Wage Structure in India under

The Minimum Wages

Act, 1948

INTRODUCTION

The concept of minimum wages in India is governed by minimum wages act, 1948. For

workers, Wages are the primary source of income, along with smaller sources like

governmental aid & investment income. Wages form work pay for essentials such as,

rent, a mortgage, food and utility bills. Workers who earn higher wages can afford more

expensive lifestyles than those who earn a lower wage. Minimum wage laws ensure that

all workers earn enough to pay for the basics and that the employers can not take

advantage of workers. To employers, wages are an important tool for retaining workers.

Low wages will save money on pay roll, but a more competitive wage will give workers

fewer reasons to leave for a job elsewhere. Wages are also source of tax revenue for the

government. The more workers earn, the higher their taxable income and tax rate. Wages

also plays major role in the economy by giving workers spending power. This refers not

only to money that workers earn and spend on basics, but also the money they save or use

in the short term for consumer goods, travel, investing etc.

The purpose of seeking employment is to sell labour to earn wages so as to attain a

‘decent’ or ‘dignified’ standard of living. The wage or income that a worker obtains from

his /her work is therefore, what enables him /her to achieve a fair standard of living. One

seeks a fair wage both to fulfil one’s basic needs and to feel reassured that one receives a

fair portion of the wealth in return for one’s work to generate for society. Society has a

duty to ensure a fair wage to every worker, to ward off starvation and poverty, to promote

the growth of human resources, and to ensure social justice without which likely threats

to law and order may undermine economic progress.

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The Minimum Wages Act was passed for the welfare of labourers. The Minimum Wages

Act empowers the appropriate government to fix and revise minimum rates of wages

payable to employees engaged in scheduled employment for work done in accordance

with the contract of services, express or implied.

Word “scheduled employment” means an employment specified in schedule or any

process or branch of work forming part of such employment. Schedule is divided into

two parts i.e. Part-I1 and Part-II2

The Constitution of India envisages a just and humane society and accordingly gives

place to the concept of living wage in the chapter on Directive Principles of State Policy.

The Minimum Wages Act, 1948 is based on Article 43 of the Constitution of India which

states that, "The State shall endeavor to secure by suitable legislation or economic

organization or in any other way to all workers, agricultural, industrial or otherwise,

work, a living wage (emphasis added) conditions of work ensuring a decent standard of

life and full enjoyment of leisure and social and cultural opportunities"3

A minimum wage is the lowest hourly, daily or monthly remuneration that employers

may legally pay to workers. Equivalently, it is the lowest wage at which workers may sell

their labor. Although minimum wage laws are in effect in many jurisdictions, differences

of opinion exist about the benefits and drawbacks of a minimum wage. Supporters of the

minimum wage say that it increases the standard of living of workers, reduces poverty,

and forces businesses to be more efficient. Opponents say that if it is high enough to be

effective, it increases unemployment, particularly among workers with very low

1 Part-I includes employment in any woolen carpet making or shawl weaving establishment, in any flour mill, rice mill or Dal mill, any tobacco manufactory, any plantation, any estate which is maintained for the purpose of growing rubber, tea or coffee, any oil mill, under any local authority, on the construction, in stone breaking/crushing, in lac manufactory, in any mica works, in public motor transport, in tanneries and leather manufactory.2 Part-II includes employment in agriculture. Example any form of farming including cultivation and tillage of soil, dairy farming, the production, cultivation, growing and harvesting of agriculture or horticulture commodity, raising of live stock, bees or poultry.3 http://nceus.gov.in/Report_Bill_July_2007.htm

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productivity due to inexperience or handicap, thereby harming less skilled workers and

possibly excluding some groups from the labor market; additionally it is less effective

and more damaging to businesses than other methods of reducing poverty.1

India was one of the first developing countries to introduce a minimum wage policy. The

enactment of the Minimum Wages Act in 1948 was the result of both internal and

external factors. Internal factors included the increase in the number of factories and

wage-earners during the first half of the 20th century, as well as the growing number of

industrial unrests and strikes of workers who rebelled against their starvation wages. The

most significant external factor was the adoption by the International Labour

Organization (ILO) in 1928 of Article 1 of Convention No. 26 on minimum wage fixing

in trades in which no effective collective bargaining takes place and where wages are

exceptionally low.

Until this day, the Minimum Wage Act of 1948 is still considered to be one of the most

important pieces of labour legislation. But India‘s system of minimum wages is also one

of the most complicated in the world. The 1948 legislation determines that the

―appropriate government should fix minimum wage rates payable to employees in a

number of listed or scheduled employments. This has at least three important

implications:

Firstly, minimum wages are set by different authorities in different types of companies;

Secondly, the minimum wage is set only ―in certain employments or occupations and so

not all wage-earners are covered:

Thirdly, there exist now a large number of rates which sometimes differ widely across

states, even for the same occupation.2

1 http://en.wikipedia.org/wiki/Minimum_wage2 http://www.ilo.org/wcmsp5/groups/public/---ed_protect/---protrav/---travail/documents/publication/wcms_145336.pdf

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In practice, the ―appropriate government is either the Central Government or the state

governments. More specifically, the Act provides that the Central Government sets the

minimum wage rate in state-owned enterprises, while state governments set minimum

wages for any other type of companies. The Central Government is also responsible for

setting the minimum wage in all companies operating under a railway administration or

in relation to a mine, oilfield, or major port or any corporation established by the Central

Government. The state governments and Union Territory Administration are the

appropriate governments in respect of all other companies. In practice, both the Central

and the state governments have appointed Advisory Boards, with the Central Advisory

Board coordinating the work of all the State Advisory Boards. These Advisory Boards

are usually tripartite, including representatives of government, employers and workers.1

The Constitution of India accepts the responsibility of the State to create an economic

order in which every citizen finds employment and receives a ‘fair wage’. This made it

necessary to quantify or lay down clear criteria to identify a fair wage. Therefore, a

Central Advisory Council in its first session (November, 1948) appointed a Tripartite

Committee on Fair Wages. The Committee consisted of representatives of employers,

employees and the Government. Their task was to enquire into and report on the subject

of fair wages to labour.

A tripartite Committee Viz., "The Committee on Fair Wage" was set up in 1948 to

provide guidelines for wage structures in the country. The report of this Committee was a

major landmark in the history of formulation of wage policy in India. Its

recommendations set out the key concepts of the 'living wage', "minimum wages” and

"fair wage" besides setting out guidelines for wage fixation. 

Article 39 states that the State shall, in particular, direct its policy towards securing (a)

that the citizen, men and women equally shall have the right to an adequate livelihood

and (b) that there is equal pay for equal work for both men and women.

1 http://www.ilo.org/wcmsp5/groups/public/---ed_protect/---protrav/---travail/documents/publication/wcms_145336.pdf

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Article 43 states that the State shall endeavor, by suitable legislation or economic

organization or in any other way, to give all workers, agricultural, industrial or otherwise,

work, a living wage, conditions of work ensuring a decent standard of life and full

enjoyment of leisure, and social and cultural opportunities. 

Case: Chatturam Darasanram vs. Union of India

A petition for quashing a notification dated 28th may, 1976 issued by central government

revising the wages of the workmen employed in the mica mines was filed. The question

was whether workmen working in mines were working in scheduled employment. It was

held that the item no. 10 of part 1 of schedules relate to employment in any “mica

works”. The connotation “mica works” and “mica mines” are different from each other.

So mica mines is not included in the schedule.1

Case: - Ahmadabad Panjrapole Sanstha vs. Miscellaneous Mazdoor Sabha and

others2

The petitioner sanstha is engaged in activities of taking care of sick and lame cattle. It has

other objects such as rising of cattle, improving the breed, run dairy farm in order to

supply good milk and ghee in the interest of public and to grow grass to cut it or have it

cult and to buy or sell the same. It has land in different villages and it earns rental and

other income and also agricultural income besides income earned by sale of wood, wool

etc. it was held that having regard to the activities of panjrapole sanstha, it is a

“commercial establishment” attracting minimum wages act. It is not a separate

establishment and the fact that the other branches have not demanded minimum wage

will not affect the right of workmen.

NATIONAL WAGE POLICY

1 (1980 II L.L.J. 465 (Patna))2 (1987) II L.L.J. 291 (Guj)

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Though it is desirable to have a National Wage Policy, it is difficult to conceive a concept

of the same. The issue of National Wage Policy has been discussed on many occasions at

various forums. Because fixation of wages depends on a number of criteria like local

conditions, cost of living and paying capacity which also varies from State to State and

from industry to industry, it would be difficult to maintain uniformity in wages. The

Indian Labour Conference, held in November, 1985 expressed the following views-

“Till such time a national wage policy does not come into being, it would be desirable to

have regional minimum wages in regard to which the Central Government may lay down

the guidelines. The Minimum Wages should be revised at regular periodicity and should

be linked with rise in the cost of living”

Accordingly, the Government issued guidelines in July, 1987 for setting up of Regional

Minimum Wages Advisory Committees. These Committees renamed subsequently as

Regional Labour Ministers’ Conference, made a number of recommendations which

include reduction in disparities in minimum wages in different states of a region, setting

up of inter-state Coordination Council, consultation with neighboring States while

fixing/revising minimum wages etc.1

ACCORDING TO THE REPORT OF THE SECOND INDIAN NATIONAL LABOUR

COMMISSION – 2002

(i) The Commission recommends that every employer must pay each worker his one-

month's wage, as bonus before an appropriate festival, be it Diwali or Onam or Puja or

Ramzan or Christmas. Any demand for bonus in excess of this up to a maximum of 20%

of the wages will be subject to negotiation. The Commission also recommend that the

present system of two wage ceilings for reckoning entitlement and for calculation of

bonus should be suitably enhanced to Rs.7500/- and Rs.3500/- for entitlement and

calculation respectively.

(ii) There should be a national minimum wage that the Central Government may notify.

This minimum must be revised from time to time. It should, in addition, have a

1 http://labourbureau.nic.in/MW_Report_2008.pdf

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component of dearness allowance to be declared six monthly linked to the consumer

price index and the minimum wage may be revised once in five years. The Commission

also recommends the abolition of the present system of notifying scheduled employments

and of fixing/revising the minimum rates of wages periodically for each scheduled

employment, since it feels that all workers in all employments should have the benefit of

a minimum wage.

(iii) There is no need for any wage board, statutory or otherwise, for fixing wage rates for

workers in any industry

ADVANTAGES OF WAGES

Wages helps in reduction of poverty because it increases the wages of the

lowest paid.

Wages increases the productivity because higher incentives, makes people

work harder and thereby, resulting in increase of output.

Giving workers the needed amount income from their work to survive and pay

the bills.

Preventing employers to take advantage of the employees, particularly in

tough times.

CONSTITUTIONAL VALIDITY OF THE ACT:-

A draft convention on the question of minimum wages was adopted at the international

labour conference held in Geneva in 1928. Draft convention contemplated the creation of

a minimum wage fixation machinery only in case “traders or part of trades in which no

arrangement exists for the effective regulation of wages by collective agreement

otherwise and wages are exceptionally low”

In view of the directive principles of state policy as contained under article 43 of Indian

constitution it is beyond doubt that securing of living wage to labourers which ensure not

only bare physical subsistence but also the maintenance of health and decency, is

conducive to general interest of the public.

The minimum wages act was passed to fulfill the aspirations as contained in following

resolution:-

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“If the labourers are to be secured the enjoyment of minimum wages and they are to be

protected against exploitation by their employers, it is absolutely necessary that restraints

should be imposed upon their freedom of contract and such restriction cannot in any

sense be said to be unreasonable. On the other hand, the employers cannot be heard to

complaint if they are compelled to any minimum wages to their laborers even though the

labourers on the account of their poverty and helplessness are willing to work on lesser

wages.”

