Minimum Wages Act 1948

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The Minimum Wages Act, 1948
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Parliament of India

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Citation
Enacted by
Commenced

15 March 1948

Status: In force

The Minimum Wages Act 1948 is an Act of Parliament concerning Indian labour law that sets the minimum wages that must be paid to skilled and unskilled labours.

The Indian Constitution has defined a 'living wage' that is the level of income for a worker which will ensure a basic standard of living including good health, dignity, comfort, education and provide for any contingency. However, to keep in mind an industry's capacity to pay the constitution has defined a 'fair wage'.[1] Fair wage is that level of wage that not just maintains a level of employment, but seeks to increase it keeping in perspective the industry's capacity to pay.

To achieve this in its first session during November 1948, the Central Advisory Council appointed a Tripartite Committee of Fair Wage. This committee came up with the concept of a minimum wage, which not only guarantees bare subsistence and preserves efficiency but also provides for education, medical requirements and some level of comfort.[1]

India introduced the Minimum Wages Act in 1948,[2] giving both the Central government and State government jurisdiction in fixing wages. The act is legally non-binding, but statutory. Payment of wages below the minimum wage rate amounts to forced labour. Wage boards are set up to review the industry's capacity to pay and fix minimum wages such that they at least cover a family of four's requirements of calories, shelter, clothing, education, medical assistance, and entertainment. Under the law, wage rates in scheduled employments differ across states, sectors, skills, regions and occupations owing to difference in costs of living, regional industries' capacity to pay, consumption patterns, etc. Hence, there is no single uniform minimum wage rate across the country and the structure has become overly complex. The highest minimum wage rate as updated in 2012 was Rs. 322/day in Andaman and Nicobar[3] and the lowest was Rs. 38/day in Tripura.[4] In Mumbai, as of 2017, the minimum wage was Rs. 348/day for a safai karmachari (sewage cleaner and sweeper), but this was rarely paid.[5]

History

1920: K.G.R. Choudhary recommended setting up boards for determining minimum wages for each industry.[6]

1928: International Labour Conference implemented system to fix wages for different trades.[7] However, the practice was not put into legislation in India.

1943: Standing Labour Committee, a Labour Investigation Committee was appointed on the recommendation of Indian Labour Conference (ILC), 1943 to look into conditions of labour in terms of their wages, housing, social conditions, and employment.[8]

1945: The first bill on minimum wages was drafted in ILC.[8]

1946: A bill on minimum wages was introduced in Central Legislative assembly on the recommendations of 8th Standing Labour Committee. The 8th meeting of the Standing Labour Committee, 1946[8] also recommended that a separate legislation that specified working hours, minimum wages and paid holidays of unorganised sector be enacted.

1947: Post-independence representatives of labour, employers, and government attended a government-organised conference. They defined minimum wages to be such that they should not only provide for subsistence but should also be enough for education, medical requirements and other amenities and should sustain efficiency.[9]

1948: The Minimum Wages Act was eventually passed and was effective from 15 March. Under the act a tripartite committee "The Tripartite Committee of Fair Wage"[10] was appointed that set definitions and guidelines for formulating a wage structure in India. The Committee of fair wage definition of minimum wage as: "The minimum wages must be provided not merely for the bare subsistence of life but also for the preservation of efficiency of the workers by providing for some measures of education, medical requirement and amenities". Recommendations of this committee have now set the foundations of wage fixation.

1957: The 15th Labour conference added some norms in the fixation of minimum wages such that revision and fixation of wage rates are need-based. The recommendations were:[9]

  • The cost of three consumption units- husband, wife and two children for one earner. Income from women and children should be ignored
  • Satisfy the minimum food requirement of 2700 calories per person
  • Clothing requirement of 72 yards for a family annually
  • Rent of the minimum area as specified by Government's Industrial Housing Scheme
  • 20% of minimum wage should be the cost of fuel and miscellaneous items of expenditure

1987: Parliamentary sub-committee on unorganised labour concluded that minimum wages fail to ensure a livelihood above the government defined poverty line for the unorganised sector. It also revealed some flaws in implementation of the act. The committee noted that wages are not fixed or revised regularly in some states.[11] The committee recommended that factors such as nutrition requirements, poverty line, shelter, clothing, fuel, light, medical and educational expenses should be taken into account while fixing and revising minimum wages.[12]

