2.

REMUNARATION
FOR LABOUR AND
MINIMUM WAGE
By Prof. S.K. Chopra
 Concept of Wages
WAGE :
Payment for labour or services to a worker, especially

remuneration on an hourly, daily, or weekly basis or by the piece.

Wage is a price of productive labour.

Compensation
Is of a recent origin which includes everything an employed

individual receives in return for his work

Earnings
It relates to remuneration in cash and in kind paid to employees,

as a rule, at regular intervals for time worked or work done

together with remuneration for time not worked Wages.
It means any economic compensation met by the employer under

some contract to his employees for the services rendered by them

The two terms often used interchangeably are “wages” and “salary”
 Minimum Wages
 There can be 3 kinds of minimum wages.
 1. A minimum wage notified by the Government
under the Minimum Wages Act, 1948 for different
scheduled employments.
 2. A minimum wage drawn by an unskilled worker
in an organized industry as a result of wage
settlement which is purely the result of hard
bargaining.
 3. Need-based minimum wage determined as per
the norms prescribed by the 15th Session of Indian
Labour Conference.
 Need-based Minimum Wage
 The committee accepted the following 5 norms and recommended
that they should guide all wage-fixing authorities, including
minimum wage committees, wage boards and adjudicators in
calculating the minimum wage:-
i. the standard working class family should be taken to consist of
three consumption units for one earner.
ii. Minimum food requirements should be calculated on the basis of
a net intake of 2,700 calories per adult per day.
iii. Clothing requirement should be estimated at a per capita
consumption of 18 yards per annum which could give for the
average workers’ family of four, a total of 72 yards .
iv. In respect of housing, the norm should be the minimum rent
charged by Government in any area for houses provided under
the subsidised industrial housing scheme for low-income groups
v. Fuel, lighting and other miscellaneous items of expenditure
should constitute 20% of the total minimum wages
  Living Wage
 It is a wage sufficient to ensure the workman food, shelter,
clothing, savings, provision for evil days etc. as regard for the
skill of an artisan.
 According to Fair Wages Committee Report: "The living wage
should enable the male earner to provide himself and his
family not merely the basic essentials of food, clothing and
shelter but a measure of frugal comfort including education
for the children, protection against ill-health, requirement of
essential social needs and measures of insurance against old
age." 
 Article 43 of the Constitution of India states that the state
shall endeavor to secure by suitable legislation or economic
organization or in any other way to all workers a living wage,
conditions of work ensuring a decent standard of life and full
enjoyment of pleasure and social and cultural opportunities.
 Fair Wage
 It is more than the minimum wages.
 It is between the living wage and the minimum wage.
 The upper limit is the capacity of the industry to pay fair wage
compares reasonably with the average payment of similar task
in other trades or occupations requiring the same amount of
ability.
 The fair wages depends upon the following factors:
 (1) Minimum Wages
 (2) Capacity of the industry to pay
 (3) Prevailing rates of wages in the same or similar
occupations in the same or neighboring localities
 (4) Productivity of labour
 (5) Level of national income and its distribution
 (6) The place of the industry in the economy of the country
COMPENSATION PHILOSOPHIES
1. Entitlement Philosophy
 Assumes that individuals who have worked another year are

entitled to pay increases, with little regard for performance

differences.
 Pay scales revised periodically.

 Industry comparison for compensation only.

 Bonus paid as incentive

2. Performance Philosophy
 Requires that compensation changes reflect individual

performance differences.
 No raise for length of service

 No raises for poor performance

 Market adjusted pay structure

 Broader industry comparison

 Bonus tied to performance results.

 Acts connected with Wages
1. Payment of Wages Act, 1937
 To prohibit any delay or withholding of wages

2 Industrial Disputes Act, 1947

 Authorizing all State Governments to set up Industrial

Tribunals which would look into disputes relating to

remuneration .
3. Minimum Wages Act, 1948
 Fixation of minimum rates of wages to workers

4. Equal Remuneration Act, 1976

 Prohibits discrimination in matters relating to remuneration

on the basis of religion, sex etc

5.The payment of Bonus Act 1965
6. Companies Act 1956 and 2013.
 The Minimum
Wages Act, 1948
 The Minimum Wages Act,1948
Background
 The International Labor Conference (ILO)

adopted Convention No: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 11.4.1946.

