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Minimum Wages Act, 1948 (Download Notes)
October 22, 2024
Overview: The Minimum Wages Act, 1948, is a fundamental piece of labour legislation in India that ensures wage protection for workers, particularly those in vulnerable sectors. For law students and candidates preparing for the All India Bar Examination (AIBE), understanding this Act is critical as it deals with the regulation of wages, workers’ rights, and labour welfare.
Here's why the Minimum Wages Act, 1948 should be a primary focus in legal education and professional examinations.
To help you with your preparation, we have curated notes that you can download from its blog and use for your preparation.
In this blog, we will cover:
- The Minimum Wages Act, 1948 Notes
- Amendments to the Act
- Objectives of the Minimum Wages Act
- Scope and Objective of the Minimum Wages Act
The Minimum Wages Act, 1948: Safeguarding Workers' Rights
The Minimum Wages Act of 1948 mandates that organizations pay a minimum amount to employees, whether skilled or unskilled, for specific jobs at a particular time.
Any contract or collective agreement cannot reduce this minimum wage. On 15 March 1948, the Act introduced the Tripartite Committee of Fair Wage, which set wage guidelines and established the process for wage fixation in India. The salary structure is often determined by the number of employees in an organization.
Purpose of the Minimum Wages Act, 1948
The primary aim of the Minimum Wages Act is to prevent worker exploitation and ensure a decent standard of living for employees.
The Act mandates that the government set and revise minimum wage rates every five years. Advisory committees are appointed to review and propose adjustments, which the government must implement promptly. Often, these changes are announced publicly before being enacted.
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Amendments to the Act
Since its inception, the Minimum Wages Act has undergone amendments, including significant changes in 2000, which revised the floor level of minimum wages.
The national minimum wage floor in India is ₹115, but there are exceptions for specific categories of workers. Some states, such as Andhra Pradesh, Kerala, and Gujarat, have lower minimum wage floors. The Act also introduced higher wages for workers with disabilities, emphasizing inclusivity.
Role of the Government
The government must consult with a committee, including representatives of the affected workers, to set the minimum wage. Once decided, the government must publish the new wage rate in official newspapers and enforce it within three months. Employers are obligated to adhere to these rates, and in cases of non-compliance, they must pay ten times the difference between the prescribed and paid wages.
Objectives of the Minimum Wages Act
The Act addresses the following key areas related to wage determination:
- Work Hours: An ordinary working day should include at least one break, and employees must have one rest day per week. Compensation for rest days must be at least equal to the overtime rate.
- Multiple Roles: If a worker is engaged in various tasks, their wage should reflect the different rates for each type of work.
- Record Keeping: Employers must maintain detailed employee wages and work hours records.
- Government Oversight: Governments appoint inspectors to monitor compliance and ensure fair implementation of the Act.
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Fixation and Revision of Minimum Wages
The Minimum Wages Act applies to industries nationwide, with wage rates typically revised every five years. Additionally, dearness allowance is increased every two years to account for inflation. Wages are adjusted based on a cost-of-living index, and can be set for entire states, regions, or specific industries. Central and State Governments are authorized to fix and revise minimum wages. For example:
- If wages pertain to Central Government employees or the Railways, the Central Government sets the rates.
- For other industries, the State Governments are responsible for fixing wages.
The National Floor Level Minimum Wage set by the Centre is often lower than the minimum wages established by individual states. This overlap in jurisdiction has caused debates, particularly around schemes like MGNREGA, which guarantees employment and sets wage rates at the central level.
Scope and Objective of the Minimum Wages Act
The primary aim of the Minimum Wages Act is to safeguard workers' necessities and ensure they receive fair compensation. Specifically, the Act aims to:
- Ensure Basic Needs: To secure the basic physical necessities, proper health, and overall comfort of employees.
- Fair Wages: To guarantee that workers are compensated fairly for their labour.
- Dignified Life: To ensure that workers can live decent lives and maintain a respectable standing in society.
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Criteria for Fixing Minimum Wages
As per Section 3 of the Minimum Wages Act, 1948, "The Appropriate Government" (which can include local, state, or central authorities) is responsible for setting minimum wages. These rates can be prescribed based on hours, days, months, or other wage periods as required. Notably, the rates do not need to be uniform across all regions; different rates can be set for different zones or areas.
If wages are fixed according to Section 4 of the Payment of Wages Act, 1936, the salary setting will follow that Act's guidelines.
Minimum Wages are Determined Based on:
- Time Rate: Wages are set according to the number of hours worked by the labourer.
- Piece Rate: Wages are based on the total number of units or pieces the worker produces.
- Overtime Rate: Wages are determined by the extra hours worked by the employee, regardless of the time or piece rate.
Wage Committee
The appropriate government forms a wage committee comprising representatives from employers and employees.
To ensure impartiality, the chairman is an independent individual with no vested interest in the employment scheme. This structure helps prevent discrimination against workers when determining wages.
Advisory Board
Under Section 7 of the Minimum Wages Act, an Advisory Board is established to propose changes and recommendations to labour laws. This board advises both State and central governments on fixing minimum wages.
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Section 9 of the Act also details the formation of Committees and Subcommittees, which include:
- Representatives appointed by the appropriate government.
- Employers and employees from scheduled employment, with equal representation from both sides.
- Some independent members must not exceed one-third of the total number of members. An independent person is appointed as the Chairman of these committees.
Wages in Kind
As per Section 11 of the Act, wages must be paid in cash. However, in cases where it is customary to pay wages either wholly or partly in kind, the government may issue a notification in the official gazette to enforce payment in kind, either fully or partially.
Consequences of Non-Compliance
Failure to comply with the Minimum Wages Act, such as not paying the prescribed minimum wages, is a punishable offence. Violating the provisions regarding the fixation of wages or work hours can lead to:
- Imprisonment for up to 5 years.
- Fines up to ₹10,000.
Section 22 of the Act outlines these penal sanctions, underscoring the legal consequences of failing to adhere to the Act’s requirements.
Conclusion
The Minimum Wages Act, 1948, plays a crucial role in protecting both employers and employees by preventing exploitation and ensuring fair wages. The law requires the government to regularly review and revise wage rates, safeguarding workers' rights and enabling them to provide for their families. Though complex, the Act ensures fair compensation and is a critical piece of legislation for maintaining worker welfare across industries in India. Every citizen should know its provisions to ensure their rights are upheld.