1988: Labour Minister's Conference recommend the necessity of an allowance that safeguards wages against inflation, called Variable Dearness Allowance (VDA).[13]

1991: Hon’ble Supreme court's judgment in the case of Reptakas & Co. specified that 25% of the minimum wages should also account for Children's education, required medical expenses, recreation in festivals/ceremonies and provision for old age and marriage. National Commission on Rural Labour (NCRL) recommended the government to introduce a national minimum wage floor level for uniformity.[14]

VDA became effective. It is revised twice in a year, on 1 April and 1 October.[15]

1992: Thirtieth session of ILC observed the ineffectiveness of states' implementation machinery and labour administration. It urged the civil society especially NGOs and workers' organisations to inspect and ensure payment of minimum wages.[1] The thirtieth session also discussed that officials should be wary of fixing minimum wage rates to impracticable high levels.

1994: The 9th Centre of Indian Trade Unions conference along with insisting a minimum wage floor of Rs. 78.50, raised the following demands

  • The family should be taken as five units instead of three.
  • The Minimum Wages Act should cover all employments.
  • There should be full neutralisation of cost of living with automatic linkage with the consumer prices index and revision after every six months or 50-point rise in the CPI, whichever is earlier.

1996: Government fixed the national minimum wage floor at INR 35/day as per the recommendations of NCRL. Since 2009 it stands at INR 100/day.[1]

2007: The Tamil Nadu state government announced that it has fixed minimum wages for 90% of all occupations.

The Indian National Trade Union Congress appeals for a "national decent minimum wage" for all industries that would be based on workers' needs.[1]

2008: Working Women in Houses Union marched in Salem demanding statutory fixation of minimum wages for house maids and servants.

2009: The Central government de-linked MGNREGA's wage rates from minimum wages through notification under Section 6(1). Wage rates that were initially aligned with respective states' minimum wages were now fixed at a uniform wage rate of Rs. 100/- under the scheme.[16]

On 12 August, the Andhra Pradesh wrote to the Ministry of Rural Development that workers under the MGNREGA scheme are being paid less than the Minimum wage rate and this could attract "contempt of court". There was no response to this.

On 10 July, the Labour Department responded to the notification of wage rate in MGNREGA scheme as against the minimum wage rate: "Minimum Wages Act, 1948 guarantees minimum wages to workers and there cannot be a wage rate less than the minimum wage rate in any circumstances."[16]

2010: Andhra Pradesh's government says that any payment including that under the MGNREGA scheme, below minimum wage rate is unconstitutional.

2011: As per Karnataka High Court's interim order MGNREGA's wage rates are to be aligned with the Minimum Wage rates of the state.[17]

National Human Right Commission convened a zonal workshop on fixation, revision and enforcement of minimum wage is Brick kiln industry.[18]

2012: Mazdoor Kisan Shakti Sangathan urges the Supreme Court to withdraw the SLP to the PM to rediscuss Karnataka High Court and Andhra Pradesh high Court's judgments[19]

Supreme Court asks the Central Government to consider respective states' minimum wages to bring parity between them.

The Labour Department decides to make revisions in minimum wage rates mandatory within three years.[20]

2015: From 1 July 2015 the National Floor Level of Minimum Wage was raised to Rs 160 per day.

2015: On 1 September 2015 labours in unorganised sector extended their support to one-day nationwide general strike[21] called by central trade unions (CTUs). Later than Shri Bandaru Dattatreya, the Minister of State(IC) for Labour and Employment, elaborated on the initiatives and continuing efforts of the Government to address the issues and concerns of the Trade Unions for the welfare of workers. If the norms are implemented then the minimum wage would be not less than Rs 273 per day which is currently Rs 160 per day.[22]

Contents

The Act provides for fixing wage rate (time, piece, guaranteed time, overtime) for any industry .

1) While fixing hours for a normal working day as per the act should make sure of the following:

  • The number of hours that are to be fixed for a normal working day should have one or more intervals/breaks included.
  • At least one day off from an entire week should be given to the employee for rest.
  • Payment for the day decided to be given for rest should be paid at a rate not less than the overtime rate.