The constitutional validity of the act is attacked on the ground that it violates the

guarantee of freedom of trade and business, envisaged by article 19(1) (g) of constitution

in as much as the provisions of the act are bound to effect harshly and even oppressively

a particular class of employers who for purely economic reasons are unable to pay

minimum rates of wages fixed by the authorities, but have absolutely no dishonest

intention of exploiting their workers.

The fact that employer might find difficulties to carry ob business on settled principles

cannot be a sufficient reason for striking down the law itself as unreasonable. The

poverty of labourers is also a factor to be taken into consideration while determining a

question whether a particular provision is in the interest of general public.

The appropriate government has undoubtedly has been given wide powers with regard to

procedure of fixing of minimum wages. But it has to take into consideration before fixing

the wages, the advice of committee or the representations on its proposals made by the

persons who are likely to be affected by it.

The provisions of the act constitute adequate safeguard against any hasty, arbitrary and

capricious decision by appropriate government. However there is no provision regarding

review of decision of the ‘appropriate government’ but that by itself cannot be taken to

hold the provisions of the cat as unreasonable.1

Therefore the restrictions though they are inferred to some extent with the freedom of

trade or business guaranteed under article 19(1) (g) of Indian constitution, are reasonable

1 Unichay v. State of Kerela, A.I.R. 1962 SC 12

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and are imposed in the interest of general public and as such are protected by article 19(6)

of Indian constitution.

Aims and Objects of Minimum Wages Act

The Act provides for fixing minimum rates of wages in certain employments to

which provisions of this Act apply. The justification for statutory fixation of

minimum wages is obvious. Such provisions which exist in more advanced

countries are even more necessary in India where workers' organizations are

yet poorly developed and the workers ' bargaining power is consequently

poor. The act provides for fixation by the State Government of minimum wages

for employments covered by the schedule to the Act.

The items in the schedule are those where 'sweated labour' is most prevalent or

where there is a big chance of exploitation of labour. After a time, when some

experience is gained, more categories of employments can be added and the Act

provides for additions to the schedule. A higher period is allowed for fixation of

minimum wages for agricultural labour as administrative difficulties in this case

will be more than in other employments covered by the schedule. The Act also

provides for periodical revision of wages fixed.

Provision has been made for appointment of Advisory Committees and

Advisory Boards, the latter for co-ordination of the work of the Advisory

Committees. The Committees and the Boards will have equal representation of

employers and workmen. Except on initial fixation of minimum wages,

consultation with the Advisory Committee will be obligatory on all occasions of

revision.

In cases where an employer pays less than the minimum wages fixed by the

State Government, a summary procedure has been provided for recovery of the

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balance with penalty and for subsequent prosecution of the offending parties.

It is not ordinarily proposed to make any exemption in regard to employees of

undertakings belonging to the Central Government except that difficulties might

arise where the sphere of duty of such an employee covers more than one State,

and when the rates of minimum wages fixed by the different States may be

different. For this purpose, a provision has been included that the minimum wages

fixed by the State Government will not apply to the employees in any

undertaking owned by the Central Government or employees of a Federal Railway

except with the consent of the Central Government.1

The first step in the direction of fixing minimum wages was taken in April, 1946,

when a Bill to provide for fixing minimum wages in certain employments wherein

sweated labour was most prevalent or where there was a big chance of

exploitation of labour was introduced in the Central Legislative Assembly. The

Bill as finally passed by the Dominion Legislature received the assent of the

Governor-General on 15th March, 1948 and it came to be known as the

Minimum Wages Act, 1948. It was passed to give effect to the resolution passed

by the Minimum Wages Fixing Machinery Convention held at Geneva in 1928. The

relevant resolutions of the convention are embodied in Articles 223 to 233 of the

International Labour Code. The object of these resolutions as stated in Article 224

was to fix minimum wages in industries in which no arrangements exist for the

effective regulation of wages by collective agreements or otherwise and wages

are exceptionally low. 2

In view of the historical survey, it may be pointed out that the object of the Act is

to prevent exploitation of the workers, and for that purpose it aims at fixation of

1 Gazette of India, 1946, Part V, p.3312 Chapra and Apte, The Minimum Wages Act, 1948, (1973) p.1

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minimum wages which the employer must pay. The legislature undoubtedly intended

to apply the Act to those industries or localities in which by reason or causes such

as unorganized labour or absence of machinery for regulation of wages, the wages

paid to workers, were in the light of general level of wages and subsistence level,

inadequate.1 The Act was intended to apply only to industries in which the labour

was unorganized to achieve the object of doing social justice to workmen

employed in the scheduled employments by prescribing minimum rates of wages for

them.2

In this way the pith and substance of the Act is to provide for the welfare of

the labour.3 The Supreme Court of India has observed that the object of the Act is

directed against exploitation of the ignorant, less organized and less privileged

members of the society by the capitalist class. This anxiety of the State for

improving the general economic condition of some of its less favored members

appears to be in supersession of the old principle of absolute freedom of contract

and the doctrine of laissez faire and in recognition of new principles of social

welfare and common good. 4 The Act contemplates certain security measures

providing at least security of minimum wages to working class safeguarding

them from exploitation of labour due to their less bargaining power, when

they are unorganized and there is absence of machinery for regulation of wages.

In 'essence what the Act purports to achieve is to prevent exploitation of labour

and for the purpose it authorizes the appropriate Government to take steps to

prescribe minimum rates of wages in the scheduled industries. In an under-

developed country which faces the problem of unemployment on a very large scale,

it is not unlikely that labour may offer to work even’ on starvation wages. The

policy of the Act is to prevent employment of such sweated labour in the interest of

general public and so in prescribing minimum wages rates even the capacity of the

1 Bhikusa Yamess Kshatriya vs. Sengemmer Akola Taluka Bibi Kamgar Union, A.I.R. 1963 SC 8062 M.P. Miner Industries Association vs. Regional Labor Commissioner, A.I.R. 1960 SC 10683 Panihatti Municipality Vs. Secretary, PMLW Union, A.I.R. 1965 Cal. 2294 Y.A.Mamarde Vs Authority Under Minimum Wages Act, 1948 A.I.R. 1972 SC 1721, 1725

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employer need not be considered1 as the State assumes that every employer must

pay the minimum wages before he employs laborer for his work.

The Act contemplates that minimum wage rates must ensure not merely the mere

physical need of the worker which would keep him just above starvation but must

ensure for him not only his subsistence and that of his family but also preserve

his efficiency as a workman. It should, therefore, provide, not merely for the

bare subsistence of his life but for the preservation of the worker and so must

provide for some measure of education, medical requirements and amenities.2 In

other words, the Act contemplates that the minimum wage rates should be fixed in

the scheduled industries with the dual object of providing sustenance and

maintenance of the worker and his family and preserving his efficiency as a

worker.3 The schedule to the Act mentions industries where there was sweated

labour or exploitation of laborer.4

Part I of the schedule contains employment (1) Carpet making or Shawl weaving, (2)

Rice Mill, Flour Mill or Dal Mill, (3) Tobacco (including Bidi making) Manufactory,

(4) Plantation that is to say, any estate which is maintained for the purpose of

growing cinchona, rubber, tea or coffee, (5) Oil Mills, (6) Employment under

Local Authority, (7) Road Construction and Building Operations, (8) Stone

breaking or Stone Crushing, (9) Lac Manufactory, (10) Mica Works, (11)

Public Motor Transport (12) Tanneries and Leather Manufactory, (13)

Agriculture, (14) Mines such as Fire clay mines, copper mines, China clay mines,

etc. (15) Employment in loading and unloading in Railways goods sheds, docks, and

ports, (16) Employment in Ashprit cleaning on railways.

In 1998 some other industries have been added, namely Employment in (i) lignite

mines (ii) gravel mines (iii) slate mines and (iv) Laying of underground cables,

1 U.Unichoy Vs. State Of Kerala A.I.R. 1962 SC 122 Crown Aluminum Works Vs. Their Workmen, A.I.R. 1958 SC 30; U.Unichoy Vs. State Of Kerala A.I.R. 1962 SC 12;M/S Hydro Engineers Pvt Ltd Vs Their Workmen, A.I.R. 1969 SC 1823 Airfreight Ltd. Vs. State Of Karnataka And Others, 1999 SCC (L&S) 1185; U.Unichoy Vs. State Of Kerala A.I.R. 1962 SC 12, 17 Relied On4 Chandra Bhawan Boarding And Lodging, Bangalore Vs. State Of Mysore 1970 II LLJ 403 SC

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electric lines, water supply and sewerage pipe line.1

Part II of the schedule contains employment in Agriculture.

It may be noted that in respect of the employment in agriculture, instead of fixing

the minimum rates of wages for whole of the State, the Appropriate Government has

been given the power to fix such rates for a part of the State or for any specified

class or classes of such employment in the whole State or part thereof. It may be

observed that the list of employments specified in the schedule is not exhaustive

and therefore power is given to the State Government to add to the schedule more

employments. It has been held by the Supreme Court of India that this power given to the

State Government is not ultra vires.

The Supreme Court has observed: "Conditions of labour vary under different

circumstances and from State to State and the expediency of including a particular trade

or industry within the schedule depends t upon a variety of facts which are by no means

uniform and which can best be ascertained by the person who is placed in charge of the

administration of a particular State. It is to carry out effectively the purpose of this

enactment that power has been given to the Appropriate Government to decide, with

reference to local conditions, whether it is desirable that minimum wages should be fixed

in regard to a particular trade or industry which is not already included in the list. We do

not think that in enacting Section 27 of the Minimum Wages Act, the Legislature has in

no way stripped itself of its essential powers or assigned to the administrative authority

anything but an accessory or subordinate power which was deemed necessary to carry out

the purpose and the policy of the Act."2 Accordingly various employments have been

added to the schedule in different States from time to time.

Rationalization of Wages

1 Added By So 439 (E) Dated 20.5.19982 Edward Mills Co. vs. State of Ajmer, AIR 1955 SC 25

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In Marathwada Agricultural University (Marathwada Agricultural University V.

Marathwada Kirshi Videyapith, M.S.K.S,1

Union espousing cause of daily rated workers of appellant university succeeded in their

writ petition in which they sought direction of parity of wages paid to permanent

labourers. The primary grievance was that qualification, nature of work, duties and

responsibility of works of daily rated labourers are same as that of permanent labourers

employed by university. Even then the daily rated workers were getting far less wages

which were being paid to permanent labourers. It was also submitted that Maharashtra

Mumbai wages commission constituted under the minimum wages act, 1948, had fixed

rate of wages depending upon zones in marathwada region. But the university paid these

daily rated workers far less. The high court held that denial of appropriate wages to daily

rated workers amounted to exploitation of worker.

In appeal against the high court direction, the appellant submitted that the workers were

seasonal workers and the question of regularization does not arise in view of supreme

court decision in secretary, state of Karnataka v. Uma Devi2 , the supreme court

considered that considering the peculiar nature of controversy a committee should be

constituted for the purpose of rationalization of wages to be paid to concerned workers.

Then on the basis of report the state government should take necessary action after

obtaining the view of the university and after giving all concerned an opportunity of

stating the views.

Case: - Haryana Unrecognized School Association vs. State of Haryana3

That the teachers of educational institution cannot be brought within the purview of

minimum wages act. The state government in exercise of its power under the act was not

entitled to fix minimum wages for this segment of employees. Since the teachers of

educational institution are not employed to do any skilled or unskilled or manual or

clerical work, they cannot be said to be employees under section 2(i).

