INDUSTRIAL RELATION AND

LABOUR WELFARE
MINIMUM WAGES ACT,1948
MINIMUM WAGES ACT,
1948
The Minimum Wages Act 1948 is
an Act of Parliament concerning Indian
labour law that sets the minimum wages that
must be paid to skilled and unskilled labours.

HISTORICAL BACKDROP
The initiative by Shri K.G.R.Choudhary in 1920:
set up boards for determination of wages
The International Labour Conference adopted
convention 26 and 30 in 1928 relating to wage
fixing machinery in trades or parts of trades
A Minimum Wages Bill was introduced in the
Central Legislative Assembly on 11.4.46 and
came into force with effect from 15.3.48
The Committee on Fair Wage was set up in
1948 to provide guidelines for wage structure

OBJECTIVES OF THE ACT
To provide minimum wages to the workers
working in organized sector
To stop exploitation of the workers
To empower the government to take steps for
fixing minimum wages and to revising it in a
timely manner
To apply this law on most of the sections in
organized sector (scheduled employment)


DEFINITIONS [SEC. 2]

Section No. Term
2 (a) Adolescent
2 (aa) Adult
2(b) Appropriate government
2 (c) Competent authority
2 (d) Cost of Living Index Number
2 (e) Employer
2 (h) Wages
2 (i) Employee
Adolescent : It means a person who has completed his
14
th
year of age but not completed his 18
th
year.
Adult: It means a person who has completed his 18
th

year of age.
Appropriate Government: It means either the central
government or state government.
Competent Authority: It means authority appointed by
the appropriate government by notifications in its
official gazatte to ascertain from time to time the cost
of living index number is applicable to the employee
employed in the scheduled employment specified in
such notifications.
Cost of living Index number: It is in elation to
employees in any scheduled employment in respect of
which minimum number of wages have been
fixed,means the index number ascertained and
declared by the competent authorityby notification in
official gazette to be the cost of index number
applicable to employees in such employment.

Employer: means any person who employs, whether
directly or through another person, or whether on
behalf of any other person, one or more employees in
any scheduled employment in respect of which
minimum rates of wages have been fixed under this act
Wages:
Minimum wages: all remuneration capable of
being paid in money terms for work done if
terms of contract were fulfilled

Consist of Basic + Dearness Allowance + House
Rent Allowance

Every 5 years, basic rates of every industry are
decided by Minimum Wages Committe

Dearness Allowance changes every six months
and is decided by Government



WAGES DO NOT INCLUDE
House Accommodation, Supply of necessities like Light, Water and
Provision of Medical Attendance and Other Amenity or Service
specifically excluded by the Appropriate Government.
Contribution made to Pension Fund or Provident Fund or under any
scheme of Social Insurance
Travelling Allowance or the value of any Travelling Concession
Special Allowances provided based on the nature of Employment
Gratuity Payable
Employee:
The term employee means any person who is
employed for hire or reward, to do any work
skilled or unskilled, manual or electrical in a
scheduled employment in respect of which
minimum rates of wages have been fixed.
FIXATION AND REVISION OF WAGES
SECTION 3- Empowers appropriate
government to fix the minimum rates of
wages payable to the employees working in
scheduled employment.

SECTION 5- Lays down the procedure for fixing
and revising the minimum rates of wages.
FIXING OF MINIMUM RATES OF WAGES
MIMIMUM TIME RATE
-The minimum wages paid for time work
MINIMUM PIECE RATE
-The minimum wages paid for piece work.
GUARANTEED TIME RATE
-Those employed under the scheme of piece work but,
guaranteed wages will be paid on the basis of time.
OVERTIME RATE
-Time rate of piece rate will apply where the employee
has worked overtime and above his normal working hours

