Minimum Wages Act, 1948: History, Objective & Applicability

Introduction

The Minimum wages act is to fix minimum wages to the workers including skilled or unskilled workers in the industry. The Act came into force after World War II in 1948. India is one of the developing countries with a number of unemployed, therefore the employers exploit the manual labourers by fixing low wages which is insufficient to meet their daily needs and medical expenses. Hence, the legislature enacted a law to prohibit the payment of wages below the employee’s subsistence level.

The wages provided by employers to workers should be following the minimum wages act, 1948. The Act is considered to be a violation of Article 19(1)(g) of the Indian constitution in the eyes of the employers, but the Supreme Court ruled that the act is based on the directive principles of state policy provided under Article 43 of Indian Constitution.

History of the Act

In 1919 the International labour organisation highlighted the importance of minimum wages as a part of the Treaty of Versailles. The concept of minimum wages was evolved to protect the workers against exploitation by the employers. The workers get wages substantially low when compared to the other industry workers. Hence, it became a crisis between the workers where they cannot meet their daily needs. In 1928, a draft was adopted for minimum wages in the International Labour Conference.

In 1929, the Royal Commission on labour adopted the subject of minimum wages and discussed establishing statutory wage-fixing machinery in India. In 1928, the resolution of the Geneva convention contained that the minimum wages act is to fulfil the aspiration of the workers and to be protected against exploitation by their employers in regard to low wages. Regarding the minimum wages legislation it has been discussed in third and fourth meetings of the Standing Labour Committee held in 1943 and 1944, also at a tripartite labour conference in 1943, 1944 and 1945.

Dr. B.R. Ambedkar drafted the Minimum Wages Bill, on 11th April 1946 the bill was introduced and enforced on 15th March 1948 due to delay by constitutional changes.

Objectives

• To ensure that statutory fixation of minimum wages to prevent exploitation of labour.
• To ensure that the labourers have a minimum standard of life.
• To bring social justice.
• To ensure that the workers can meet their daily needs, physical necessity, proper health and comfort.
• To provide for periodic revision of minimum wages fixed.
• To provide for the appointment of an Advisory Committee and boards with an equal number of representatives from employers and employees.

Importance

Minimum wages have been defined as “the minimum amount of remuneration that an employer is required to pay wage earners for the work performed during a given period, which cannot be reduced by collective agreement or an individual contract”.

The purpose of minimum wages is to protect workers against unduly low pay. They help ensure a just and equitable share of the fruits of progress to all, and a minimum living wage to all who are employed and in need of such protection. Minimum wages can also be one element of a policy to overcome poverty and reduce inequality, including those between men and women, by promoting the right to equal remuneration for work of equal value.^[1]

Scope and its applicability

The Act applies to the whole of India including Jammu and Kashmir. The provision of the Minimum Wages Act, 1948 are applicable to every employer that employs more than 1000 employees in a state. The provisions of the Act do not apply to the employees undertaken by the central government or railways unless the same has been consented by the central government.

Salient Features of the Act

• The Act specified minimum wages for all government sector employees including central and state government.
• The minimum wages is equal to minimum payment + Special allowances including house rent allowances.
• The wage-fixing mechanism according to the act is minimum wage rate, minimum piece rate, guaranteed time rate and price rate applicable to overtime.
• There are different classes for fixing minimum wages including different scheduled employments, different classes of work in the same scheduled employment, adults, adolescents, children, apprentices and different localities.
• There are standard criteria for fixing minimum wages.
• The food requirement must be ascertained by the regular calorie intake by the family.
• 25% of the total wage is also considered to be social expenditure.
• The minimum wages must be revised every five years and the same has to be announced every six months.
• The regional labour commission shall be the authority for claiming the remedy under section 20 of the minimum wages act, 1948.

Important definitions

1. Appropriate Government

Section 2(b): “appropriate Government” means concerning any scheduled employment carried on by or under the authority of the Central Government or a railway administration or concerning a mine, oil-field or major port, or any corporation established by a Central Act, the Central Government, and concerning any other scheduled employment, the State Government.

2. Competent Authority

Section 2(c): “competent authority” means the authority appointed by the appropriate Government by notification in its Official Gazette to ascertain from time to time the cost of living index number applicable to the employees employed in the scheduled employments specified in such notification.

3. Cost of living index number

Section 2(d): “cost of living index number” concerning employees in any scheduled employment in respect of which minimum rates of wages have been fixed, means the index number ascertained and declared by the competent authority by notification in the Official Gazette to be the cost of living index number applicable to employees in such employment.

4. 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.

5. Scheduled employment

Section 2(g): “scheduled employment” means employment specified in the Schedule or any process or branch of work forming part of such employment.

6. Wages

Section 2(h): “wages” means all remuneration, capable of being expressed in terms of money, which would, if the terms of the contract of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment.

7. 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 scheduled employment in respect of which minimum rates of wages have been fixed; and includes an out-worker 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 for 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 not being premises under the control and management of that other person; and also includes an employee declared to be an employee by the appropriate Government; but does not include any member of the Armed Forces of the Union.^[2]

Case laws regarding the definitions

In the case Linge Gowda Detective and Security Chamber (P) Ltd. v. Authority under Minimum Wages Act^[3]The Karnataka High Court states that the detective agency will not cover under the act, the employers are liable to pay minimum wages but the same employees who are engaged by the detective agency are on private duty and are not entitled to get minimum wages under the act. Therefore, no release can be sought against the contractor or manager.

In the case, Bandhua Mukti Morcha v. Union of India^[4] The Supreme Court held that the piece rated worker is also entitled to receive the minimum wages under the act irrespective of his outcome.

In the case, Madhya Pradesh Bidi Udyog Sangh, Sagar v. State of Madhya Pradesh^[5] The court stated that any payment which takes part like lay off compensation cannot fall within the definition of wages under Section 2(h) of the Minimum Wages Act, 1948.

Major Provisions covered under the Act

• Fixing of minimum rates of wages
• The minimum rate of wages
• Procedure for fixing and revising minimum wages
• Advisory board
• Central advisory board
• Correction of errors
• Payment of minimum rates of wages
• Fixing hours for a normal working day
• Overtime
• Wages for a worker who work less than normal hours
• Wages for two or more classes of work
• Minimum time rate wages for piece work
• Maintenance of registers and records
• Inspectors
• Claims
• Penalties for certain offences
• General provision for punishment of other offences
• Cognizance of offences
• Offences by companies
• Bar of suits
• Exemptions and exceptions.

Conclusion

The minimum wage act is a great revolutionary in the Indian economy, it has wider benefits for the employees. India is a country with a number of unemployed and poverty, this act will boost the economy to eradicate poverty by giving high wages to the employees who receive low wages, further it will encourage the unemployed to join the labour market. This Act gives complete protection for employees against exploitation.

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^[1] International Labour Organisation, definition and its purpose, available here

^[2] Minimum wages Act, 1948 Available here

^[3] ILR 1998 KAR 1715

^[4] (1984) SCC (L&S) 389

^[5] 1981 Lab 1C 363: 1981 Lab LN 434: (1981) LLJ 756.

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1. Labour Law; Notes, Cases & Study Material