DEFINITION OF WAGES

1 (2007) III L.L.J 768 : AIR 2007 SC 29692 (2006) 4 SCC 1 : (2006) ii LLJ 7223 (1996) 2 LLJ 639: A.I.R. 1996 SC 2108. To The Same Effect, Hari Vidya Mandir Vs. State Of UP, (1998)LLJ 1126

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The minimum wages act, 1948 defines wages as under section 2(h), which reads as

under: - Wages means all remuneration, capable of being expressed in terms of money,

which accrued, in terms of contract of employment, express or implied, were fulfilled be

payable to person employed in respect of his employment or of work done in such

employment and includes house rent allowance but does not include:-

1. The value of

a. any house accommodation, supply of light, water, medical attendance or

b. any other amenity or any service excluded by general / special orders of

appropriate government

2. Any contribution paid by the employer to any pension fund or provident fund or

under any issuance of social insurance

3. Any traveling allowance or value of any traveling concession. Where a trip

allowance was prescribed by notification, the notification was held to be invalid

because trip allowance is meant to compensate the extra cost which an employee

is likely to incur when he moves out of his head quarter in connection with his

employment; it clearly partakes of character of traveling allowance and traveling

allowance according to definition of expression “wages” cant form a component

of wages1

4. Any sum paid to the person employed to defray special expenses entailed on him

by nature of his employment

5. Any gratuity payable on discharge

Thus analysis of this section indicates that the following essential requirements are

necessary for wages:-

1 Mahender Chandra v. State , A.I.R. 1971 Tri 32

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1. Wages include all remuneration paid to an employee including house rent

allowance

2. Wages must be capable of being expressed in terms of money

3. Wages become due when there is a contract between employer and employee

4. The terms and conditions of contract must be fulfilled or he must have done work

assigned to him under such employment

But “wages” does not include value of “-

A. Any house accommodation, supply of water, light and medical attendance

or

B. Any other amenity or service excluded by general or special orders pf

appropriate government. It doesn’t include any contribution to pension

und or any payment under scheme of social insurance, traveling

allowance.

In Prerna Sahyaog v. Authority under Minimum Wages Act and Others1

On receiving a complaint of non payment of wages, the authority under Minimum Wages

Act, 1948 ordered payment of 8times of wages as compensation. The Supreme Court

held that the award of compensation was too excessive and hence it was reduced to

equivalent of wages awarded to the workman.

In Titagarh Paper Mills Co. Ltd. vs. Its Workmen2 the Supreme Court held that the

payment of production bonus is in the nature of an incentive and it is in addition to he

wages. It cannot be treated as part of minimum wages fixed under Minimum Wages Act,

1948.

TYPOLOGY OF WAGES

1 (2002) L.L.J 205 (S.C)2 A.I.R. 1959 SC 1095

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Broadly speaking the wage structure can be divided into three categories viz. the basic

“minimum wage” which provides bare subsistence and is at poverty line level, a little

above is “fair wage” and the finally “living wage” which comes at the comfort level. It is

not possible to demarcate these levels of wage structure with any precision.

Principles on which wages are fixed have been laid down by Supreme Court in Kamani

Metals and Alloys vs. Their Workmen1 that “there is a minimum wage which, in any

event must be paid irrespective of the extent of profits, the financial conditions of the

establishment or the availability of workmen on lower wages. The minimum wage is

independent of the kind of industry and applies to all alike big or small. It sets the lowest

limits below which wages cannot be allowed to sink in all humanity.

The second principle is that wages must be fair , that is to say, sufficiently high to

provide a standard family with food , shelter, clothing, medical care and education of

children appropriate for the workmen but not at a rate exceeding his wage earning

capacity in the class of establishment to which he belongs. A fair wage is thus related to

earning capacity and the workload. It must ,however, be realized that fair wage is not a

living wage by which is meant a wage which is sufficient to provide not only the essential

above mentioned but a fair measure of frugal comfort with an ability to provide for old

age and evil days. Fair wage lies between minimum wage which must be paid in any

event and the living wage which is the goal”

In order to understand the concept of minimum wages it would be desirable to know the

meaning as such. Wage is remuneration to labour for the work done or the service

rendered by it to the employer. Of all the problems that face the worker .that of wage is

1 A.I.R. 1967 SC 1175

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the most vital and important to him. For, wages constitute the earnings for the workman,

which in turn, determine his standard of living and that of his family. They also

determine the standard of his efficiency and consequently, the level of productivity. It is

accepted by all those interested in the advancement of industry and the well-being of

labour that a well-paid labour is an asset to the industry which helps in increasing the

efficiency and the productivity in the industry.

The International Labour Organization, which has since its inception given inspiration

impetus to numerous measures of social justice and social security in several countries

including India, recognized the importance of the problem of wages and provisions of an

adequate living wage, and recognition of the principle of equal remuneration for equal

work, figure prominently amongst the objectives of that organization. A number of

conventions adopted by the ILO will testify this. For example the Minimum Wages

Fixing Convention casts upon the members who ratify the convention, the obligation to

create machinery the wage fixation and enforcement of the minimum rates of wages in

certain trades or parts of trade in which no machinery exists for collective bargaining or

where the wages are exceptionally low.1

The fair wages committee formulated the concepts of living wage, fair wage and the

minimum wage. The fair wages committee report published by the government of India

1949 has been broadly approved by Supreme Court in Express Newspaper (p) ltd. v.

Union of India2 and Standard Vacuum Refining Co. of India v. Its Workmen3 living

wage is at the apex a political aim and in view of the level of national income a distant

goal to be achieved in course of years, at bottom is the minimum wage which must

provide not merely for the bare subsistence of life but for preservation of efficiency of

worker. For this purpose, minimum wage must also provide for some measures of

education, medical requirement and amenities on the basis of decided cases, the concept

of minimum wages may be simplified. As a matter of fact there are three concepts in this

regard, i.e., living wage, fair wage and minimum wage.

1 GM Kothari, A Study of Industrial Law, pp. 39-402 A.I.R. 1958 SC 5783 A.I.R. 1961 SC 895, followed in Workmen v. Reptakas Brett & Co. Ltd. A.I.R. 1992 SC 504

18

MINIMUM WAGES

The expression “minimum wages” is not defined in the minimum wages act presumably

because it would not be possible to lay down a uniform minimum wages for all industries

throughout country on account of different and varying conditions prevailing from

industry to industry and from one part of country to another1. It was held in Hydro

(engineers) Pvt ltd. v. The Workmen2 that “the concept of minimum wages takes in the

factor for prevailing cost of essential commodities wherever such minimum wage is to be

fixed. The idea of fixing such wages in the light of cost of living at a particular juncture

of time and neutralizing the rising prices of essential commodities by linking up scales of

minimum wages with the cost of living index can not, therefore, be said to be alien to

concept of minimum wage. Furthermore in the light of spiraling of process in recent

years, if the wage scales are to be realistic it may become necessary to fix them so as to

neutralize at least partly the price rise in essential commodities”

The minimum wages must be defined as the lowest wages determined by lower contract,

that an employer may pay an employee for a specified job.3

According to Columbia encyclopedia lowest wage legally permitted in an industry or in

government or any other organization is minimum wages. The goal in establishing

minimum wages has been to assure wage earners a standard of living above the lowest

permitted by health and decency.4

The Committee was of the view that a minimum wage must provide for not merely the

bare sustenance of life, but for the preservation of the efficiency of the worker. For this

purpose, the minimum wage must also provide for some measure of education, medical

requirements and amenities. The statutory Minimum Wage is the wage determined

according to the procedure prescribed by the relevant provisions of the Minimum Wages

Act, 1948.

The question of establishing statutory wage fixing machinery in India was, therefore,

discussed at the third and fourth meetings of the Standing Labour Committee held in

1943 and 1944 respectively and at successive sessions of the Tripartite Labour

Conference in 1943, 1944 and 1945. The last of these approved the enactment of 1 Hydro (engineers) Pvt. Ltd. v. The Workmen, A.I.R. 1969 SC 1822 Ibid3 Hydro Engineers Pvt Ltd. vs. The Workmen, A.I.R. 1969 SC 1824 www.encyclopedia.com/doc/1E1-minimumw.html

19

minimum wages legislation in principle. On April 11, 1946, a Minimum Wages Bill was

introduced in Parliament but the passage of the Bill was considerably delayed by the

constitutional changes in India. It was, however, passed into an Act in March, 1948.1

In Sandeep Kumar and others v. State of U.P2 where five persons were working as

Junior Engineers in a project placed under the control of Executive Officer, City Board,

Ghaziabad engaged in the work of slum clearance. The project was financed by the State of

U.P. and World Bank funds. They were working on daily rate basis and on an average

received Rs. 1000 per month. No other benefits were given even they did not get any

payment for the holidays. However, similarly qualified engineers when employed for

similar work on regular basis are paid a minimum grade pay of Rs.1400. The Supreme

Court held that there is no justification to discriminate between the two categories and

directed to pay Rs. 1400 per month instead of Rs. 1000.

The Supreme Court further held that they are not entitled to be regularized in service as

there is no permanent need for the work in such projects which are for a particular

purpose. But they would be entitled to regularization of their service by recruitment

through the Public Service Commission for vacancies other than employment under the

project as and when such vacancies arise and are duly notified subject to their satisfying

the requisite qualifications prescribed therefore under the rules and the employer would

not stand in the way of regularization of their service.

In Ram Naresh Shah vs. Union of India where dispute was for equal pay for equal

work. In U.P. Bridge Corporation Diploma Holder regular employees were paid Rs. 1400

while Diploma Holder employees engaged on casual basis were getting only Rs. 1280

per month at relevant time and no payment was made for holidays. On the other hand,

daily rated degree 'holder junior engineers were paid at the same rate as the regular degree 1 http://labourbureau.nic.in/MW_Report_2008.pdf2 1993 SCC (L&S) 290

20

holders. The Supreme Court held that there is no reason to make distinction between

petitioner diploma holders and the regular diploma holders. Besides even under the

Minimum Wages Act a paid day of rest in every period of seven days is mandatory. The

Diploma Holders among the petitioners should therefore be paid Rs. 1400 per month. On

the issue of regularization it was observed that all such vacancies’ which would occur

henceforth shall ordinarily be filled up by regularizing the employees like the petitioners

who are directly employed by the corporation and as and when that is not possible for

some reasons, on temporary basis deputationist may be accepted so as to ensure that no

deputations functions for more than six months.

NATIONAL FLOOR LEVEL MINIMUM WAGE

In order to have a uniform wage structure and to reduce disparity in minimum wage

across the country, concept of national floor level minimum wage was mooted on the

basis of recommendations of the national commission on rural labour, in 1991. Keeping

in view the recommendation of national commission and subsequent rises in price, the

national floor level minimum wage was fixed a rs. 35 per day in 1996 which was revised

ay with effect from upwards to rs. 66 per day with an effect from 1/2/2004. The national

floor level minimum wage has no statutory backing. The state governments are persuaded

to fix minimum wages such that in none of the scheduled employments, the minimum

wage is less than the national floor level minimum wage. This method has helped in

reducing disparity among different rates of minimum wages to some extent.1

The National Commission on Labor was required under its terms of reference to report on

the need of fixation of a national minimum wage. Several State Governments have been of

general view that a national minimum wage could be an alluring concept and they I feel that

a start should be made by fixing 'regional minima'. Workers' organizations, on the other

hand, have suggested a national minimum below which no employer should be allowed to

1 labour.nic.in

21

hire labour. Some apprehended that the minimum so fixed will tend to be the maximum.

With this national minimum, there should also be regional minima worked out with special

reference to the ways of living in different areas.

The employers suggested fixation of a national minimum taking into account national per

capita income and it should be applicable to industrial as well as non-industrial

employments. However, some felt that a national minimum only for selected industries may

be fixed.1

The advocates of a national minimum wage claim that such a minimum would have more

extensive coverage and would make implementation easier and effective because of its

simplicity. The National Commission on Labour felt that far from leading to ease and

effectiveness of administration, fixing of a national minimum with a necessarily wider

coverage may bring in its train a number of difficulties. Because of the vastness of the

country and wide differences in the levels of development in industries and regions, a

uniform national minimum wage will be untenable.