2) If an employee is involved in work that categorises his service in two or more scheduled employments, the employee's wage will include respective wage rate of all work for the number of hours dedicated at each task.

3) It is mandatory for the employer to maintain records of all employee's work, wages and receipts .

4) Appropriate governments will define and assign the task of inspection and appoint inspectors for the same.

Fixation and revision of minimum wages

The Minimum Wages Act 1948 generally specifies minimum wage rates on a per day basis,[23] and extends to the entire country and is revised within a period of not less than five years, however there is a provision to increase dearness allowance every two years. The norms in fixing and revision of minimum wages were first recommended by ILC, 1957.[24]

Revision of minimum wage rates is based on a 'cost of living index' and wages can be fixed for an entire state, part of the state, class or classes and employments pertaining to these categories. The fixation of wages is based on the norms mentioned and a wage board (different for different industry).

Under the Minimum Wages Act, State and Central Governments have the power to fix and revise minimum wages. The act specifies that the "appropriate" government should fix the wages i.e. if the wages to be fixed are in relation to any authority of Central government or Railway administration then the Central government fixes it. However, if the wage rate is to be fixed or revised for a scheduled employment, the respective state governments fix it. The Centre fixes the National floor level Minimum Wage that is lower than most states' respective minimum wages.[25] The ambiguity and overlap in the jurisdiction of both these tiers of government have caused debates and controversies. One of such debates revolves around fixing wage rates of MGNREGA scheme, an employment guarantee initiative by the Central Government[26]

As per Section 5 of the Minimum Wages Act, 1948, there are two ways of fixing and/or revising minimum wages • Committee Method: Committees and Sub-committees are set up to make recommendations or create inquiries. • Notification Method: The government publishes proposals and an official date in the Official Gazette. All advice and recommendations form various committees and sub-committees as well as representations are collected before the specified official date and the government then proceeds to fix/revise minimum wages.

Exclusions

  • Workers: Wages to disabled people and those payable to a dependent family member of the employer
  • Industries: Un-scheduled industries are generally excluded. With every revision of minimum wages, a state can add a minimum wage for an occupation or specify it for a sector.

Enforcement

The Central Government is the proper authority for enforcement of the act. Schedule employment is carried under the railway administration, mines, oilfield, major port and corporation established by Central Act. Chief Labour Commissioner is charged under central level, and at state level officers in industrial relations are charged for enforcement act and other labour laws.

Offences and penalties

Violation of the act in regards to minimum wages, working hours and other comes under Central Act as offences, and there is a penalties of five years imprisonment and fine of Rs. 10000/- (under section act 22). Any agreement whereby an employee reduces his right under this act shall be null and void.

Process of complaints

To process complaints the appropriate government can appoint a labour commissioner, Commissioner for Workmen's Compensation, or officer with experience as a judge of Stipendiary Magistrate or an officer that is at least above the rank of Labour Commissioner. If an individual feels that he/she is being paid less than the minimum wages specified for his region/sector/occupation, or is not paid for a duration of work, a complaint can be made to the appointed authority.

Minimum wage rates

The table below summarises minimum wages across states.[27] All states specify different minimum wages for different occupations and skill levels within those occupations. Except for Andaman and Nicobar, no state makes variations in wage rates across districts. The table below briefly shows if the states account for Variable Dearness Allowance (VDA) that are linked and fixed according to a cost of living index (CPI in case of India), the range of minimum wages, and when these wages were last updated/revised. The period within which minimum wages are revised is different for different states. Some states revise their respective minimum wage rates every six months while some do so in five years. This anomaly reflects how in some cases minimum wage rates are as low as INR 38/day.

