Minimum Wages Act, 1948

Minimum Wages Act, 1948 Objective The principle objective of the Minimum Wages Act, 1948 is to prevent exploitation of labour through the payment of unduly low wages. The act provides for fixing the minimum rates of wages for certain employments specified in the schedule (schedule is usually used for annexure). In a country like ours where the number of unemployment persons is very large, the legislature realized that if the rule of the market was allowed to prevail, it would be difficult to prevent sweating or exploitation of labour through payment of low wages. Under the minimum wages act, minimum rates of wages are not fixed in respect of all employments. They are fixed only in respect of certain employments specified in the schedule of the act. This act states that the wage paid for the work done should not be lesser than the amount suggested by the Act. The minimum wages are prescribed by States through notifications in the State's Gazette under the Minimum Wages Rules of the specific State. This act is a landmark legislation for regulating wages in the country. Minimum rate of wages The minimum rates of wages may be fixed for different scheduled employments, different classes of work in the same scheduled employments, adults, adolescents, children and apprentices and for different localities (terms defined below) Minimum wage and the Supreme Court India’s Supreme Court provides precedents in cases such as PUDR v. Union of India and Sanjit Roy v. State of Rajasthan, where it has stated that any wage below the prescribed rate breaches Article 23 of the Indian constitution. This means that a worker cannot be forced to work 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 labor under Article 23. In Sanjit Roy v. State of Rajasthan (1983)[xii], the Supreme Court held that “the Exemption Act in so far as it excluded the applicability of the Minimum Wages Act 1948 to the workmen employed in famine relief work is “clearly violative” of Article 23. Thus even public works ostensibly initiated by the government for the sole purpose of providing employment are subject to the Minimum Wage Act.” At the 15th Session of the Indian Labour Conference held at New Delhi in July 1957, an important resolution was passed, which laid down that the minimum wage should be need-based and should ensure the minimum human needs of the industrial worker. The following norms were accepted as a guide for all wage- fixing authorities including Minimum Wage Committees, Wage Boards, Adjudicators, etc.: (i) In calculating the minimum wage, the standard working class family should be taken to comprise three consumption units for one earner, the earnings of women, children and adolescents being disregarded. (ii) Minimum food requirements should be calculated on the basis of a net in take of 2700 calories, as recommended by Dr. Akroyd for an average Indian adult of moderate activity. (iii) Clothing requirements should be estimated on the basis of a per capita consumption of 18 yards per annum, which would give for the average worker’s family of four a total of 72 yards. (iv) In respect of housing, the norm should be the minimum rent charged by Government in any area for houses provided under the Subsidised Industrial Housing Scheme for low – income groups ; and (v) Fuel, lighting and other miscellaneous items of expenditure should constitute 20 per cent of the total minimum wage. The Resolution further laid down that wherever the minimum wage fixed was below the norms recommended above, it would be incumbent on the authorities concerned to justify the circumstances which prevented them from adherence to the aforesaid norms. The Resolution, thus, tried to give a concreteness to the whole concept of minimum wage. In 1991, the Supreme Court in its judgment expressed the view that children’s education, medical requirement, minimum recreation, including festivals ceremonies, provision for old age and marriage should further constitute 25 per cent and be used as a guide for fixing the minimum wage REPTAKOS BRETT AND CO.LIMITED The Hon’ble Supreme Court in the case of Reptakos Brett and Co. Ltd., while affirming the use of the five above norms prescribed in the 15th Indian Labour conference for fixation of Wage has directed that keeping in view the Socio economic aspect “25% of the Total minimum wages shall also be taken into account for Children education, medical requirement, minimum recreation including festivals/ceremonies and provision for old age, marriage etc.,” The above norms are only useful for arriving the wage for the lowest category worker. Minimum rate of wages fixed or revised by the appropriate government (i) a basic rate of wages and a special allowance at a rate to be adjusted, at such intervals and in such manner as the appropriate Government may direct, to accord as nearly as practicable with the variation in the cost of living index number applicable to such workers (hereinafter referred to as the “cost of living allowance”). Practically this special allowance is referred to as Dearness Allowance and some refer to it as VDA i.e Variable Dearness Allowance. (ii) a basic rate of wages with or without the cost of living allowance, and the cash value of the concessions in respect of supplies of essential commodities at concession rates, where so authorised; or (iii) an all-inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of the concessions, if any. The cost of living allowance and the cash value of the concessions in respect of supplies of essential commodities at concession rates shall be computed by the competent authority at such intervals and in accordance with such directions as may be specified or given by the appropriate Government. That is there is a proper procedure for the same and it is not dependent on the will of the Employer. The VDA is to be revised twice a year. This revised VDA is effective from 1st April and 1st October every year in accordance with the increase in Consumer Price Index Numbers for Industrial Workers. Definitions: Categories/classes of workforce Commonly 2 terms are used: Blue collar and skilled. Blue collar is referred for the Labour class who do manual work. However as per law, 4 categories are there. (i) “Unskilled Work” means work which involves simple operations requiring little or no skill or experience on the job; (ii) “Semi-skilled Work” means work which involves some degree of skill or competence acquired through experience on the job and which is capable of being performed under the supervision or guidance of a skilled employee and include unskilled supervisory work; (iii) “Skilled Work” means work which involves skill or competence acquired through experience on the job or through training as an apprentice in a technical or vocational institute and the performance of which calls for initiative and judgement; (iv) “Highly Skilled Work” means work which calls for a degree of perfection and full competence in the performance of certain tasks including clerical work acquired through intensive technical or professional training or practical work experience for certain reasonable period and also requires of an worker to assume full responsibility for the judgement or decision involved in the execution of the tasks; Reading Material: https://upload.indiacode.nic.in/showfile?actid=AC_CEN_6_6_00025_194811_1517807324200&type=notification&filename=Revision%20of%20minimum%20rates%20of%20wages%20in%20the%20Central%20Sphere%20-%20Final%20Notification.pdf “adolescent” means a person who has completed his fourteenth year of age but has not completed his eighteenth year; “adult” means a person