Experience in other countries also does not encourage us to recommend a national

minimum. It was concludingly remarked that a national minimum wage in the sense of a

uniform minimum monetary remuneration for the country as a whole, is neither feasible nor

desirable.

If that is fixed, the dangers are that there will be areas which will not afford the minimum if

the minimum is worked out somewhat optimistically and if calculations are allowed to be

influenced by what a poorer region or industry can pay, the national minimum will not be

worth enforcing. It may be possible, however, that in different homogeneous regions in each

State regional minima could be notified. In due course, the region itself could be widened to

1 http://labourbureau.nic.in/MW_Report_2008.pdf

22

cover the whole State. But, widening of the area beyond a State may be impracticable and

also not in the best interest of workers.1

On account of all these difficulties the Minimum Wages Act permits fixation of different

rates of minimum wages for different localities.

COMPONENTS OF MINIMUM WAGE

A minimum wage must provide not merely for the bare subsistence of life but for the

preservation for the efficiency of the worker, and, so it must also provide for some

measures of education, medical assistance, requirements and amenities. The concept of

minimum wage does not mean a wage that enables the worker to cover his bare physical

need and keep himself just above starvation. The capacity of the employer to pay is

irrelevant in fixing the minimum wage. Therefore, no addition shall be made to the

components of minimum wage, which would take minimum wage near the lower level of

fair wage.

In Unichay v. State of Kerela2, it was held that “the Act contemplates that minimum

wage rate should be fixed in scheduled industries with the dual object of providing

subsistence and maintenance of the worker and his family and preserving his efficiency

as a worker”.

The Tripartite Committee of the Indian Labour Conference (1957) accepted the following

five norms for fixing the “minimum wages”:-

1. In calculating the minimum wage, the standard working class family should be

taken to consist of 3 consumption units for one earner, the earnings of the women,

children and adolescents should be disregarded.

1 Report of the National Commission on Labour (1969), pp. 233-2342 A.I.R. 1962 SC 12

23

2. Minimum food requirement should be calculated on the basis of net intake of

calories, as recommended by Dr. Aykroyd for an average Indian adult of

moderate activity.

3. Clothing requirements should be estimated as per capita consumption of 18yards

per annum which would give for the average workers family of four, a total of 72

yards.

4. In respect of housing, the rent corresponding to minimum area provided for under

Government Industrial Housing scheme should be taken into consideration in

fixing the minimum wage.

5. Fuel, lightning and other ‘miscellaneous’ items of expenditure should constitute

20% of total minimum wage.

It was held in Workmen of Reptakos Brett & Co. Ltd v. Management1, that a workers

wage is no longer a contract between employer and employee. It has the force of

collective bargaining under the labour laws. Each category of wage structure has to be

tested at the anvil of social justice which is the live – fiber of our society today. Keeping

in view the socio – economic aspect of the wage structure one more component to

minimum wage should be added, namely, children education, medical requirement,

minimum recreation including festivals/ceremonies and provisions for old age, marriages

etc. should further constitute 25% of total minimum wage.

It was further held that the wage structure which approximately answers the above six

components is nothing more than a minimum wage at subsistence level. The employees

are entitling to minimum wage at all times and under all circumstances. An employer

who can not pay the minimum wage has no right to engage labour and no justification to

run the industry.

In People’s Union for Democratic Rights v. Union of India2, it was held by the Supreme

Court that where children below age of 14 years are employed in violation of the

Employment of Children Act, 1938 and minimum wages are denied either to such

children or to other persons who by reason of poverty or socially or economically

1 (1992) I L.L.J. 340 (SC)2 (1992) I LJ 545 (SC)

24

disadvantageous position are unable to approach the court, legal redress may be sought

on their behalf by any member of public.

In Ahmad Nagar Zilla Slieth Mazdoor Union v. Dinkar Rao KaIyan Rao Jagdale,1

It has been held by the Supreme Court that mere continuance every year of seasonal work

obviously during the period when work was available, does not constitute a

permanent status unless there exist posts and regularization is done. Under these

circumstances the Tribunal and the High Court are not right in holding, that the

respondents are entitled to be absorbed on regular basis as regular employees.

Therefore, their orders were set aside. However the Supreme Court made it clear that the

appellant shall take the services of all the workmen existing as on date as and when the

work is available and during the period of seasonal operation. As and when the

vacancies arise, regularization of the employees should be made in order of their seniority

and till the employees are regularized, they are not to be retrenched.

In State of Haryana v. Tilakraj and others,2 where 35 daily wagers filed petition in

the High Court claiming that they were entitled to regularization in view of their long

period of service put in by them and also claimed same salary as paid to regular

employees since the nature of work done by them was similar. The petition was allowed

by the High Court with the following observations: "the petitioners would be entitled to

the relief, but again not the regular pay scale which their regular counterparts are

receiving. The petitioners would be entitled to the minimum of the pay scale with D.A.

alone".

In appeal the Supreme Court observed that the principle of equal pay for equal work is

not always easy to apply. There are inherent difficulties in comparing and evaluating the

work done by different persons in different organizations, or even in the same

organization. This is a concept which requires for its applicability complete and wholesale

identity between group of employees claiming identical pay scales and the other group of

1 2001 SCC (L&S) 1180 Chandigarh Administration V. Rajni Vali, 2000 SCC (L&S) 247 Followed2 2003 SCC (L&S) 828; State Of Orissa V. Balaram Sahu; 2003 SCC (L&S) 250 Relied On. State Of Haryana V. Fastner Singh, 1997 SCC (L&S) 210; Ghaziabad Development Authority V. Vikram Chaudhary, 1995 SCC (L&S) 1226; Harbans Lal V. State Of H. P. 1990 SCC (L&S) 71;

25

employees who have already earned such pay scales. The problem about equal pay cannot

always be translated into a mathematical formula.

FAIR WAGE

Fair wage is a wage between “minimum wage” and a “living wage”. There is a difference

between minimum wages and fair wages. In case of fair wage besides the principle of

industry-cum-region, the company’s capacity to bear the financial burden must receive

due consideration. But mere hopeful observations made in director’s annual report cannot

be basis for awarding increased wages because such observations are sometimes made to

inspire hope and confidence in shareholders and the cannot be substituted for actual

audited figures1

The Fair Wages Committee also recommended that the fair wage should be related with

the productivity of labour. In this connection, it may be said that in India since the

existing level of wages is unable to maintain the workers on subsistence plus standard, it

is essential that the workers must be first assured a living wage and only after this

minimum has been done, the wages should be related to the productivity. The Committee

further recommended that the fair wage should be related with the prevailing rates of the

wages, though in view of unduly low wages prevailing even in organized industries in the

country, it laid that the wage fixing machinery should, therefore, make due allowance for

any depression of wages caused by unequal bargaining.

S.A.F.L. Works v. State Industrial Court, Nagpur2, is a leading case on the point. In this

case Supreme Court observed that in fixing the paying capacity the tribunal will have to

fix the income as well as permitted deductions and allowances properly incurred. There

can be no dispute that express incurred for purchase of raw material, maintenance for

factory, expenses incurred towards rent, public charges, maintenance of establishment

and expenses incurred in marketing of the produce should be deducted. These items are

not exhaustive. As to whether a particular item of expenditure is liable to be deducted or

1 Sangam Press v. Workmen, A.I.R. 1975 SC 20352 A.I.R. 1978 SC 1113

26

not have to be determined on the facts of the case. No deduction should be allowed for

the payment of income tax or for allowances made for depreciation or making provisions

for reserve. So far as expenses incurred towards payment of wage bill inclusive of

dearness allowances, bonus, gratuity, etc. are concerned they will have to be deducted.

After properly determining the paying capacity of the industry the tribunal will have to

proceed to fix fair wages which would include the fitment, scale of wages and dearness

allowances, period during which retrospective effect is to be given will have to be

determined afresh.

It was held in Transport Corp. Of India Ltd. V. State of Maharashtra and others1

That it is not for the labour court or a tribunal to fix minimum rates of wages. While

fixing fair rates of wages the courts or tribunals take into consideration the minimum

rates of wages and where the government has not fixed the minimum rates of wages then

the courts or tribunals ascertains for them what would be the minimum rate of wages. In

fact the minimum rates of wages are fixed by the government. Courts or tribunals merely

ascertain as to what are the minimum rates of wages for the purpose of deciding ‘fair

wages’.

In Express newspapers ltd v. union of India,

Bhagwati, J. observed that Marshall would consider the rates of wages prevailing, in an

occupation as ‘fair’ if it is about one level with the average payment of task in other

trades which are of equal difficulty and disagreeableness which requires equally rare

natural abilities and equally expensive training. Prof. Pigon would apply two degrees of

fairness in judging a wage rate, viz. fair in the narrower sense and fair in the wider sense;

when it is equal to the rate current for similar workman in the same trade and

1 (1993) II L.L.J. 365 (Bom.)

27

neighborhood, and fair in the wider sense when it is equal to the predominant rate for

similar work throughout the country and in generality of trades.1

Prof. Kothari has rightly remarked that a wage level lower than living wages but higher

than minimum is fair wage. In the light of these concepts of minimum wage and the

living wage the committee considered what should be the principle for the fair wage

contemplated by the Industrial Truce Resolution and stated that the fair wage was

something between minimum wage and a living wage. While lower limit of fair wage

must be the minimum wage, the upper limit is broadly set out by what may be called, the

capacity of industry to pay. This will depend not only on the present economic condition

of the industry but on its future prospects also.

Between these two limits the actual wage will be fixed on consideration of the following

factors:-

1. The productivity of labour;

2. The prevailing rates of wages in the same industry for similar occupations in the

same neighboring locality;

3. The level of national income and its distribution;

4. The place of industry in the economy of country.

Regarding the capacity of industry to pay the fair wages committee was of the opinion

that in determining the capacity of an industry to pay, it would be wrong to take the

capacity of the particular unit or the capacity of a particular industry in the country. The

relevant criterion should be the capacity of the particular industry in specified region and,

as far as possible; the same wages should be prescribed for all units of that industry in

that region. It will not be possible for the wages fixing board to measure the capacity of

all units in a region and the only practicable method is to take a fair cross-section of that

industry.2

1 D.S. Chopra and S.A. Apte, The Minimum Wages Act, 1948 (1973), p. 142 G.M. Kothari, Loc, cit. p. 43

28

In Novex Dry Cleaners v. Workmen1, it has been observed that it is now a well settled

principle that fixing a minimum wage, the capacity of industry to pay is not relevant, but

in fixing a fair wage, the capacity of the industry to bear the burden of the said wage is

very relevant and important factor. Where wage structure is being fixed with reference to

those in other similar industries in the region, the standing of industries, strength of

labour employed, extent of customers, profits and loss must be taken into account. It is

also necessary to assess whether the employer would be able to meet the additional

liability.

In Wenger & Company vs. Its Workmen2, the Supreme Court observed that in

constructing the wage structure, industrial adjudication has to take into account the

overall financial position of the employer because a scheme of wage structure including

scale of increment is a long term scheme, and before it is framed, the tribunal must be

satisfied that the burden imposed by the scheme would not be beyond the means of

employer. In regard to minimum wage no such consideration arises because it is the duty

of industrial employer to pay the basic minimum wages to his employees.

In Workmen vs. Reptakos Brett and Co. Ltd ,3”where a similar question of

revision of wage structure to the prejudice of workmen on the ground of financial

stringency was involved. The Supreme Court reviewed all the above cases leading to

the ratio that the management can revise the wage-structure to the prejudice of the

workmen in a case where due to financial stringency it is unable to bear the burden of

the existing wage. But in an industry or employment where the wage-structure is at the

level of minimum wage, no such revision at all is permissible not even on the ground of

financial stringency. It is therefore, for the management, which is seeking restructuring

of D.A. scheme to the disadvantage of the workmen to prove to the satisfaction of the

1 (1962) I L.L.J 2712 (1968) II L.L.J 4033 A.I.R. 1992 SC 504 : 1992 SCC 271

29

Tribunal that the wage-structure in the industry concerned is well above minimum level

and the management is financially not in a position to bear the burden of the existing

wage-structure. It was held that the Tribunal was not justified in abolishing the slab

system of D.A. which was operating in the company for almost thirty years.