State Basic and VDA/special allowance No. of minimum wages Lowest minimum wage rate (per day), occupation and date with effect from Highest minimum wage rate (per day) Remarks
Andaman and Nicobar[3] 63 212 (Agriculture, construction, education, loading- unloading, wood based and unorganised sector)

1 January 2012

322 (Construction, Education and woodbased industry)

1 January 2012

Arunachal Pradesh[28] × 180 80

(Unskilled workers of all industries) 19 February 2009

100

(Highly skilled workers of forestry and construction) 19 February 2009

Assam[29] × 267 208

(Unskilled workers of all industries) 1 April 2012 to 30 September 2012

208

(Highly skiled workers of forestry and construction) 1 April 2012 to 30 September 2012

Bihar[30] 427 151

(Unskilled workers of all industries) 1 April 2012 to 30 September 2012

234

(Highly skilled workers of forestry and construction) 1 April 2012 to 30 September 2012

Chandigarh[31] × 387 244.53

(Unskilled workers of all industries) 1 April 2012 to 30 September 2012

285.88

(Highly skilled workers of forestry and construction) 1 April 2012 to 30 September 2012

Chhattisgarh[32] 100 173

(Unskilled workers of all industries) 1 April 2012 to 30 September 2012

190

(Highly skilled workers of forestry and construction) 1 April 2012 to 30 September 2012

Wages are common for 33 out of 34 industries.
Dadra and Nagar Haveli[33] 132 166.8

(Unskilled workers of all industries) 1 April 2012

179.80

(Highly skilled workers of forestry and construction) 1 April 2012

The government gives a special allowance, not VDA
Daman & Diu[34] 213 115

(Unskilled workers of all industries) 1 April 2012

128

(Highly skilled workers of forestry and construction) 1 April 2012

Delhi[35] × 81 270

(Unskilled workers of all industries) 1 April 2012

328

(Highly skilled workers of forestry and construction) 1 April 2012

Goa[36] × 109 150

(Unskilled workers of all industries) 13 May 2010

179

(Clerks in Commercial and Industrial establishments) 13 May 2010

Gujarat[37] 313 55

(unskilled workers in Agarbati industry) 1 April 2012 to 30 September 2012

210.7

(Patiawali-A workers in Brick kilns) 1 April 2012 to 30 September 2012

Haryana[38] × 6 186.42

(Unskilled workers of all industries) 1 January 2012 to 30 June 2012

211.42

(All industries) 1 January 2012 to 30 June 2012

The six minimum wage rates correspond to different skills common to all industries.
Himachal Pradesh[39] × 38 130

(Unskilled workers of all industries) 1 April 2012

209.94

(Highly skiled workers of forestry and construction) 1 April 2012

Jammu & Kashmir[40] × 140 110

(Unskilled workers of all industries) 1 October 2009

200

(Skilled workers of all industries) 1 October 2009

Jharkhand[41] 111 127

(Unskilled workers of all industries) 1 April 2012 to 30 September 2012

222

(Highly skiled workers of all industries) 1 April 2012 to 30 September 2012

Karnataka[42] 71

(scheduled employments)

4.25/kg

(Peeling cashews) 1 April 2012 to 30 September 2012

226.69

(Manager in Brick Industry) 1 April 2012 to 30 September 2012

Maximum minimum wage/day of a manager in brick industry is calculated by dividing the category's monthly minimum wage by 30 days.
Kerala[43] 182 109.04

(Grade IV workers of Toddy Tapping) 2 August 2012

271.32

(Milking cows in Dairy Farming) 2 August 2012

Lakshadweep<[44] × 16 200

(Unskilled workers of all industries) 1 December 2011

275

(Highly skiled workers of all industries) 1 December 2011

Madhya Pradesh[45] 576 103.66

(Peons and unskilled workers at cardboard box industry) 1 January 2012 to 30 June 2012

435

(Accountant at Powerloom) 1 January 2012 to 30 June 2012

Minimum wage/day calculated by dividing monthly minimum wage by 30 days.
Maharashtra[46]

(Special Allowance)

485 103.67

(Un-skilled workers and peon/watchmen in card-board box industry)

478.57

(Manager in Powerlooms)

Minimum wage/day is calculated by dividing monthly minimum wage by 30 days.
Manipur[47] × 45 112.30

