THE MINIMUM WAGES ACT, 1948: Short Compilance

The Minimum Wages Act, 1948

Objective of the Act

There were several objectives that this Act needed to ensure:

·       Minimum wages need to be ensured to all blue-collar workers in the organized sector.

·       Prohibition of exploitation of labour in the workplace.

·       The Act would empower the government to fix minimum wages and revise those wages from time to time according to the economic situation of the country.

To ensure the application of this Act to a maximum number of organized sector employers.

DEFINITIONS

1. Minimum Wage

Minimum wage is the most widely recognized term in the realm of employee compensation. It is the lowest hourly wage an employer can pay an employee for work.

In addition to the minimum wage mandated by the federal government, 45 states have their own minimum wage rates – some of which exceed the federal rate.

2. Living Wage    

Living wage is the lowest wage at which the wage earner and his/her family can afford the most basic costs of living.

Because the needs of each employee differ based on marital status, number of children, location and other cost-of-living considerations, the term living wage often pushes many hot-button political issues.Legislation and policy conversations surrounding the increase of minimum wage quite often intersect with those of living wage. Proponents of a higher federal minimum wage, for example, argue an increase would help the working poor achieve a living wage and reduce the number of full-time workers who rely on government assistance.

Although living wage and minimum wage are often used interchangeably, they differ. For instance, minimum wage is mandated and enforced by legislation, whereas a living wage is not.

3. Fair Wage

By general definition, fair wage is a compilation of company practices that lead to sustainable wage developments.

·       According to the Fair Wage Network, These practices include:

·       Living wage floor

·       Compliance with national wage regulations, such as minimum wage, payment of wages, overtime payments, paid holidays and social insurance payments

·       Ensuring proper wage adjustments as living wage and minimum wage change

·       Wages that align with the skills necessary of the job being performed

 

Fixing of Minimum wages- Procedure And Payment

 

FIXATION OF MINIMUM  WAGES [Section 3(1)(a)

Section 3 lays down that the Government shall fix the minimum rates of wages which is payable to employees in the course of employment specified in Part I and Part ii of the Schedule, and in an employment added to either part by notification under Section 27. In case of the employments specified in Part II of the Schedule, the minimum rates of wages may not be fixed for the entire State. Parts of the State may be left out altogether. In the case of an employment specified in Part I, the minimum rates of wages must be fixed for the entire State, no parts of the State being omitted. The rates to be fixed need not be uniform. Different rates can be fixed for different zones or localities

REVISION OF MINIMUM WAGES

According to Section 3(1)(b) the Government may review at such intervals as it may think fit, such intervals not exceeding five years, and revise the minimum rate of wages, if necessary. This means that minimum wages can be revised earlier than five years also.

 

MANNER OF FIXATION/REVISION OF MINIMUM WAGES

According to Section 3(2), the Government may fix minimum rate of wages for:

·       time work, known as a Minimum Time Rate;

·       piece work, known as a Minimum Piece Rate;

·       a “Guaranteed Time Rate” for those employed in piece work for the purpose of securing to such employees a minimum rate of wages on a time work basis;

·       a “Over Time Rate” i.e. 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 the employee.

Section 3(3) provides that different 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;

·       different localities

Further, minimum rates of wages may be fixed by any one or more of the following wage periods, namely:

·       by the hour,

·       by the day,

·       by the month, or

·       by such other large wage periods as may be prescribed; and where such rates are fixed by the day or by the month, the manner of calculating wages for a month or for a day as the case may be, indicated. However, where wage period has been fixed in accordance with the Payment of Wages Act, 1986 vide Section 4 thereof, minimum wages shall be fixed in accordance therewith [Section 3(3)].

PROCEDURE FOR FIXING AND REVISING MINIMUM WAGES (Section 5)

In fixing minimum rates of wages in respect of any scheduled employment for the first time or in revising minimum rates of wages, the appropriate Government can follow either of the two methods described below.

First Method [Section 5(1)(a)] This method is known as the ‘Committee Method’.

The appropriate Government may appoint as many committees and subcommittees as it considers necessary to hold inquiries and advise it in respect of such fixation or revision as the case may be. After considering the advice of the committee or committees, the appropriate Government shall, by notification in the Official Gazette fix or revise the minimum rates of wages. The wage rates shall come into force from such date as maybe specified in the notification. If no date is specified, wage rates shall come into force on the expiry of three months from the date of the issue of the notification.