The above dictum was reiterated by the Supreme Court in Ahmadabad Mills

Owners Association v. Textile Labour Association1 in clear terms. It was observed

that in dealing with question whether the additional burden which an award would

impose would not be beyond the financial capacity of the employer, there are two general

considerations which cannot be ignored. The First consideration is that the task of

constructing a wage structure of industrial employees is a very responsible task and it

presents several difficult and delicate problems. The claim of the employees for a fair and

higher wage is undoubtedly based on the concept of social justice and it inevitably

plays a major part in the construction of a wage structure. There can be little doubt that

if the employees are paid a better wage which would enable them to live in fair

comfort and discharge their obligations to the members of their families in a

responsible way, they would be encouraged to work whole-heartedly and their work

would show appreciable increase in efficiency.

In Crown Aluminum Works vs. Their Workmen,2 the question posed before the

Supreme Court was: Can the wage structure fixed in a given industry be never revised to

the prejudice of its workmen? The Court speaking through Gajendragadkar, J. held: "We

do not think it would be correct to say that in no conceivable- circumstances can the

wage structure be revised to the prejudice of workmen. When we make this observation,

we must add that even theoretically no wage structure can or should be revised to

prejudice of workmen if the structure in question falls in the category of the bare

subsistence or the minimum wage. If the wage structure in question falls in a higher

category, then it would be open to the employer to claim its revision even to the prejudice

of the workmen provided a case for such revision is made out on the merits to the

1 A.I.R. 1966 SC 4972 A.I.R. 1958 SC 30

30

satisfaction of the tribunal. After considering all the relevant facts, if the tribunal is

satisfied that a case for reduction in the wages structure has been established then it

would be open to the tribunal to accede to the request of employer to make appropriate

reduction in the wage structure, subject to such conditions as to time or otherwise that the

tribunal may deem fit or expedient to impose.

LIVING WAGE

The term living wage has not been defined under the provisions of the Minimum Wages

Act. However, “an instance of statutory definition of living wage is provided in south

Australian Act of 1912 which states the “living wage” means a sum sufficient for the

normal and reasonable needs of average employee living in a locality where the work

under consideration is done or is to be done”

In the famous Harvester case, the commonwealth arbitration court has visualized a living

wage as a sum which is adequate to satisfy the normal needs of the average employee

regarded as human being in a civilized community.

Another example is found in the Queensland industrial conciliation and arbitration act

which states that the basic (i.e. living) wage paid to an adult male employee shall not be

less that what is sufficient to maintain a well conducted employee of average health,

strength and competence and his wife and a family of three children in a affair and

average standard or comfort, having regard to conditions of living prevailing among

employees in the calling in respect of which such wage is fixed, and provided that in

fixing such basic wage the earnings of children or wife of such employee shall not be

taken it to account. Living wage consists of amount of necessaries, comforts and luxuries,

the quantum of goods and services which an individual considers necessary for decent

existence.”

31

In India there is no statutory definition of living wage. However, it may be pointed out

that Fair wage committee in its report observed that it was not possible to fix a living

wage as contemplated by various authorities, in the context of present low level of our

national income. It has been observed that at the bottom of the ladder there is a minimum

wage rate which the employer of any industrial labour must pay in order to be allowed to

continue an industry. Above this is the fair wage, which may be said to approximate to

the need based minimum, in the sense of a wage which is adequate to cover the normal

needs of the average employee regarded as a human being in a civilized society. Above

the fair wage is the living wage. It is the wage which will maintain the workmen in the

highest state of industrial efficiency, which will enable him to provide his family with all

material things which are needed for their health and physical well-being, and will be

enough to enable him to qualify to discharge his duties as a citizen.1

Better living conditions for workmen can only be possible by giving them a living wage.

This will tend to increase the nation’s wealth and income, but if it makes unreasonable

inroads on the profits of the capitalists, it might have a tendency to drive capital away

from fruitful employment and even effect prejudicially the capital formation itself.2

The amount of living wages in term of money will vary from trade to trade and locality to

locality. But the idea is that every workman shall have a wage which will maintain him in

the highest state of industrial efficiency which will enable him to provide his family with

all material things which are needed for their health and physical well being, enough to

enable him to qualify to discharge his duty as a citizen.3

The living wage should enable the male earner to provide for himself and his family not

merely the bare essentials of food, clothing and shelter but a measure of frugal comfort

including education for the children, protection against ill-health, requirements of

essential social needs and a measure of insurance against the more important misfortunes

including old age.

1 Hindustan Times Ltd. vs. Their Workmen, A.I.R. 1963 SC 13322 Ibid.3 Standard Vacuum Refinery Co. vs. Its Workmen, A.I.R. 1961 SC 895

32

It has been remarked by Supreme Court in Workmen v. Peptakos Brett & Co. ltd.1, that a

living wage has been promised to the workers under the constitution. A’ socialists’

framework to enable working people a decent standard of life has further been promised

by 42nd amendment.

Living wage is a political ideal to be achieved and it means and includes salary, pay or

remuneration for the work done, which is quite essential for providing necessities of life,

such as, food, cloth and shelter including maintenance of health, education, frugal

comforts and certain means of recreation which are quite essential for a person to lead his

life in a society as a human being. The concept of living wage may vary from place to

place, because it depends upon the price level of necessaries of life, and it is determined

by socio-economic conditions of a particular country

Classification of Living Wages

1) Poverty Level - According to Rowntree where it is not sufficient to

obtain minimum necessities for the maintenance of mere physical efficiency.

This is also known as Poverty Line.

2) Minimum Subsistence Level - This is secondary poverty line where a

family living upon the scale allowed for in this estimate must never spend

a penny on railway fare, or omnibus, such persons must never purchase

newspapers. They must write no letter to absent children for they cannot

afford to pay the postage. The children must have no pocket money for dolls,

1 1992 SCC (L&S) 271

33

etc.

3) Minimum Health and Decency Level - In this case, income is sufficient

not only for physiological existence but also for some elementary social

necessities, such as medical attention, car fare, insurance, clothing

compatible with self-respect, elementary education f r children, etc.

4) Comfort Level - It represents (attainment of) the highest class of wage

earners an e cynosure of the rest. At this level, the family is to live in a

decent house, modestly equipped and decorated. It has reasonably adequate

funds available for such items as: Insurance, education, recreation, etc.

FIXATION OF MINIMUM RATES OF WAGES

The “appropriate government”1 shall be empowered to fix the minimum rates of wages in

the manner prescribed in the Minimum Wages Act. It shall fix the minimum rates of

wages payable to the employees employed in an employment specified in Part-I2 or Part-

II3 of the schedule or review at such intervals, as it may think fit, such intervals not

1 As per the Act, the appropriate government means (i) In relation to any scheduled employment carried on by or under the authority of the Central Government or a railway administration or in relation to a mine, oilfield or major port or any corporation established by a Central Act, the Central Government and (ii) In relation to any other scheduled employment, the State Government.2 Part-I includes employment in any woolen carpet making or shawl weaving establishment, in any flour mill, rice mill or Dal mill, any tobacco manufactory, any plantation, any estate which is maintained for the purpose of growing rubber, tea or coffee, any oil mill, under any local authority, on the construction, in stone breaking/crushing, in lac manufactory, in any mica works, in public motor transport, in tanneries and leather manufactory.3 Part-II includes employment in agriculture. Example any form of farming including cultivation and tillage of soil, dairy farming, the production, cultivation, growing and harvesting of agriculture or horticulture

34

exceeding five years, the minimum rates of wages so fixed and revise the minimum rates,

if necessary.1

The Act does not set out a minimum wage in rupee terms, but just stipulates that the wage

be a living wage2 which is to be decided by labour department in each state. Certain

norms have been laid out including that of calorie requirements, yards of cloth per family

and so on. The Act also stipulates that minimum wage rates are to be revised keeping in

mind inflation. Additionally, the guidelines laid down for the minimum wage by the 15th

Indian Labour Conference (ILC) and the Supreme Court suggest that a minimum wage

for 8 hours of work should be high enough to cover all the basic needs of the worker,

his/her spouse and two children. However, in many states while fixing the minimum

wages, they are not linked to the payment of dearness allowance. As a result, real wages

of workers keep eroding due to inflation, pushing them below the poverty line.

The appropriate government may refrain from fixing minimum rates of wages in respect

of any scheduled employment in which there are in whole state less than one thousand

employees engaged in such employment, but if any time, the appropriate government

comes to finding after such enquiry, as it may make or cause to be made in this behalf,

that the number of employees in any scheduled employment in respect of which it has

refrained from fixing minimum rates of wages has risen to one thousand or more, it shall

fix minimum rates of wages payable to employees in such employment, as soon as after

such finding.3

The main objective to be considered while fixing or revising the minimum wage rate

should be two fold –

1) Social objective: that is, by providing sufficient purchasing power to the worker,

enable him/her to have a basic standard of living. In long run such a step would help in

abolishing labour exploitation and poverty.

commodity, raising of live stock, bees or poultry.1 Section 3, of The Minimum Wages Act, 19482 A "living wage" is the level of income sufficient to allow workers to support their families. 3 Section 3(1-A) of The Minimum Wages Act, 1948

35

2) Economic objective: The rate of minimum wage should be fixed at such a level which

would motivate workers and enable them to enjoy the benefits of economic growth, and

thereby contribute to the economy.4

Fixation can be done in two ways:-

Fixation on committee report basis

After considering the advice of the committee or the representations submitted on

proposals contained in the notification, the government shall by notification in

gazette fix the minimum rates of wages and unless the notification otherwise

provides, the rates so fixed shall come into force on expiry of three months from

the date of notification.

For the purpose of co-coordinating the work of committee and sub-committee

appointed under section 5 of the minimum wages act, 1948 for holding enquiry

and advising government generally in the matter of fixing and revising minimum

rates of wages, the state government has to appoint an advisory board for the

purpose of advising central government and state government in the matter of

fixation and revision of minimum wages and other matters under this act. For

coordinating the work of the advisory board, central government has to appoint

central advisory board.

In case the appropriate government proposes to revise the minimum rates of

wages by mode of giving notification in the official gazette, the appropriate

government has to consult the advisory board also.

Fixation on basis of consideration of proposals:-

Under this second method, government publishes the proposals for information of

persons likely to be affected.

It specifies date not less than two months from the date of notification, on which

the proposal will b taken into consideration. Thereafter, the government takes into

consideration either the advice of the committee or sub-committee appointed or

consider all representations received by it and thereby after notification fixes or as

4 http://www.amrc.org.hk

36

the case may be revises the minimum rates of wages which would come into force

on the expiry of three months from the date of its issue unless it is specified that it

will come into force on some other date.

The Supreme Court1 has held that the act is valid because of provisions, among

others, which required the state government, before fixing minimum wages, to

take into account advice of committee or representations on its proposals. If this

provision and similar other provisions relating to consultation with advisory

bodies have not been made obligatory, the act in all probability would have been

struck down. Therefore obtaining the advice of committee or considerations on

representation of proposals of the state government is “sine qua non” of fixation

of minimum rates of wages by the state government. If the state governments

were to proceed to revise and fix the minimum rates of wages without appointing

a committee or without publishing its proposals and inviting the representations

and considering them, the notification fixing minimum rates of wages or revising

them would be clearly against the basic provisions of the act and would have no

force and validity.2

Where the provisions of section 5 have not been followed at all, it is not open to the state

government to fix minimum wages, and any order fixing minimum rates of wages

without following the provisions of section 5 is of no force and effect.

