed person-[Section 2 (i)]: Employed person includes the legal representative of a deceased employed person; Employer-[Section 2 (ia)]: Employer includes the legal representative of a deceased employer; Industrial or other establishment- [Section 2 (ii)]: According to Section 2 (ii) of this Act Industrial or other establishment means any – a) Tramway service or motor transport service engaged in carrying passengers or goods or both by road for hire or reward; aa)air transport service other than such service belonging to or exclusively employed in the military naval or air forces of the Union or the Civil Aviation Department of the Government of India; b) Dock wharf or jetty; c) Inland vessel mechanically propelled; d) Mine quarry or oil-field; e) Plantation; f) Workshop or other establishment in which articles are produced adapted or manufactured with a view to their use transport or sale; g) establishment in which any work relating to the construction development or maintenance of buildings roads bridges or canals or relating to operations connected with navigation irrigation or to the Law of Wages And Principles of Wage Fixation The Payment of Wages Act, 1936 45 NOTES “Only for Private Circulation”
  • 47. supply of water or relating to the generation transmission and distribution of electricity or any other form of power is being carried on; h) any other establishment or class of establishments which the Central Government or a State Government may having regard to the nature thereof the need for protection of persons employed therein and other relevant circumstances specify by notification in the Official Gazette. Wages- [Section 2 (iv)]: means all remuneration (whether by way of salary allowances or otherwise) expressed in terms of money or capable of being so expressed which would if the terms of employment express or implied were fulfilled by payable to a person employed in respect of his employment or of work done in such employment and includes – a) any remuneration payable under any award or settlement between the parties or order of a court; Law of Wages and Principles of Wage Fixation 56 b) any remuneration to which the person employed is entitled in respect of overtime work or holidays or any leave period; c) any additional remuneration payable under the terms of employment (whether called a bonus or by any other name); d) any sum which by reason of the termination of employment of the person employed is payable under any law contract or instrument which provides for the payment of such sum whether with or without deductions but does not provide for the time within which the payment is to be made; e) any sum to which the person employed is entitled under any scheme framed under any law for the time being in force, but does not include- 1. any bonus (whether under a scheme of profit sharing or otherwise) which does not from part of the remuneration payable under the terms of employment or which is not payable under any award or settlement between the parties or order of a court; 2. the value of any house-accommodation or of the supply of light water medical attendance or other amenity or of any service excluded from the computation of wages by a general or special order of the State Government; 3. any contribution paid by the employer to any pension or provident Law of Wages And Principles of Wage Fixation The Payment of Wages Act, 1936 46 NOTES “Only for Private Circulation”