(Unskilled workers of all industries) 1 February 2011

132.60

(Skilled workers of all industries) 1 February 2011

Meghalaya[48] × 81 100

(Unskilled workers of all industries) 24 August 2009

140

(Skilled workers of all industries) 24 August 2009

Mizoram[49] × 16 132

(Unskilled workers of all industries) 1 April 2009

235

(Skilled Grade II workers of all industries) 1 April 2009

Nagaland[50] × 144 80

(Unskilled workers of all industries) 1 October 2009

100

(Skilled Grade II workers of all industries) 1 October 2009

Orissa[51] × 332 90

(Unskilled workers of all industries) 13 July 2009

129

(Highly skilled workers of all industries) 13 July 2009

Pondicherry[52] × 87 without VDA 8 with VDA 55

(Female light workers in Agriculture) 1 March 2011

177.88

(Manager of security guards) 1 March 2011

55/day is the wage for 8 hours a day of work
Punjab[53] × 664 154.62

(Agriculture, meal or foodgrain) 1 March 2012

209.18

(Truck/Tempo/Bus Driver / Supervisor / Stenographer) 1 March 2012

Rajasthan[54] × 212 147

(Unskilled workers of all industries) 1 May 2012

217

(Highly skilled workers of all industries) 1 May 2012

Sikkim[55] × 100 130

(Unskilled workers of all industries) 1 July 2010

190

(Highly skilled workers of all industries) 1 July 2010

Tamil Nadu[56] 69 85

(Women workers in agriculture) 1 April 2012

273

(Neera tapping) 1 April 2012

Rs. 85/day is the wage rate for 5 hours of daily work
Tripura[57] × 50 38

(Unskilled workers at tea plantations) wef Not mentioned

251.54

(Highly skilled worker at Mechanical workshop) wef Not mentioned

The 38/day minimum wage rate includes supply of rice and wheat dough
West Bengal[58] × 245 269.5

(without food, Agriculture) January 2015

296

(All industries except agriculture) January 2015

Uttarakhand[59] 191 82

(Unskilled workers at Khandsari, Soap and Woolen industries) 1 April 2012 to 30 September 2012

253

(Skilled workers at engineering industry and establishments) 1 April 2012 to 30 September 2012

Uttar Pradesh[60] 178 100

(Agriculture) 1 April 2012 to 30 September 2012

220.35

(All industries except agriculture) 1 April 2012 to 30 September 2012

Central Sphere[61] 44 162

(Mining) 1 April 2012

1120.93 (Agriculture)

1 April 2012

Central Sphere consists of Area A and B, both comprising metropolitan cities

Issues

42% of all wage earners in India receive wages below the national minimum wage floor rate.[62] The data used for these statistics includes half of casual labourers and 1/4th of those salaried. Female workers and those in rural areas are more likely to be paid below a minimum wage. Those who are illiterate or have no mid-level education are most likely to be paid below a minimum wage. For Salaried workers, if they are employed in agriculture, it is more likely that they are paid higher than the minimum wage. Whereas casual workers in construction and unionised workers in production and manufacturing are likely to receive wages at the minimum wage rate. In sum, the implementation and enforcement of minimum wages is dismal and marginalised groups and communities suffer the most. The government has announced that many amendments are underway to improve enforcement such as penal action against violations and mandatory revision of minimum wages every 5 years.[63]