Compliance with procedure must be real and not in name. In N.K. Jain v. Labour

Commissioner, Rajasthan3, the state government composed a committee consisting of

six of its officers. There was no representation of employers or the employees in

scheduled employment on the committee. On the advice of committee the state

government issued a notification fixing minimum wages. It was held that though there

was in name a committee, in reality there was none. The state government’s notification

fixing minimum rates of wages was in effect made without consulting the committee and

without publishing its proposal and obtaining representation on them. In these

1 Gulamahommed Tarasaheb V. Bidi Factory By Its Proprietor Shamrao, A.I.R. 1955 SC 332 VKS v. State, (1971) 2 LLJ 252 (Kerala) : 1972 lic 3983 1957 Raj 35

37

circumstances, the notification fixing minimum rates of wages in certain scheduled

employments was of no force and effect.

Power of government in wage fixation:-

If it is not shown that the appropriate government in issuing notification has acted mala

fide or in excess of its jurisdiction1 or in defiance of natural justice, the notification

cannot be declared invalid2. The appropriate government is not bound to act judicially or

even quasi-judicially. The government may seek the view of labour commission even

after consulting the advisory board.3

The state government is bound to consider the advice of the committee and to fix by

notification in the official gazette the minimum rates of wages applicable to scheduled

employment.4

The object of this provision is to enable the government to collect data required for fixing

the minimum rates of wages. The committee appointed is only an advisory body and

government is not bound to accept any of its recommendation.5

Power confined to class of employments and not individuals:-

The power of fixing wages can only be exercised in respect of class of employments6

In fixing such wages it is also open to the state government to fix different minimum

rates of wages for different scheduled employments as well as different classes of

workers under the same scheduled employment. But having fixed the minimum rates of

wages, there is nothing in the cat which authorizes the state government to provide by

notification the procedure for deciding which of the employees fall within which

particular category of employment whose rates of minimum wages has been fixed under

such notification.7

1 1975 Lic 4292 Edwards Mills Co. Ltd. V. State Of Ajmer,1953 Ajmer 653 Tourist Hotel Case, 1975 I LLJ 211 (AP)4 Ibid5 Jaswant Rai Berry V. State Of Punjab, 1958 Punj. 4256 G.P. Stewart V. Jogendra Nath, 1939 Cal. 6287 Prafulla Chandra Chakravarty V. Manager, Dawan Tea Estate, 1958 Assam 12

38

The appropriate government may fix –

a. A minimum rate of wages for time work (referred to as ‘a minimum time rate’)

b. A minimum rate of wages for piece work (referred as ‘a minimum piece rate’)

c. A minimum rate of remuneration to apply in case of employees employed on

piece work for the purposes of securing to such employees a minimum rate of

wages on a time work basis (referred as ‘a guaranteed time rate’)

d. A minimum rate (whether a time rate or piece rate) to apply in substitution for the

minimum rate which would otherwise be applicable, in respect of overtime work

done by employees (referred to as ‘overtime rate’)1

In fixing or revising minimum rates of wages under this section-

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 localities;

b) Minimum rates of wages may be fixed by any one or more of the

following wage-periods, namely-

i. By the hour,

ii. By the day,

iii. By the month, or

iv. By such other larger wage period as may be prescribed,

And where such rates are fixed by the day or month, the manner of calculating wages for

a month or for a day, as the case may be, may be indicated

1 Section 3(2) of The Minimum Wages Act, 1948

39

Provided that where any wage-periods have been fixed under section 4 of the Payment of

Wages Act, 1936 (4 of 1936) minimum wages shall be fixed in accordance herewith.1

Any minimum rates of wages fixed or revised by the appropriate government in respect

of scheduled employments under section 3 may consist of-

i. A basic rate of wages and a special allowance at a rate to be adjusted, at such

intervals and in such a manner as the appropriate government may direct, to

accord as nearly as practicable with the variation in cost of living index number

applicable to such workers; or

ii. A basic rate of wages with or without the cost of living allowance, and the cash

value of concessions in respect of supplies of essential commodities at concession

rates, where so authorized; or

iii. An all inclusive rate allowing for the basic rate, the cost of living allowance and

the cash value of concessions, if any2

The cost of living allowance and the cash value of concessions in respect of supplies of

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.3

Tribunal can fix minimum rates of wages at a figure higher than those fixed by

government. Tribunal can take into account the minimum wages fixed in several awards

in city as a criteria for fixation.4

In Kerela Hotel and Restaurant Assoc. vs. State of Kerela,5 it was held that for

fixation of minimum wages for employees in hospitals, minimum wages fixed for

employees n dispensaries can be taken into consideration.

1 Section 3 (3) of The Minimum Wages Act, 19482 Section 4 (1) of The Minimum Wages Act, 19483 Section 4 (2) of The Minimum Wages Act, 19484 Sakshi vs. Presiding Officer, labour court, north Bihar, Muzaffarpur, A.I.R. 1966 Patna 495 (db)5 1989, labour court 1920 (Bombay)

40

Case: - Karnataka Film Chamber of Commerce vs. State of Karnataka1

The language of section 4 doesn’t lend itself to the interpretation that a minimum wage

under section 4(1) necessarily should consist of basic wages and dearness allowances.

Minimum wages may consist of basic rate of wages and a special allowance at a rate

adjusted at such intervals in such a manner as appropriate government may direct to

accord as nearly practicable with a variation in cost of living index applicable to such

workers, or a basic rate of wages with or without cost of living allowance and cash value

concessions with respect of supply of essential commodities at concessional rates or all

inclusive rate allowing basic , the cost of living allowance and cash value of concessions.

Jaswant Rai Berry vs. State of Punjab2

“Where an inclusive rate has been fixed including a basic rate of wages and cost of living

allowance, this is in accordance with law. Whether rate is fixed under clause (2) or (3),

the fixation of an all inclusive rate of minimum wage is legal.

V.A. Mamarde vs. Authority Under Minimum Wages Act3

The phrase “double the ordinary rate of wages” means double the remuneration which

an employee in fact ordinarily receives during the casual requisites and other advantages.

Irrelevant considerations while fixing of minimum wages:-

The fact that an employer may find it difficult to carry on his business on the basis

of minimum wages.

The financial capacity of the employee

1 1987 I l.l.j. 182 (karn.)2 A.I.R. 1958 Punjab 4053 A.I.R. 1972 SC 1721

41

The fact of the employer- company having incurred losses during the previous

year.

Employer’s difficulty in importing raw materials and

The region- cum- industry principles.

However in fixing fair wages the financial capacity of the employer and the wages scale

prevailing in the comparable industries in the region are some of the relevant

considerations.1

Minimum wages must be paid irrespective of extent of profits, financial condition of

establishment or availability of workmen on lower wages. The minimum wage is

independent of kind of industry and applies to all alike big or small. It sets the lowest

limits below which wages cannot be allowed to sink in all humanity.2

Case: - Sri Ram and Co. V. State of Tamil Nadu,3

The government issued a notification fixing minimum wages of the employees of a rice

mill in Tripura. The notification was issued on recommendation of a committee. One

representative of an employer was the member of the committee but he was not given

notice about committee meetings. The question was whether non issue of notice of

meeting to one of the members would vitiate the notification issued by the government.

No notice was issued to personnel officer of century flour mills ltd. On account of

chairman’s misapprehension cannot obliterate the fact that one of the representatives of

the employer was not given an opportunity to participate in the meetings. The notification

was bad because the committee was not properly constituted and did not function in

accordance with the provisions of the act. The legislature has attached an importance to

equality of representation to the employers and employees in advisory committee, when

equality is not available and the balance sought o be maintained by legislature is

disturbed, that will constitute a disregard to the provision of the act.

1 Hydro (engineers) Pvt ltd vs. the workmen A.I.R. 1969 SC 1822 Kamani Metals and Alloys ltd v. Workmen A.I.R. 1967 SC 11753 1979 ii LLJ 418 mad

42

In HMT Ltd. v. HMT Head Office Employees Association and others,1 where there

existed two settlements dated 1.9.1978 and 2.9.1978 reiterating Term No 1 of settlement

dated 25.5.1978 postulating the union's acceptance of the pay and D.A. offered by the

management without prejudice to the Union's right to take up with the Government of

India the issue of revision of minimum wages and rate of neutralization of D.A. beyond

the specified point; and the managements, in case of Government agreed to an

improvement therein, agreeing to revise the minimum wages and the rate of

neutralization of D.A. in consultation with the unions. The terms of settlement were

considered and held by the Supreme Court that the Term No. 1 in the agreement dated

25.5.1978 does not postulate revision of pay scales in the event of higher wages being

paid to the employees of BHEL or employees of any other public sector undertaking.

This clause gives to the union only a right to take up the issue regarding the minimum

wages and enhancement of rate of neutralization of D.A. with the Government of India if

the Government agrees to the improvement in the minimum wages or the D.A.

neutralization rate. At best, this clause only gives a right to the union to make a reference

to the Government of India for revision of minimum wages but does not give any vested

right of enhancement of wages or pay scales in the event of their being a revision in any

other public sector undertaking.

PROCEDURE FOR FIXING AND REVISING MINIMUM WAGES

Section 5 lays down that in fixing minimum rates of wages in respect of any scheduled

employment for the first time under this act or in revising minimum rates of wages so

fixed, the appropriate government shall either:-

a. Appoint as many committees and sub-committees as it considers necessary to

hold enquiries and advise it in respect of such fixation or revision, as the case may

be; or

1 1997 SCC (L&S) 228

43

b. By the 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 two

months from the date of notification on which the proposals will be taken into

consideration.

After consideration the advice of committees appointed, and all representations received

by it before the date specified in gazette notification, the appropriate government may by

notification in the official gazette, fix or revise the minimum rates of wages in respect of

each such employment, which shall come into force after the expiry of 3 months unless

otherwise provided in the notification.

Where the appropriate government proposes to revise it shall consult the advisory board.

If the advisory board approves the notification regarding revision of wages without

discussing the objections raised, the action of the board would be arbitrary because it

amounts to non application of mind in granting approval.1

The two methods have been provided for fixation/revision of minimum wages. They are

the Committee method and Notification method.

(i) COMMITTEE METHOD

Under this method, committees and sub-committees are set up by the appropriate

Governments to hold enquiries and make recommendations with regard to

fixation and revision of minimum wages, as the case may be.

(ii) NOTIFICATION METHOD

In this method, Government proposals are published in the Official Gazette for

information of the persons likely to be affected thereby and specify a date not less

than two months from the date of the notification on which the proposals will be

taken into consideration. After considering advice of the Committees/Sub-

committees and all the representations received by the specified date in

Notification method, the appropriate Government shall, by notification in the

Official Gazette, fix/revise the minimum wages in respect of the concerned

1 H.B. Verma v. Union of India, (1993) I L.L.J. 39 (Delhi)

44

scheduled employment and it shall come into force on expiry of three months

from the date of its issue.

Case: - Chandra Bhawan boarding and lodging, Bangalore v. state of Mysore1

Power conferred upon appropriate government under section 5(1) is neither arbitrary nor

unguided. Therefore it does not offend article 14 of Indian constitution.

The fixation of wages depends upon the prevailing condition the cost of living in place,

the nature of work to be performed and the conditions in which work is performed.