Note: It was held in Edward Mills Co. v. State of Ajmer  that Committee appointed under Section 5 is only an advisory body and that Government is not bound to accept its recommendations.

Second Method [Section 5(1)(b)] The method is known as the ‘Notification Method’.

When fixing minimum wages under Section 5(1)(b), the appropriate Government shall by notification, in the Official Gazette publish its proposals for the information of persons likely to be affected thereby and specify a date not less than 2 months from the date of notification, on which the proposals will be taken into consideration.

The representations received will be considered by the appropriate Government. It will also consult the Advisory Board constituted under Section 7 and thereafter fix or revise the minimum rates of wages by notification in the Official Gazette. The new wage rates shall come into force from such date as may be specified in the notification.

 

However, if no date is specified, the notification shall come into force on expiry of three months from the date of its issue. Minimum wage rates can be revised with retrospective effect.

INSPECTORS

SECTION 19

Inspector Appointed under the Minimum Wages Act.

The appropriate Government may, by notification in the Official Gazette, appoint inspectors for the purposes of this Act. It may also define the local limits within which these inspectors shall exercise their functions. Powers of Inspectors. An inspector, within the local limits for which he is appointed, enjoys the following powers.

He may enter at all reasonable hours, with such assistants, being persons in service of the Government or any local or other public authority, as he thinks fit, any premises or place where employees are employed or work is given out to out -workers in any scheduled employment in respect of which minimum rates of wags have been fixed. He may examine any register, record of wages or notices required to be kept or exhibited by or under this Act or rules made there under, and require the production thereof for inspection.

He may examine any person whom he finds in any such premises or place and who, he has reasonable cause to believe, is an employee employed therein or an employee to whom work is given out therein.

The inspector may require any person giving out work and any out-workers, to give any information, which is in his power to give, with respect to the names and addresses of the persons to, for and from whom the work is given out or received, and with respect to the payments to be made for the work.

The inspector has the power to seize or take copies of such register, record of wages or notices as he may consider relevant in respect of an offense under the Act which he has reason to believe has been committed by an employer and

The inspector has the power to exercise such other powers as may be prescribed. Every inspector shall be deemed to be a public servant with in the meaning of the Indian Penal Code, 1860.

Any person required to produce any document or thing or to give any information by an Inspector under sub-section (2) shall be deemed to be legally bound to do so within the meaning of section 175 and section 176 of the Indian Penal Code (45 of 1860).

 

CLAIMS

SECTION 20

Under Section 20(1) of the Act, the appropriate Government, may appoint any of the following as an authority to hear and decide for any specified area any claims arising out of payment of less than the minimum rate of wages or in respect of the payment of remuneration for the days of rest or of wages at the rate of overtime work:

(a) any Commissioner for Workmen’s Compensation; or

(b) any officer of the Central Government exercising functions as Labour Commissioner for any region; or

(c) any ofthe State Government not below the rank of Labour Commissioner; or

(d) any other officer with experience as a Judge of a Civil Court or as the Stipendiary Magistrate.

The authority so appointed shall have jurisdiction to hear and decide claim arising out of payment of less than the minimum rates of wages or in respect of the payment remuneration for days of rest or for work done on such days or for payment of overtime.

The provisions of Section 20(1) are attracted only if there exists a disputed between the employer and the employee as to the rates of wages. Where no such dispute exists between the employer and employees and the only question is whether a particular payment at the agreed rate in respect of minimum wages, overtime or work on off days is due to an employee or not, the appropriate remedy is provided by the Payment of Wages Act, 1936.

 

Cognizance of offences

Section 22B

(1) No court shall take cognizance of a complaint against any person for an offence –

(a) under clause (a) of section 22 unless an application in respect of the facts constituting such offence has been presented under section 20 and has been granted wholly or in part and the appropriate government or an officer authorized by it is this behalf has sanctioned the making of the complaint;

(b) under clause (b) of section 22 or under section 22A except on a complaint made by or with the sanction of an Inspector.

(2) No court shall take cognizance of an offence –

(a) under clause (a) or clause (b) of section 22 unless complaint thereof is made within one month of the grant of sanction under this section;

(b) under section 22A unless complaint thereof is made within six months of the date on which the offence is alleged to have been committed.

Contracting out

Section 25

Any contract or agreement whether made before or after the commencement of this Act whereby an employee either relinquishes or reduces his right to a minimum rate of wages or any privilege or concession accruing to him under this Act shall be null and void in so far as it purports to reduce the minimum rate of wages fixed under this Act.