 The Act came into force with effect from

15.3.1948.
 The Committee on Fair Wage was set up in

1948 to provide guidelines for wage structure.

 OBJECTIVES
 To provide minimum statutory wages to the
workers working in organized sector
(scheduled employments) and to revising it
in a timely manner
 To stop exploitation of the workers
 The Act also provides for the maximum daily

working hours, weekly rest day and

overtime.
 Rates fixed under Minimum Wages Act

prevail over the rates fixed under any

award/agreement.
 Scope & coverage
 The Act extends to the whole of India
 It was extended to Jammu and Kashmir by

the Central Labour Laws (Extension to

Jammu and Kashmir) Act, 1970 w.e.f. 1st
September, 1971.
 It applies to all Establishments employing 1

or more persons and engaged in any

Scheduled Employment.
 LIST OF SCHEDULED EMPLOYMENT S &

STATE AMENDMENTS TO BE REFERRED.

 Administrative Authority
 The Minimum Wages Act is a Central
legislation; however, its enforcement is
administered by the Central and State
Governments in their respective spheres.
 The State Govt. shall fix the minimum rates

of wages in respect of the various

scheduled employments, make the rules,
appoint Inspectors and an Authority to
decide claims relating to non payment of
minimum wages.
Contd.
 The Central Government is concerned to a limited extent
with building and construction activities mostly carried
on by Central Public Works Department (CPWD), Ministry
of Defence etc, and agricultural farms under the
Ministries of Defence and Agriculture.
 Bulk of such employment fall in the state spheres and

state governments are required to fix/revise wages and

ensure their implementation in respect of scheduled
employment within their spheres.
 Enforcement of Minimum wages in Central sphere is

secured through the Central Industrial Relations

Machinery (CIRM) i.e. Office of Chief Labour
Commissioner (Central).
Salient Features of the M.W. Act
 Section 2
 (b) "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;
 The appropriate Government to fix minimum rates of
wages for the employees employed under part-I or
part-II of Schedule.
 Contd.
 Section 2(i) “employee" means any person who is employed
for hire or reward to do any work, skilled or unskilled,
manual or clerical, in scheduled employment in respect of
which minimum rates of wages have been fixed; and
includes an out-worker to whom any articles or materials are
given out by another person to be made up, cleaned,
washed, altered, ornamented, finished, repaired, adapted or
otherwise processed for sale for the purposes of the trade or
business of that other person where the process is to be
carried out either in the home of the out-worker or in some
other premises not being premises under the control and
management of that other person; and also includes an
employee declared to be an employee by the appropriate
Government; but does not include any member of the Armed
Forces.
 Contd.
 Section 2(h) "wages" means all remuneration, capable of being
expressed in terms of money which would, if the terms of the contract
of employment, express or implied, were fulfilled, be payable to a
person employed in respect of his employment or of work done in
such employment and includes house rent allowance, but does not
include:
 (i) the value of
 (a) any house accommodation, supply of light, water, medical
attendance, or
 (b) any other amenity or any service excluded by general or special
order of the appropriate Government;
 (ii) any contribution paid by the employer to any Pension Fund or
Provident Fund or under any Scheme of social insurance;
 (iii) any travelling allowance or the value of any travelling concession;
 (iv) any sum paid to the person employed to defray special expenses
entailed on him by the nature of his employment; or
 (v) any gratuity payable on discharge;
 Committees and Advisory Board
 The Appropriate Govt. shall appoint such committees and
sub-committees as may be necessary, to hold inquiries and
advise it in respect of fixation or revision of minimum rates
of wages. (Section 5)
 The Govt. has also appointed Advisory Boards for the
purpose of coordinating the work of the committees and
sub-committees, and advising it generally in the matter of
fixing and revising the minimum rates of wages.(Section 7).
 Each of the committees and sub-committees and the
Advisory Board shall be constituted by persons nominated
by the Govt., equally representing the Employers and
employees in the Scheduled employment. One-third of the
total members shall be independent persons one of whom
shall be appointed as the Chairman.(Section 9)
 Central Advisory Board
 Section 8:
 (1) For the purpose of advising the Central and State