Where the notification is issued by the govt authorizing the employer to deduct the sum

mentioned in the notification towards the cost of free meals supplied to the workers by

him, it was held that the notification gives only an option to employer and does not

impose an obligation to the employer and does not impose any obligation upon him.2

Revision of Wages By The Central Government:-

The central government in exercise of power conferred on it under section 3, 4 and 5 of

the act has a revised the minimum rates of wages in (1) marble and calcite mines, (2)

hematite mines, (3) rock phosphate mines, (4) chromite mines, (5) wolflam mines, (6)

iron ore mines, (7) laterite mines, (8) dolomite mines, (9) graphite mines, (10) bauxide

mines, (11) manganese mines, (12) china clay, (13) red oxide mines, (14) felsfar mines,

(15) silica mines, (16) construction or maintainance of roads or buildings, stone breaking

or stone crushing, maintainance of buildings and construction and maintainance of

runways.3

Under section 5 of the act both central and state government responded to fix and revise

wages for such employment under their respective jurisdiction. It is stipulated that review

and revision of minimum wage in scheduled employment are to be done at intervals not

exceeding 5 years.

1 A.I.R. 1970 SC 20422 Chandra Bhawan boarding and lodging, Bangalore v. state of Mysore3 See Gaz. of India, extra no. , 439, dt. 29-10-1986, pt. ii. Section 3(ii), p. 2-55

45

The national commission on labour recommended in 1969 that this period should be

reduced to 3 years. A conference of labour ministers recommended that wages of

scheduled employments should be reduced and revised at period not exceeding 2 years.

CASE LAWS ON FIXATION OF MINIMUM WAGES

In Chatturam Darsanram v. Union of India1

A petition for quashing the notification dated 28/ may/1976, issued by central

government revising minimum wage of the workmen employed in mica mines was filed.

The question was whether workmen working in mine were working in scheduled

employment. It was held that item no. 10.of P-I of schedule relates to employment in any

“mica work” and not “mica mine”. Thus “mica mine” is not included in the schedule and

as the inclusion of an employment in a condition precedent for issuing any notification by

appropriate government, the notification fixing minimum wages is ultra vires.

In Ahmadabad Panjrapole Sanstha v. Miscellaneous Mazdoor Sabha and others2,

The petitioner sanstha is engaged in activities of taking care of sick and lame cattle. It has

other objects such as raising of cattle, improving the breed, run dairy farm in order to

supply good milk and ghee in the interest of public and to grow grass to cut it or have it

cult and to buy or sell the same. It has land in different villages and it earns rental and

other income and also agricultural income besides income earned by sale of wood, wool

etc. it was held that having regard to the activities of panjrapole sanstha, it is a

“commercial establishment” attracting minimum wages act. It is not a separate

establishment and the fact that the other branches have not demanded minimum wage

will not affect the right of workmen.

In S.A.F.L. Works v. State Industrial Court, Nagpur3

1 (1980) L.L.J 465 (Pat)2 (1987) L.L.J 291 (Guj)3 A.I.R. 1978 SC 1113

46

It was held that in fixing the minimum rates of wages, the Minimum Wages Act also

makes a provision for special allowances to be paid along with basic rates of wage.

In Murga Home Industries v. Government of Tamil Nadu & another1

The minimum wages of Beedi-workers was revised by the state government by a

notification issued after consultation with the Advisory Board. It was held that the

notification fixing minimum wages should not be interfered with in writ proceedings

except on most substantial grounds. The work in Beedi industry is unorganized sector and

the conditions of work of Beedi-workers are below subsistence level and minimum wages

fixed is fair and just and not arbitrary.

Case: - Gobind Bhavan Karyalya vs. State of Uttar Pradesh2

It has been held that where a notification by itself does not intend to make any

classification of workmen except classification for fixing minimum rates of wages for

adult employees, such classification is permissible in law and such notification is not bad

or invalid.

The minimum wages must be paid by the employer notwithstanding the want of financial

capacity3. Such a consideration is antilogous to the principles enshrined in the

constitution of India.

The supreme court has held that the appropriate authorities should take into consideration

the components such as children education allowance, medical requirements, minimum

1 (1996) I L.L.J. 598 (Madras)2 1998 llr 2873 Woolcombers of India vs. Workers Union, A.I.R. 1973 SC 2758

47

recreation, provisions for old age and marriage etc. which should be additional 25% of

minimum wages.

Case: - Ministry of Labour An\d Rehabilitation And Other vs. Tiffin’s Barites

Asbestos & Paints Ltd

It was held that the notification fixing minimum wages cannot be lightly inferred with in

exercise of writ jurisdiction by high courts on ground of some irregularities in the

constitution of committee or procedure adopted by the committee. Committee acts only

as a recommendatory body and the minimum wages are fixed only by the government.

In a country where wages are only minimal a notification fixing minimum wages should

not be inferred with under article 226 of Indian constitution except on the most

substantial grounds.

Bihar Mica Exporters Association v. State of Bihar and others1

The appellant challenged the notification issued by the government revising minimum

wages. The high court observed that on the facts it was found that merely the variable

dearness allowance has been fixed by impugned notification. It was therefore not inclined

to interfere with the same on the ground that the advisory committee had not heard the

appellant. Hearing the appellant is required at the time of fixing the minimum wages. It

was also made clear that the court does not interfere with the notification unless fixation

of wages or variable dearness allowance is arbitrary.

Andhra Pradesh Hotels Association vs. Government of Andhra Pradesh and ors

1 2002 iii l.l.j. 1107 (jhar)

48

The gvt of Andhra Pradesh issued a gazette notification on March 1999 proposing

revising of minimum wages in hotel industry under section 5(2) of minimum wages act.

On October 1, 2002 the government of Andhra Pradesh in consultation with state

advisory board issued another notification revising minimum wages in exercise of powers

conferred by section 3(1) and 5(2) of act in hotels and restaurants etc. being aggrieved by

same notification the petitioner association filed the present writ petition. Dismissing

appeal high court made following observations:-

Fixation of minimum wages was an administrative act and quantum fixed on

humanitarian ground was not subject to judicial review, unless fixation was ultra

vires

Minimum wages must provide not merely for bare subsistence but for the

preservation of worker’s efficiency also, and so the capacity of employer to pay

such wages was treated as irrelevant.

The high court wile revising a notification fixing minimum wages could not

assume the role of appellate authority and re appreciate each and every factor.

It could not be said that under no circumstances the rate of neutralization of

variable should not exceed 100%

The minimum wages act 198 was a beneficial piece of social legislation and

fixing the wages under it, the consideration was that workmen should receive

their proper share of the national income which they help to produce

The appellant had not made out any permissible ground to quash the impugned

government order.

In Jyothi Home Industries vs. State of Karnataka1 it has been observed that the

provisions of Section 3 (2) of the Act, if scrutinized closely being out of the powers of the

Government to fix a minimum rate of wages for time work and for piece work and the

minimum rate or remuneration to employees employed on piece work for the purpose of

securing to such employees a minimum rate .of wages on a time work basis. This

remuneration under Section 3 (2) (c) of the Act is called as guaranteed time rate. It is also

1 ((1983) I LLJ 201

49

open to the government under Section 17 of the Act to bring out parity in the wages of

employees employed on piece work, for which a minimum rate is not fixed, with those

employed in work, for which a minimum time rate has been fixed under the Act. Hence it is

clear that the appropriate Government under Section 3 of the Act can fix minimum wages

for hours actually worked by the employee and if he is not in a position to fulfill his part

of the contract on account of

The fact that the employer does not offer him the necessary raw material to work on his

job, he would be entitled to remuneration under Section 3 (2) (c) of the Act. The

government knowing the plight of the Beedi workers, has prescribed a sum of Rs. 4/- per

day as guaranteed remuneration in the event of the employer being not in a position to

fulfill his part of the contract in offering a full day's work to the employee and that

remuneration is called the 'guaranteed wages' in the impugned notification. It is wrong to

treat the terms 'wages', 'minimum wages' and 'remuneration' as connoting different

concepts under the Act. The word wages is the genus and 'time rate', 'piece rate', 'over time

wages', 'minimum rate of wages' and 'remuneration' are species. As observed by the

Supreme Court, while considering the meaning of the word 'remuneration' In the Catering

Wages Act, 1943 in Central Bank of India v. Their Workmen,1 words must be

given their meaning with reference to the context in which they occur in 'statute. Jyothi

Home industries deal in manufacturing and selling Beedis. The petitioners, owners of the

Beedi factories challenged the notification of the Government which with a view to

revise minimum wages under the clause (5) fixed a sum of Rs. 7.40 as minimum wages

for thousand Beedis rolled and further provided that the workmen employed in the Beedi

industry should be entitled to get at least Rs. 4/- per day as guaranteed wages where the

employer failed to supply sufficient quantity of raw material- including tobacco leaves to

roll 800 Beedis per day. Clause (7) of the Notification provided that where no raw

material was supplied by the employer to the employee when the employee was willing

to work and reported for duty or for collecting the raw material, the employee should be

entitled to get full guaranteed , wages. It was held that these clauses of the Notification

give effect to the power of the State Government to fix the minimum rate of remuneration

1 ((1959) II LLJ 205; See also Mizar Govinde Annapa Pai and Sons vs. State of Mysore (1971)39 FJR 275

50

as provided for under Section 3 (2) (c), of the Act. The Notification was held valid.'

In Arimala Clinic vs. State of Kerala,1 where the Government fixed the minimum rates

of wages of employees employed in the hospitals, dispensaries and pharmacies in the

State. The Notification fixing the minimum rate of wages was challenged on the main

ground that employees in private hospitals/dispensaries, pharmacies in the State is a

sector which needs classification both with regard to the establishment in rural and in

urban areas with regard to the size of the establishment. It was held that there are

hospitals with 1,000 or more beds and hospitals with super specialty facilities in urban

area whereas there are small dispensaries without any modern facility with one or two

rooms situated in rural areas. It will be irrational to group together all these

establishments into one class since, obviously nature of duties of employees vary very

much depending on the size of the establishment.

Apparently, the above aspects have not been considered by the government while issuing

1990 Notification. Under the above circumstances, the original petitions are allowed and

Notification concerned is quashed. The Government is directed to consider the entire

issue and take a decision afresh in the matter of fixing the minimum wages as required

under the Act, in accordance with law taking note of what is stated above and after

consulting the Advisory Committee constituted under the Government Order.

In M.C. Mehta v. State of Tamil Nadu,2

The Supreme Court expressed the view that minimum wage for child labour in factories

wherein manufacturing process of matches and fireworks like SIVAKASI should be

fixed. It took the note that tender hands of the young workers are more suited to sorting

out the manufactured products and process it for the purposes of packing. In

consideration of their special adaptability at least 60% of the prescribed minimum wage

for an adult employee in the factories doing the same job should be given to them. But

indicating the minimum wage does not stand in the way of prescription of a higher rate if

the State is satisfied that a higher rate is viable.

1 1970 Lab LC 485(All)2 A.I.R. 1991 SC 417

51

Case: - Bandhua Mukti Morcha v. Union of India,1

Payment of wages less than the minimum wages o a workman on ground of less

performance or output is illegal.

Case: - Sanjit Roy vs. State of Rajasthan2

In this case it was held that an employer may fix any norm he thinks fit specifying the

quantity of work which must be turned out by workman during a day, but if workman

don’t turn out the work in conformity with norm, the employer should not pay him

anything less than minimum wage. If the norm fixed by the employer is reasonable and

workman does not run out work as per norms, disciplinary action may be taken against

him and in a given case he may even be liable to be thrown out of employment.

PAYMET OF MINIMUM RATES OF WAGES

The employer is required to pay to every employee, engaged in a scheduled employment

under him, wages at a rate not less than the minimum rate of wages notified for that class

of employees without any deduction except as may be authorized.

FIXING HOURS FOR NORMAL WORKING DAY

In regard to any scheduled employment, minimum rates of wages in respect of which

have been fixed under this Act, the appropriate Government may

(a) Fix the number of hours of work which shall constitute a normal working day,

inclusive of one or more specified intervals;

(b) Provide for a day of rest in every period of seven days which shall be allowed

to all employees or to any specified class of employees and for the

payment of remuneration in respect of such days of rest;

1 A.I.R.1984 SC 8022 A.I.R. 1983 SC 328

52

(c) Provide for payment for work on a day of rest at a rate not less than the

overtime rate.1

Overtime:-

Where an employee whose minimum rates of wages is fixed under the 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 number of hours constituting normal working day, the employer shall pay him

for every hour or part of an hour so worked in excess at the overtime rate fixed under the

act or under any law of the appropriate government for the time being in force, whichever

is higher.