MINIMUM RATE OF WAGES WILL BE FIXED FOR
-Employments provided in schedule-I and II
-Different types of employment provided in schedule-I
and II
-Adults,Adolescents,Children and Apprentices
-Different localities.
WAGES PERIOD FIXED UNDER MINIMUM RATE OF
WAGES
-By the hour
-By the day
-By the month
-By such other larger wage period as may be prescribed.
LIVING
WAGES
FAIR WAGES
MINIMUM RATES OF WAGES
DIFFERENT TYPES OF WAGES
Different Minimum Wages May Be Fixed By The
Government May consist of [Sec. 4]
1. Basic + Special Allowance (Which varies with
the cost of living index)
2. Basic + Cash value of concessional supply of
materials like food, clothes, etc
3. An all inclusive rate which includes Basic + Cost
of living Allowance + Cash value of concessional
supply of materials

PROCEDURE FOR FIXING AND
REVISING MINIMUM WAGES
Publish its proposals in the official gazette asking comments
from the affected parties
Constitute committees/sub committees for the purpose.
The committees/sub-committees and advisory boards
constituted by the Government consist of equal number of
members of :
Employers
Employees, and
Independent persons

Recommendation of Advisory Board for different class
[unskilled, skilled, Clerk, Supervisor]
Publish recommendations in National Publications [for public
comments/representations from Trade Unions etc.]
Hearing of the Representatives etc
Notification of Minimum wages

ADVISORY BOARD [SEC.7]
-Appointed by appropriate government
-To co-ordinate the work of committees and sub committees
appointed under Section 5

COMPOSITION OF COMMITTEE AND ADVISORY BOARD[Sec.9]
Each of the committee, sub-committee and the Advisory Board
shall consist of:
a. persons to be nominated by the appropriate Government
b. representing the employers and employees in the scheduled
employments who shall be equal in number and
c. independent persons not exceeding one-third of its total
number of members: one of such independent persons shall
be appointed the Chairman by the appropriate Government.


CENTRAL ADVISORY BOARD [SEC.8]

-To advise the Central and State Governments in fixation and
revision of minimum rates of wages.
-To co-ordinate the work of the Advisory Boards

Power of the Central Government to make rules [Sec. 29]

Procedure to be followed in conduct of business
Method of voting
Manner of filling of casual vacancies in membership
Quorum necessary for the transaction of business of
the Central Advisory Board.



Wages in Kind [Sec. 11]
Minimum wages shall be paid in cash.

The appropriate govt. may authorize, where
there has been a custom of payment in this
manner, payment of minimum wages either
wholly or partly in kind

The appropriate govt. may authorize supply
of essential commodities at concessional
rates


Payment of minimum rate of wages
[Sec. 12]
The Minimum Wages has to be paid without
any deductions other than Statutory
Deductions.
Payment of wages less than minimum wages
on the ground of less performance or output is
illegal

Normal working hours [Sec. 13]
For an Adult Worker working in Factories:

Number of Working Hours should not exceed
48 Hours in a week with a weekly Holiday

The Daily Hours should not exceed more than
9 Hours with 1 Hour Rest Interval

Provision of Compensatory Holiday/ Overtime
Wages if working on holiday

Overtime wages [Sec. 14]

If the person has worked for more than 48 hours in a
week then, the excess hours worked will be treated as
Overtime
Overtime wage rate will be twice of the normal wage
rate
Wages for a person who has worked less than normal
working hours [Sec. 15]
Employer could not provide the activities of the job
then, the employee is entitled to receive full salary

Employee has not worked due to his unwillingness
then, the employee is not entitled to receive full salary


Case study: Minimum wage

Sean works 43 hours per week including three hours on a
Saturday. He is entitled to the minimum wage of 8.65 as he is
an experienced adult employee and isn't on a training or
study course. He is paid a gross wage of 375 per week. Sean's
pay includes a 20 premium for working Saturdays. He asked
his employer about the national minimum wage and his
employer gave him the following information:
The pay reference period is weekly
Dividing the gross pay (375) by the hours worked (43), this
gives an average hourly pay of 8.72
This is slightly above the current national minimum wage of
8.65 per hour. Is Sean's employer correct?

ANSWER
No, Sean's employer is incorrect. The 20
premium for working on Saturdays should not be
included for national minimum wage purposes.
This means that only 355 should be divided by
43, giving an average hourly pay of 8.25 - below
the national minimum wage of 8.65.
Sean's entitlement is a basic wage of 372 (8.65
x 43) plus 20 Saturday premium which comes to
a total of 392.