Governments in the matters of the fixation and revision of

minimum rates of wages and other matters under this Act
and for co- coordinating the work of the Advisory Boards,
the Central Government shall appoint a Central Advisory
Board.
 (2) The Central Advisory Board shall consist of persons to

be nominated by the Central Government representing

employers and employees in the scheduled employments,
who shall be equal in number, and independent persons
not exceeding one- third of its total number of members;
one of such independent persons shall be appointed the
Chairman of the Board by the Central Government.
 Fixation of Minimum rates of wages
Section 3
 (2) The appropriate Government may fix:
 (a) a minimum rate of wages for time work (hereinafter

referred to as ‘a minimum time rate');

 (b) a minimum rate of wages for piece work (hereinafter

referred to as 'minimum piece rate');

 (c) a minimum rate of remuneration to apply in the case of

employees employed in piece work for the purpose of

securing to such employees a minimum rate of wages on a
time work basis (hereinafter referred to as ‘a guaranteed time
rate’);
 (d) a minimum rate (whether a time rate or a piece rate) to

apply in substitution for minimum rate which would

otherwise be applicable, in respect of overtime work done by
employees (hereinafter referred to as 'overtime rate');
Contd.
 Section 3:-
 (a) fix the minimum rates of wages payable to

employees employed in an employment

specified in Part I or Part II of the Schedule
and in an employment added to either Part by
notification under section 27:
 (b) review at such intervals as it may think fit,

and such intervals not exceeding 5 years the

minimum rates of wages so fixed and revise
the minimum rates, considering the change in
price index and dearness allowance.
 Minimum rate of wages
Section 4: Minimum rate of wages
 (1) Any minimum rate 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 manner as the appropriate
Government may direct, to accord as nearly as practicable with the
variation in the cost of living index number applicable to such
workers (hereinafter referred to as the ''cost of living allowance”); or
 (ii) a basic rate of wages with or without the cost of living
allowance, and the cash value of the concessions in respect of
supplies of essential commodities like food, clothes, etc. 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 the concessions, if any.
 Procedure for fixing and revising
minimum wages
Section 5: Procedure for fixing and revising minimum wages
(1) 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
(b) by notification in the Official Gazette, publish its proposals for

the information of persons likely to be affected thereby and

specify a date, not less than 2 months from the date of the
notification, on which the proposals will be taken into
consideration.
Contd.
Section 5(2)
 After considering the advice of the committee or
committees appointed under clause (a) of sub-
section (1), or as the case may be, all
representations received by it before the date
specified in the notification under clause (b) of that
sub-section, the appropriate Government shall, by
notification in the Official Gazette, fix, or, as the
case may be, revise the minimum rates of wages in
respect of each scheduled employment, and unless
such notification otherwise provides, it shall come
into force on the expiry of 3 months from the date
of its issue.
 Payment of Minimum Wages
 Section 12:The Employer is bound to pay to every
employee engaged in a scheduled employment under
him wages at a rate not less than the minimum rate of
wages fixed for that class of employees in that
employment without making any deduction there from
except those permitted under the Payment of Wages
Act.
 The employees are entitled to the minimum wages at

all times and under all circumstances. An employer

who cannot pay the minimum wage has no right to
engage labour and no justification to run the industry.
 Citation: The workmen Vs Management of Reptakos

Brett & Co. Ltd. (1992) I LLJ 340 (SC).