  • Large unemployment: Ensuring a payment at the minimum wage rate does not ensure employability to a willing worker. Many workers out of desperation then accept a wage below the minimum wage. Workers are too weak and vulnerable to demand their rights and after liberalisation, collective rights to have grown weaker with decreasing power of trade unions. These two factors combined give the employer the capacity to offer employment at wages below the minimum wage rate. There have also been cases where workers are paid wages below the minimum wage floor in government funded road and construction projects.[64]
  • Less protection against inflation: Real minimum wage rates may decline in the face of accelerating inflation for three main reasons. Firstly, wages are not revised as frequently as prescribed in the norms i.e. not more than five years. In fact it is believed that revision every three years and even alternate years not only to help workers from increasing costs of living but also to improve supervision of the act.[65] Secondly, many states do not provide for dearness allowance, a safeguard against inflation and finally minimum wages are not linked to a cost of living index.
  • Exemptions from payment of minimum wages: Government projects have been known to resort to various channels for paying wages below the minimum wage rate. They use methods such as special notifications and exemption clause (26-2) of the Minimum Wages Act.[64] The parliamentary sub-committee, 1987 noted that wages of government programs such as NREP and RLEGP were below the prescribed minimum wage rate. Many professions and industries do not fall under the coverage of the act, for the simple reason that no minimum wage has yet been prescribed,[2] hence employers pay wages on their own discretion.
  • Lack of awareness: Many citizens are not aware of the existence of a statutory provision that ensures a minimum wage rate. "80% of workers earn less than INR 20/day or less than half of government stipulated minimum wage rate (rural INR 49 and urban INR 67)”.[2] On certain instances of doubt among workers on existence of a minimum wage rate, officials have denied claims of any statutory act or legislation.[11]
  • Delays and inaction: There are delays in appointment of committees for fixation, revision and implementation. A lot of industries and industries do not fall under the purview of the act as their specific minimum wage rates are yet to be fixed. Permanent Labour Inspectors have not been posted in many districts and those posted are known to not visit their districts regularly.[66] For instance in 2008, inspections in Arunachal Pradesh were as low as 7 while Maharashtra reported to have 71651 inspections.
  • Terminology: The government and its committees have defined three types of wages: 'living wage', 'minimum wage' and 'fair wage'. These concepts are vague in definition and correspond to a utopia where the government and industry could afford them.[66]

Conflict of MGNREGA wage rates and the Minimum Wages Act

The Mahatma Gandhi National Rural Employment Guarantee Act is an employment guarantee scheme that guarantees employment for 100 days at a wage rate of INR120 per day (as fixed in 2009). These benefits can be secured by any household regardless of whether they fall below or above national poverty line. The central government delinked MGNREGA wage rates from State specific Minimum wage rates in January 2009 when states like Uttar Pradesh, Rajasthan and Maharashtra revised and increased their minimum wage rates. This had direct implications on Central Government's budget set aside for MGNREGA scheme. The move of freezing MGNREGA scheme created an upheaval of discontent in various parts and sections of India as the move was considered to breach Minimum Wages Act, 1948. MGNREGA wage rates were less than the minimum wage rates of respective states and in five states they were even below the National Floor level of minimum wage.[67] Protests broke out throughout India coupled with controversies over corruption, under-payment of workers, poor quality of infrastructure, ambiguous source of funds and unintended negative effect on poverty. Recommendations made by National Advisory Council and Centre Employment Guarantee Council chaired by Jean Drèze that MGNREGA's wage rates should be synced with Minimum Wages Act were rejected by the Central Government. The Central Government stuck to its decision of freezing MGNREGA wages even after an order from Supreme Court. Eventually, the Prime Minister agreed to accept recommendations and indexed MGNREGA wages to Minimum wage rates until an expert committee chaired by Pranab Mukherjee made a satisfactory index. He however maintained a clear distinction between MGNREGA wage rates and Minimum wage rates to avoid inflating budget on revision of state-wise minimum wages.

Debate

From the very inception of the idea of minimum wages, the aim of policy makers was to set up a uniform wage rate across the entire country. However, such a policy would not be connected to reality due to regional differences over consumption patterns, paying capabilities of employers, requirements of employees, etc. Hence the modified aim was to achieve floor level minimum wage for regions and then further it to a national floor minimum wage. However, not everyone supported this view. In 1955, during the Tripartite Labour Conference, labour representatives demanded immediate fixation of a minimum wage at national level, at least in agriculture.[68] The most recent development in this debate involves the Labour Ministry and the Commerce and Industry Ministry at loggerheads over the introduction of a National floor level minimum wage rate. The Commerce and Industry Ministry argues that a national rate would further burden the industry that is anyway incurring heavy costs. On the other hand, the Labour Ministry has given a proposal to the Centre to impose a national floor to wage rates and most state governments have approved for it.[69] After a two-day strike ending on 21 February 2013, PM Manmohan Singh announced that all unskilled workers would be paid the national floor level minimum wage.[63] This would be included in one of the many amendments of the Minimum Wages Act, 1948 to be introduced this year. Currently the floor level of minimum wages is 115, though Gujarat, Maharashtra, Andhra Pradesh and Kerala have set lower floors.

See also

References

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