who has completed his eighteenth year of age; “child” means a person who has not completed his fourteenth year of age; “cost of living index number”, in relation to 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; To summarise, fixing or revising minimum rates of wages is done as per, (a) different minimum rates of wages may be fixed for— (i) different scheduled employments; (ii) different classes of work in the same scheduled employment; (iii) adults, adolescents, children and apprentices; (iv) different demographics; Wage periods Minimum rates of wages may be fixed by any one or more of the following wage-periods, namely:— (i) by the hour, (common term: hourly wage) (ii) by the day, (common term: daily wage) (iii) by the month, or (common term: salary) (iv) by such other larger wage-period as may be prescribed; (not very common) In most of the states monthly wages is per day wage *26 and for few states it is daily wage*30. First one is more common. Overtime Where an employee, whose minimum rate of wages is fixed under this Act by the hour, by the day or by such a longer wage-period as may be prescribed, works on any day in excess of the number of hours constituting a normal working day, the employer shall pay him for every hour or for part of an hour so worked in excess at the overtime rate fixed. Usually this rate is twice the normal rate. The appropriate Government may fix,— (a) a minimum rate of wages for time work (hereinafter referred to as “a minimum time rate”); (b) a minimum rate of wages for piece work (hereinafter referred to as “a minimum piece rate”); (c) a minimum rate of remuneration to apply in the case of employees employed on piece work for the purpose of securing to such employees a minimum rate of wages on a time work basis (hereinafter referred to as “a guaranteed time rate”); (d) a minimum rate (whether a time rate or a piece rate) to apply in substitution for the minimum rate which would otherwise be applicable, in respect of overtime work done by employees (hereinafter referred to as “overtime rate”). 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. Employer’s Obligations As and when proposals for revision of the minimum wages are published in the Official Gazette, the employer may, if feels necessary, send representations to the Government on the proposal revision. Once the minimum wages are notified and become effective the employer must pay to every employee engaged in a scheduled employment under him wages at a rate not less than the minimum rate of wages fixed by such notification for that class of employees. The employer shall pay overtime at a prescribed rate for the period of work done beyond nine hours on any day or 48 hours in any week or for rest day. The employer must pay minimum wages in cash unless the Government authorises their payment wholly or partly in kind. The employer shall fix the wage-period for the payment of wages at intervals not exceeding one month or such other larger period as may be prescribed. The employer shall pay the wages to a person discharged not later than the second working day after his discharge. If an employee is employed on any day for a period less than the normal working day, he shall be entitled to receive wages for a full normal working day provided his failure to work is not caused by his willingness to work but by the omission of the employer to provide him work for that period. Where an employee does two or more classes of work to each of which a different minimum rate of wage is applicable, the employer shall pay to such employee in respect of time respectively occupied in each such class of work, wages not less than the minimum rate in force in respect of each such class. Where an employee is employed on piece work for which minimum time rate and not a minimum piece rate has been fixed, the employer shall pay to such employee wages at not less than the minimum time rate. The employer shall fix working days of an adult worker which may be for a maximum of nine hours a day but this period shall not exceed 12 hours on any day. The employer shall allow a rest day with wages to the employees every week which should ordinarily be Sunday or any other day as fixed by the employer. No employee shall be required to work on a day fixed as rest day, unless he is paid wages for that day at the overtime rate and is also allowed a substitute rest day with wages. Every employer shall maintain at the work spot a register of wages in the form prescribed specifying the following particulars for each wage period respect of each employed person:- Minimum rate of wages payable The number of days in which overtime was worked The gross wages The wages actually paid and the date of payment Every employer shall issue wage slips in the form prescribed containing prescribed particulars to every person employed. Wage slip is also referred to as pay-slip or salary-slip. Every employer shall get the signature or the thumb impression of every person employed on the wage book and the wage slips. But nowadays computer generated salary slips are getting common however there is no reference in this act. The employer or his agent should authenticate the entries in the wage books and the wage slips. The employer, intending to impose a fine on an employed person or to make deduction for damage or loss caused by him, shall inform personally and in writing to him giving an opportunity to offer any explanation in the presence of another person. The amount of the said fine or deduction shall also be intimated to him. The employer shall exhibit at main entrance to the establishment and its offices, a notice in respect of the following in English and local language in a clean and legible form: Minimum rates of wages Abstract of the Acts and rules made thereunder Name and address of the Inspector The employer shall preserve register of wages, muster-roll, register of fines, register of deductions for damage or loss and register of overtime for a period of 3 years after the date of last entry made therein. The employer shall produce all such registers and record on demand before the Inspector. Where an establishment has been closed, the employers should produce such a register in his office, if asked for. Practical aspects Still 42% of all wage earners in India receive wages below the national minimum wage floor rate. 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. 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. Some of the reasons: Large unemployment: Many workers out of desperation accept a wage below the minimum wage. They doubt losing the jobs. Less protection against inflation: Firstly, wages are not revised as frequently as prescribed in the norms i.e. not more than five years. 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 clauses of the Minimum Wages Act. 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, 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 the government stipulated minimum wage rate (rural INR 49 and urban INR 67)”. 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. For instance in 2008, inspections in Arunachal Pradesh were as low as 7 while Maharashtra reported to have 71651 inspections. Example of MGNREGA scheme of Government 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 the 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 the Central Government's budget set aside for the 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. 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 the 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 the budget on revision of state-wise minimum wages. India in comparison to other countries