 Wages in cash/kind
 Section 11:
 (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, authorise 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,
authorise the provision of such supplies at concession rates.
Wages to be paid through Bank
 Amendment in Delhi
 (1) Minimum wages payable under this Act shall be paid by
depositing the same in the bank account of the employees,
electronically or by account payee cheque:
 (Substituted by vide The Minimum Wages (Delhi) Amendment Act,
2017), dated 23rd April 2018.
 Provided that payment of wages to the workers employed on daily
wages basis, not less than minimum wages as notified from time to
time by appropriate Government, may be made in cash;
 Provided further that in special circumstances which are beyond the
control of employer like- fire in the establishment, natural
calamities, death of employer or Director of the establishment and
other such circumstances as prescribed by appropriate government,
the payment of wages may be made in cash.
 (Inserted by vide The Minimum Wages (Delhi) Amendment Act,
2017, dated 23rd April 2018).
Contd.
 Section 15:
 Where an employee works on any day for a
period less than the requisite number of hours
constituting a normal working day, he shall still
be entitled to receive wages for the full normal
working day, except:-
 (i) 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,
Contd.
 Section 17:
 If an employee is employed on piece-

work basis, the employer shall pay to

him, wages at not less than the
minimum time rate. The linkage of
minimum wages with performance or
output, if it falls short of such wages,
shall be illegal.
 Fixing hours for a normal working day
 Section 13: Fixing hours for a normal working day, etc.
 (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 1 or more specified intervals;
 Accordingly, 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
 (b) Provide for a day of rest in every period of 7 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.
 Overtime Wages
Section 14
 If an employee works on any day in excess of

the normal working hours, the employer shall

pay to him overtime wages for every hour or
for part of an hour, so worked in excess, at the
rate prescribed under this Act or under any
other law, whichever is higher.
 As per Factories Act, overtime wages are to be

paid at twice the normal rate of wages after 48

hours of normal working in a week.
 Wages for 2 or more classes of work

Section 16:
 Where an employee does two or more

classes of work, to each of 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.
Power of State Government to add to
Schedule
 Section 27
 The appropriate Government, after giving by
notification in the Official Gazette not less than
three months’ notice of its intention so to do,
may, by like notification, add to either Part of
the Schedule any employment in respect of
which it is of opinion that minimum rates of
wages should be fixed under this Act, and
thereupon the Schedule shall in its application
to the State be deemed to be amended
accordingly.
 Contracting out is void
 Section 25
 Any contract or agreement

whereby an employee relinquishes

or reduces his right to minimum
wages or any privilege or
concession accruing under the
Act, shall be null and void.
 Minimum Wages Case Laws
 1. UNICHAY V. STATE OF KERELA(AIR 1962 SC 12):
 It was held that the minimum wage rates should be fixed in the

scheduled industries with the dual object of providing subsistence

and maintenance of worker and his family and preserving his
efficiency as a worker.
2. A. SUNDARAMBAL V. GOVT. OF GOA, DAMAN AND DIU (1988 SCC):
 Sc observed: Imparting education which is the main function of

teachers cannot be considered as skilled or unskilled manual work

or supervisory work or technical work or clerical work. Imparting
education is in the nature of a mission or a noble vision. The clerical
work if they do any is only incidental to their principal work of
teaching”
the minimum wage rates should be fixed in the scheduled industries
with the dual object of providing subsistence and maintenance of worker and his family and preserving
his efficiency as a worker.
Contd.
 3. Haryana Unorganized Schools Association v. state of Haryana (1996
SCC):
 Where the Govt. of Haryana in exercise of powers conferred under section

27 of the Act Added an item describing “ employment in private coaching

classes, schools including nursery schools and technical institutions”, for
the purpose of fixing minimum rates of wages for the employees.
 The supreme court considered the objects and reasons of the Act and

provisions of S. 2(i) and S.27 and observed that combined reading of the
provisions as well as the objects of the legislation it is clear that the state
govt. can add to either part of schedule any employment where persons
are employed for hire or reward to do any work skilled or unskilled,
manual or clerical.
 Since the teachers of the educational institutions are not employed to do

any skilled or unskilled or manual or clerical work and therefore could not
be held to be an employee under section 2(i) Of the Act.
 It is beyond the competence of state govt.
Contd.
 4. Champak Lal H. Thakur v. State of Gujarat (AIR 1960 SC
1889):
 Observed by SC that following points are deducible from

provisions of the Act:

(1) For an Employer to be covered by the Act :
 a. He must be employing one or more employees in any

scheduled employment.
 b. Minimum Rates of wages for such scheduled
employment must have been fixed under the Act:
 c. If the committee has been appointed by the govt. under

Section 5 of such scheduled employment it must consist

of persons representing employers and employees in
scheduled employment who shall be equal in number.
Contd.
5. Patel Ishwarbhai Prahladbhai v.
Talukda Development Officer (1983 1
LLJ 237)
SC held that tube well operators were in
scheduled employment under Panchayats.
The tube well operators were employed in

scheduled employments' under the local

authorities and were entitled to minimum
wages.
 LABOUR DEPARTMENT
NOTIFICATION
Delhi, the 1st April, 2018 
Minimum rates of wages in
Category of Rupees
Schedule of
Workmen/Em
Employments
ployees Per Month Per Day

All Schedule Unskilled 13,896/- 534/-

employments
Semi skilled 15,296/- 588/-
Skilled 16,858/- 648/-
Clerical and supervisory staff
Non Matriculate 15,296/- 588/-
Matriculate but 16,858/- 648/-
not Graduate
Graduate and 18,332/- 705/
above
 Uttarakhand Minimum wages revised effective 1st April 2018

Effective for the period

Effective for the period From
From 01/04/2018 to
01/10/2017 to 31/03/2018
30/09/2018
Minim Minimu
Categorie
um VDA Total m VDA Total
s
Wages Wages
Unskilled 5075 1460 6535 5075 1660 6735
Semi
5555 1460 7015 5555 1660 7215
Skilled
Skilled 6035 1460 7495 6035 1660 7695
Clerical
Group 1 6845 1460 8305 6845 1660 8505
Group 2 6240 1460 7700 6240 1660 7900
Minimum Wages in Central sphere as on 1.4.2017.

 The Central Government has fixed Minimum Wages under the

Minimum Wages Act, 1948 for 40 scheduled employments
under the Central Sphere. CLC(C), is revising VDA at the
interval of six months i.e. w.e.f. 1st April and 1st October.
 Claims
 Section 20. Claims
 (1) The appropriate Government may, by notification in the
Official Gazette, appoint any Commissioner for Workmen's
Compensation or any officer of the Central Government
exercising functions as a Labour Commissioner for any
region, or any officer of the State Government 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 be the Authority to hear and decide for any
specified area all claims arising out of payment of less than
the minimum rates of wage
 Penalties for certain offences
 Section 22. Penalties for certain offences
 Any employer who:
 (a) pays to any employee less than the minimum
rates of wages fixed for that employee's class of
work, or less than the amount due to him under the
provisions of this Act; or
 (b) contravenes any rule or order made under
section 13,
 shall be punishable with imprisonment for a term
which may extend to six months, or with fine which
may extend to five hundred rupees, or with both
 The Minimum Wages (Delhi) Amendment
Act, 2017, dated 23rd April 2018.

 In Section 22, for the words “shall be

punishable with imprisonment for a term which
may extend to six months, or with fine which
may extend to five hundred rupees, or with
both, the words “shall be punishable with
imprisonment for a term of three years, or with
fine of fifty thousand rupees, or with both.”
shall be substituted.
 vide The Minimum Wages (Delhi) Amendment
Act, 2017, dated 23rd April 2018.
 Offences by Companies
 Section 22C. Offences by companies
 (1) If the person committing any offence under this Act is
a company, every person who at the time the offence was
committed, was in charge of, and was responsible to, the
company for the conduct of the business of the company
as well as the company shall be deemed to be guilty of
the offence and shall be liable to be proceeded against
and punished accordingly;
 Provided that nothing contained in this sub-section shall
render any such person liable to any punishment
provided in this Act if he proves that the offence was
committed without his knowledge or that he exercised all
due diligence to prevent the commission of such offence.
 Questions
& Discussions
Thank you
skchopra57@rediffmail.com
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