Jul 4, 2018

Top 10 FAQs On Minimum Wages In India

The Minimum Wages Act fixes the minimum wage for some scheduled employments. For these employments, this Act applies to the whole of India.

The minimum wages given under this Act apply to both skilled as well as unskilled labourers.
Minimum Wage and Indian Constitution

The Indian Constitution defines “living wage” for a worker. Living wage ensures a basic standard of living which includes good health, dignity, comfort and education. It also provides for contingencies.

However, keeping in mind an industry’s capacity to pay, the constitution has defined a “fair wage”. Fair wage maintains a certain level of employment and seeks to increase it.

The Central Advisory Council established the Committee of Fair Wages defines minimum wage. It states that minimum wage must guarantee bare livelihood.
Minimum Wage and the Supreme Court

Supreme Court in cases such as PUDR v. Union of India and Sanjit Roy v. State of Rajasthan said that any wage below the prescribed rate breaches Article 23 of the Constitution. This article states that a worker cannot be forced to for a wage that is less than the minimum rate. If anyone forces him to work at such a low wage, it may be considered forced labour under Article 23.
Frequently Asked Questions:

1. What is Minimum Wage?

The act does not define “minimum wage”.

As per the Fair Wages Committee, minimum wage must provide for a bare livelihood. In addition, it must also allow the preservation of efficiency of the worker.

Statutory minimum wage is the wage rate that the law prescribes.

2. Who Fixes Minimum Wage?

The “appropriate government” fixes the minimum wage. For some specified types of employment (http://labour.nic.in/sites/default/files/TheMinimumWagesAct1948.pdf), Central government is the appropriate government. In any other case, it is the State Government.

3. How is it Fixed?

A wage rate may be daily, hourly or even monthly. The appropriate government fixes and revises the wage rate.

There are two methods for fixation/revision of the minimum wage rate. Namely, Committee Method and Notification Method.
a). Committee Method:

The appropriate government(s) set up committees and sub-committees. These committees hold enquiries and make recommendations for fixation and revision of minimum wages.

There are five Regional Minimum Wages Advisory Committees in India. Their aim is to bring uniformity in minimum wages of different scheduled employments.
b). Notification Method:

Government publishes some proposals in the Official Gazette. The aim of these proposals is to inform the persons who may be affected. The notification specifies a date that is at least two months away from the date of the notification. This is the date on which the proposals will be due for consideration. Before publishing these notifications, the government consults various committees and sub-committees.

4. What is a “Scheduled Employment”?

The Minimum Wages Act contains a list. This list states “scheduled employments”. This act applies to these scheduled employments. All workers under a scheduled employment must receive at least the statutory rate.

Further, the Act allows the State Government to add to the list of scheduled employments.

5. How is the Rate of Minimum Wage Decided?

The determination of minimum wage depends on many factors. Some of them are:
Level of income
Paying capacity
Prices of essential commodities
Productivity
Local conditions, etc.

Since these factors vary from State to State, the wages differ too.

6. What are the Parameters for its Determination?

The Indian Labour Conference of 1957 fixed certain parameters for fixation of minimum wage. At least 20 % of wages must provide for:
Minimum food requirement: 2700 calories per adult (approx).
Clothing Requirements: 72 yards per year per family.
Rent: According to the minimum area provided by Government’s Industrial Housing Scheme.
Miscellaneous Expenditure: Fuel, lighting, etc.

Further parameters that must form 25 % of the total minimum wage are:
Children’s education
Medical needs
Minimum Recreation that is, festivals/ceremonies
Provision for old age
Provision for marriage etc.

7. Why Are There so Many Different Rates of Minimum Wage?

The rate of minimum wage may differ according to:
Type of scheduled employments
Classes of work in the same scheduled employment
Age Group, such as adults, teenagers and children
Position, for example, trainees
Location

8. What Kind of Wage does the Minimum Wages Act Pay?

The Act provides for a cash payment of wages. But, there are cases where it is a custom to pay the wages in kind. Payment in kind means payment other than cash. For example, food and clothing. Such payment may be fully or partly in kind. In such cases, the appropriate government can allow this by issuing a notification.

Also, the appropriate government may provide for essential goods at concessional rates.

9. Are There Any Penalties for Not Paying Minimum Wage?

Yes. There is a penalty of 6 months of imprisonment and/or fine of Rs. 500 for:
Paying less than the minimum wage; and
Breach of any other provision of section 13 of the act.

Further, for any other offence under this Act, there is a fine up to Rs. 500.

10. Does it do What it Aims to do?

This act lays down a lot of provisions to ensure minimum wage. Thus, it is safe to conclude that the Minimum Wage Act provides for the welfare of workers. It takes into account all necessary factors that make sure that a worker leads a decent and dignified life. Hence, it allows him to enjoy at least some degree of social security.

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