In Municipal Council, Hatta vs. Bhagat Singh2

It has been held that section 14 provides for payment of overtime only to those

employees who are getting minimum rates of wages under the act. It does not apply to

those getting better wages under other statutory rules.

Regarding equal pay for equal work Supreme Court has held in a case that the petitioner

degree- holders were paid at the same rate as the regular degree holders. There is no

reason to make distinctions between ordinary diploma-holders and regular-diploma

holders. Besides even under the minimum wages act a paid day of rest in every period of

seven days is mandatory.3

State of Gujarat V. Savailal H. Shah,4

The respondent an employee of the petitioner was getting better wages than the minimum

under other statutory rules. He claimed overtime wages under section 14 of the minimum

wages act. Which was allowed by the labour court? The petitioner state challenged the

above order. Allowing the petition the high court held that section 14 of the act provided 1 (Section 13 of the minimum wages act, 1948)2 1998 llr 298 : 1998 I LLJ 815 : A.I.R. 1998 SC 12013 sandeep kumar v. state of up, 1992 LLJ 3954 ((2003) ii LLJ 641(guj))

53

for payment of overtime wages under minimum wages act. It did not apply to those who

were getting better wages under other statutory rules.

WAGES FOR TWO OR MORE CLASSES OF WORK

If an employee performs two or more classes of work, to each of which a different rate of

wage is applicable, the employer is required to pay to such an employee in respect of the

time respectively occupied in each such class of work, wages at not less than the

minimum rate in force in respect of each such class.

MAINTENANCE OF REGISTERS AND RECORDS

Every employer is required to maintain registers and records giving particulars of

employees, the work performed by them, the wages paid to them, the receipts given by

them and any other required particulars.1

INSPECTIONS

The appropriate Government may, by notification in the Official Gazette, appoint

inspectors for this purpose under the Act and define the local limits for their functions.2

CLAIMS

1 Section 18 of the minimum wages act, 1948)

2 Section 19 of the minimum wages act, 1948

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The appropriate Government may, by notification in the Official Gazette, appoint Labour

Commissioner or Commissioner for Workmen’s Compensation or any officer not below

the rank of Labour Commissioner or any other officer with experience as a judge of a

civil court or as a Stipendiary Magistrate, to hear and decide for any specified area, all

claims arising out of the payment of less than the minimum rates of wages as well as

payment for days of rest or for work done.1

In Anand Oil Industries vs. Labour Court, Hyderabad,2 it was held that section 20 of the

minimum wages act does not cover all claims in respect of minimum wages, it covers only

cases where there is a dispute as to rate at which the minimum wages are payable. Where

there is no dispute as to the rate of wages, but there is a dispute as to the quantum of wages to

which a workman is entitled, it would not be a matter falling under section20 of the act.

AUTHORISED DEDUCTIONS

The deductions can be made on account of:

(a) Fines

(b) Damage or Loss

(c) Breach of Contract

WAGES IN KIND:-

(1) Minimum wages payable under this Act shall be paid in cash.

(2) Where it has been the custom to pay wages wholly or partly in kind, the appropriate

Government being of the opinion that it is necessary in the circumstances of the case

may, by notification in the Official Gazette, authorize the payment of minimum wages

either wholly or partly in kind.

(3) If the appropriate Government is of the opinion that provision should be made for the

supply of essential commodities at concession rates, the appropriate Government may, by

notification in the Official Gazette, authorize the provision of such supplies at concession

rates.

1 Section 20 of minimum wages act, 19482 A.I.R. 1979 AP 182

55

(4) The cash value of wages in kind and of concessions in respect of supplies of essential

commodities at concession rates authorized under sub- sections (2) and (3) shall be

estimated in the prescribed manner.1

PAYMENT OF MINIMUM RATES OF WAGES:-

(1) Where in respect of any scheduled employment a notification under section 5 1[is in

force, the employer shall 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 in that employment without any deductions

except as may be authorized within such time and subject to such conditions as may be

prescribed.

(2) Nothing contained in this section shall affect the provisions of the Payment of Wages

Act, 1936 (4 of 1936)2

FIXING HOURS FOR A NORMAL WORKING DAY, ETC:-

2[(1) ] In regard to any scheduled employment minimum rates of wages in respect of

which have been fixed under this Act, the appropriate Government may--

(a) Fix the number of hours of work which shall constitute a normal working day,

inclusive of one or more specified intervals;

1. The words and figures" or section 10" omitted by Act 30 of 1957, s. 9. 2. S. 13 re-

numbered as sub- section (1) of that section by s. 10, ibid.

(b) Provide for a day of rest in every period of seven days which shall be allowed to all

employees or to any specified class of employees and for the payment of remuneration in

respect of such days of rest;

(c) Provide for payment for work on a day of rest at a rate not less than the overtime rate.

(2) 1[ The provisions of sub- section (1) shall, in relation to the following classes of

employees, apply only to such extent and subject to such conditions as may be

prescribed:--

(a) Employees engaged on urgent work, or in any emergency which could not have been

foreseen or prevented;

1 Section 11 of the minimum wages act, 19482 Section 12 of the minimum wages act, 1948

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(b) Employees engaged in work in the nature of preparatory or complementary work

which must necessarily be carried on outside the limits laid down for the general working

in the employment concerned;

(c) Employees whose employment is essentially intermittent;

(d) Employees engaged in any work which for technical reasons has to be completed

before the duty is over;

(3) For the purposes of clause (c) of sub- section (2), employment of an employee is

essentially intermittent when it is declared to be so by the appropriate Government on the

ground that the daily hours of duty of the employee, or if there be no daily hours of duty

as such for the employee, the hours of duty, normally include periods of inaction during

which the employee may be on duty but is not called upon to display either physical

activity or sustained attention.1

WAGES OF WORKER WHO WORKS FOR LESS THAN NORMAL WORKING

DAY:-

If an employee whose minimum rate of wages has been fixed under this Act by the day

works on any day on which he was employed for a period less than the requisite number

of hours constituting a normal working day, he shall, save as otherwise hereinafter

provided, be entitled to receive wages in respect of work done by him on that day as if he

had worked for a full normal working day: Provided, however, that he shall not be

entitled to receive wages for a full normal working day—

(i) In any case where his failure to work is caused by his unwillingness to work

and not by the omission of the employer to provide him with work, and

(ii) In such other cases and circumstances as may be prescribed.2

WAGES FOR TWO OR MORE CLASSES OF WORK: -

1 Section 13 of minimum wages act 19482 Section 15 of the minimum wages act, 1948

57

Where an employee does two or more classes of work to each of which a different

minimum rate of wages is applicable, the employer shall pay to such employee in respect

of the time respectively occupied in each such class of work, wages at not less than the

minimum rate in force in respect of each such class.1

MINIMUM TIME RATE WAGES FOR PIECE WORK: -

Where an employee is employed on piece work for which minimum time rate and not a

minimum piece rate has been fixed under this Act, the employer shall pay to such

employee wages at not less than the minimum time rate.2

CONCLUSION

The question as to what is the minimum wage rate in India has no precise answer. There

is no single answer to this instead there is a wide diversity in context of different

minimum rates of wages that are set by different governments. The Minimum Wages Act

itself does not determine any criteria for the determination of the minimum wage and

leaves the concept ‘undefined’.

However, recommendations of two important sources which are usually considered while

discussing minimum wages are:-

A. Conclusion of committee on Fair Wages3 (1949), which recommends the

elements to be taken into account while setting “level” of minimum wages and

B. Decision taken at 15th session of Indian labour conference (1957), which

defined a list of basic requirements which should be taken into account4.1 Section 16 of the minimum wages act, 19482 Section 17 of the minimum wages act, 19483 The Committee on Fair Wages clearly specified that a ―minimum wage must provide not merely For the bare subsistence of life but for the preservation of the efficiency of the worker. For this purpose, the minimum wage should also provide for some measure of education, medical Requirements and amenities (John, 1997, p. 8).4 The 15th Indian Labour Conference (a tripartite body comprising representation of governments,

58

In India, the Minimum Wage Act of 1948 is perceived as being of great importance,

particularly to the unorganized casual workers which account for two-thirds of all wage-

earners and a total number of about 116 million workers. Understandably, therefore, there

have been many discussions and arguments about the minimum wage over the years. One

important discussion has revolved around the question of what is the appropriate level of

the minimum wage to prevent labour exploitation and provide a decent standard of living.

Another debate concerns the way to increase compliance by elevating the minimum wage

to a fundamental right, even equating noncompliance with a form of forced labour.

Finally, in India, policy-makers have also discussed for years the possibility of

simplifying and extending the coverage of minimum wages to the whole labour force.

Such a policy decision, if fully implemented, would have a significant impact on

inequality and poverty in India. The large impact can be easily explained by our finding

that an extension of either system of minimum wages could potentially improve the

wages and the lives of about 73 to 76 million low-paid workers.

By providing an effective backstop for wages, a minimum wage can compress inequality

and, in particular, reduce the distance between the low paid and those in the middle of the

wage distribution. A more equal distribution of wages may have the economic benefit of

increasing private consumption and aggregate demand at the national level. This effect

arises because poorer workers spend a higher proportion of their incomes on consumption

(particularly food and other essential commodities) than richer workers, who tend to save

more. These economic benefits, however, may arise at the cost of some reduction in

short-term labour demand and in the quantity of days worked by minimum wage

beneficiaries.1

employers and labour) laid down the norms for setting up minimum wages, which included three consumption units per worker: minimum food requirements of 2,700 calories per day per consumption unit; cloth requirement of 72 yards per annum per family; rent allowance which is equivalent to the government‘s industrial housing scheme. Fuel, lighting and miscellaneous items Constitute 20 per cent of the minimum wage.1 http://www.ilo.org/wcmsp5/groups/public/---ed_protect/---protrav/---travail/documents/publication/wcms_145336.pdf

59

BIBLIOGRAPHY

PRIMARY SOURCES

Bare Act – The Minimum Wages Act, 1948

REPORTS --

Gazette Of India, 1946, Part V, P.331

Report Of The National Commission On Labour (1969), Pp. 233-234.).

Report Of The Second Indian National Labour Commission – 2002

Minimum Wages in India: Issues and Concerns - Prof. Biju Varkkey and Khushi

Mehta

Report On The Working Of The Minimum Wages Act, 1948; For The Year 2008;

Gvt Of India; Ministry Of Labor And Employment; Chandigarh/Shimla

SECONDARY SOURCES

BOOKS –

S.N. Misra, Labour And Industrial Laws, (26th Edition), Central Law Publications

(2011), Allahabad

Dr. Avtar Singh, Introduction To Labour And Industrial Law, (2nd Edition),

Lexisnexis Butterworths Wadhwa, (2008), Nagpur

Dr H.K. Saharay, Textbook on Labour and Industrial Law, (5th Edition),

Universal Law Publishing Company.

Dr. V.G. Goswami, Labor & Industrial Laws,(8th Edition), Central Law Agency,

Allahabad

60

WEBSITES REFERRED –

(http://www.amrc.org.hk)

(labour.nic.in)

www.encyclopedia.com/doc/1E1-minimumw.html.)

(GM Kothari, A Study of Industrial Law, pp. 39-40)

http://www.ilo.org/wcmsp5/groups/public/---ed_protect/---protrav/---travail/

documents/publication/wcms_145336.pdf).

http://en.wikipedia.org/wiki/Minimum_wage)

(http://nceus.gov.in/Report_Bill_July_2007.htm)

http://labourbureau.nic.in/MW_Report_2008.pdf

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