The genesis of the Minimum Wages Act, 1948, took place with the set-up of a Labour investigation committee. Standing Labour Committee and Indian Labour Conference spearheaded this movement in 1943. It aimed at observing the matters related to working conditions and minimum wages. Later, in 1946, they put forward a suggestion for specific legislation exclusive to the issue of minimum wages. This lead to the enactment of the Minimum Wages Act, 1948. The Minimum Wages Act, 1948, was one of India’s first legislation related to the working rights of labourers. The Central and State level government were responsible for fixing wages for different scheduled employments. During the British era, the wages were fixed by an agreement between the employer and employee and was mostly arbitrary. The workmen have been victims of exploitation.
The Tripartite Committee, established in 1948 on Fair Wages, laid down three different types of wages: a fair wage, a living wage, and a minimum wage. According to this, wage levels should take into account the industrial capacity of the nation. The committee propounded an equilibrium between employee subsistence and general productivity. These observations later formed the essence of the Minimum Wage Act.
The Constitution of India embodies the concept of minimum wages in Part IV, i.e., the Directive Principles of the State Policy. It is enshrined firstly, under Article 39, according to which states should ensure that all citizens have the right to an adequate livelihood and that there is equal pay for equal work for both men and women. Secondly, under Article 43, the State’s obligation to protect through both legal and economic means the citizen’s right to work for a dignified living wage, i.e., a wage capable of providing a decent living standard is enshrined.
The Objective of the Act
The Honourable Supreme Court in Chandra Bhavan Boarding and Lodging Bangalore v. the State of Mysore and Another, laid down the purpose of the Act. Its main objective is to prevent sweated labour as well as the exploitation of unorganized labour. It proceeds on the basis that the State must see that at least minimum wages are paid to the employees irrespective of the capacity of the industry or unit to pay the same.
Besides, the Honourable Supreme Court in Unichoyi v. State of Kerala explained it 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 an enormous 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. So in prescribing the minimum 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”.
Features of the Act
- The Act applies to the employments listed in the schedule. Therefore, the governments at the State and Central level has to fix the minimum wage. They should also add any employment to the schedule if they satisfy the criteria of 1000 workers, at least.
- The Act lays down for fixation of the following:
- A minimum time rate of wages
- A minimum piece rate
- A guaranteed time rate and
- An overtime rate
For various occupations, localities or classes of work and adults, adolescents, children, and apprentices.
3. The minimum rate of wages consists of :
- A basic rate of wages and the cost of living allowance or
- A basic rate of wages with or without the cost of living allowance and the cash value of the concessions in respect of essential commodities supplied at concessional rates.
4. The Act lays down that payment of wages be in cash. However, it empowers the appropriate Government to authorize the payment of minimum wages either wholly or partly in kind in particular cases.
5. The appropriate Government is empowered to fix the number of hours of work per day, to provide for a weekly holiday and the payment of overtime wages.
6. The establishments are required to maintain registers and office records as prescribed.
7. The Inspectors are appointed to hear claims arising out of payments.
8. The appropriate Government has to revise the minimum wages every five years.
9. The appropriate Government has to provide special allowance once in six months.
10. On non-payment of wages, section 20 will be applicable. The authority has to pay ten times the difference amount for defaulting.
Read Also – Cash Reserve Ratio
Impact of Code on Wages
The Ministry of Labour and Employment has recently introduced the Code on Wages, 2019 Bill in the Lok Sabha. It amends and consolidates the various laws relating to wages and bonus by proposing to amalgamate, simplify, and rationalise the following central labour Acts:
- Payment of Wages Act, 1936,
- Minimum Wages Act, 1948,
- Payment of Bonus Act, 1965 and
- Equal Remuneration Act, 1976
Subsequently, the amalgamation of these acts will bring accountability to facilitate effective enforcement. The significant impact of the Code is that earlier; the Minimum Wages Act applied only to the scheduled employments. With the advent of the Labour Code on Wages, the benefits extend to all establishments irrespective of the nature of the activity. Thus, the scope has widened.
Additionally, under the existing Minimum Wages Act, around 60% of the workforce is left out. The new Code will give the right to Minimum Wages to the entire 50 crore workforce. It also provides a consolidated, more comprehensive definition of the term “wages.” Wages include salary, allowance, or any other component expressed in monetary terms. It does not include bonus payable to employees or any travelling allowance, among others.
Further, Labour Code sets a floor wage. Consequently, the central Government will fix a floor wage, taking into account the living standards of workers. The Government, before fixing the floor wage, may obtain the advice of the Central Advisory Board and may consult with state governments. The minimum wages decided must be higher than the floor wage. If at all the minimum wages are higher than the floor wage, it would remain as such without any reduction.
In conclusion, the Minimum Wages Act was brought into force to address the issues of the unorganized sector in the country. The aim of a fair wage for the workforce is fruitful only by reducing discriminatory practices. Additionally, the implementation of the Labour Code is an essential step towards streamlining and consolidating labour laws in India. It will act as a catalyst for boosting employment and opportunities. All the working men in the country will be offered protection under the Code.
 1970 AIR 2042, 1970 SCR (2) 600
 A.I.R. 1962 SC 12
Try our all-in-one Legal Practice Management Software START FREE TRIAL!