Minimum Wages Act 1948: Scope, Rules & Provisions

Summary: The Minimum Wages Act, 1948 was enacted to prevent the exploitation of labor by ensuring a baseline wage for workers across various sectors in India. It mandates both the Central and State Governments to fix and periodically revise minimum wages for scheduled employment. Wages may vary by region, skill level, and industry, with provisions for time-based, piece-based, and overtime rates. The Act also allows wages to be paid partly in kind, subject to government approval. It outlines responsibilities for labor inspectors, defines wage components (like basic wage and cost of living allowance), and prohibits discrimination in wage payment. The scope of the Act is national, though it excludes unscheduled employment. Wage rates differ based on the area (A, B, C) and type of work—ranging from construction and mining to agriculture and cleaning services. Updated rates reflect changes in the Variable Dearness Allowance (VDA) due to inflation. The Act also enables workers to claim unpaid or underpaid wages through authorities such as Labor Commissioners or designated officers. In case of violations, employers may be ordered to pay the wage deficit and compensation up to ten times the shortfall. Overall, the Act sets a legal wage floor to protect workers and maintain economic fairness.

Minimum Wages Act 1948: Rules and Applicability

The Minimum Wages Act 1948 (the “Act”) has addressed the growing concerns of worker exploitation and inequality ever since it went into effect. Thus, it has had a significant effect on both businesses and workers. Protecting workers’ interests and ensuring they receive their payments on time are the main goals of the Minimum payments Act of 1948.

There were a number of difficulties in putting the Minimum Wages Act into practice because of the wide range of needs of employees. Setting minimum salaries, however, has aided in the eradication of poverty and motivated more individuals to work in many fields.

To find out more about the Minimum Wages Act 1948, including its goals, features, and scope, keep reading this article.

What is Minimum Wages Act 1948?

The Minimum Wages Act 1948 is a comprehensive law that establishes a minimum pay for both skilled and unskilled workers. Men and women are treated equally under the Act.

Both the federal and state governments are in charge of establishing minimum salaries in accordance with the Minimum salaries Act of 1948. However, pay varies by region, taking into account the cost of living for the worker as well as other aspects. This regulation provides workers with a minimal standard of life and protects them against exploitation.

An advisory board is established by the federal or state governments to examine and adjust the minimum wages in order to meet the necessities of a family. As a result, the minimum wage is not the same throughout the nation. However, a worker can be imprisoned or have to pay a fine if he/she pays wages below the minimum wage rate prescribed under the Act.

Objectives of the Minimum Wages Act

The main objectives of the Minimum Wages Act 1948 are:

• To stabilise an adequate minimum wage applicable for all employees and secure their financial position.
• Fix and change the minimum wages paid to employees by the employer in the establishments covered under the Act.
• To fix the daily working hours of an employee according to the type of employment.
• To avoid exploitation of the workers.
• To give powers and duties to Labour Commissioners and other Labour Officers to decide on complaints relating to less wage payment.
• To establish and provide duties of respective inspectors.
• To provide powers to the appropriate government to set rules.
• To maintain a decent standard of living for the workers.

Salient Features of Minimum Wages Act 1948

The salient features of the Minimum Wages Act 1948 are as follows:

• The Minimum Wages Act determines the hourly rates of wages or guaranteed time rate and overtime pay for each category of workers depending on their work type.
• The Act looks into the fact that the wages are paid in cash.
• The Act makes it mandatory to fix and revise wages from time to time.
• Inspectors and authorities are appointed under the Act to investigate the registers maintained by employers containing information regarding wages paid to employees.
• The government appoints the competent authorities who are responsible for computing the cost of living allowance.

Scope of Minimum Wages Act 1948

The Minimum Wages Act 1948 applies to the whole of India and aims to prevent the exploitation of employees with inadequate wages and delayed salary payments. Minimum wages are fixed for workers employed in certain scheduled employment. However, unscheduled industries are excluded under this Act.

Central and State Governments determine the minimum wages for scheduled employment. They fix and revise the wage rates according to different worker categories, including skilled, unskilled, semi-skilled, and highly skilled.

Minimum Wages Act Applicability

Under the Minimum Wages Act 1948, minimum wages are fixed and applicable for the workers employed in the following scheduled employment:

• Employment in any shawl weaving or woolen carpet-making establishment.
• Employment in any flour mill, rice mill, oil mill or dal mill.
• Employment in tobacco, including bidi making manufactory.

The appropriate government, comprising both State and Central Government, may fix minimum wage for scheduled employment if the total number of employees employed in a given industry sector exceeds one thousand in the entire State. However, the appropriate government can also fix and revise minimum wage rates for scheduled employment where there is employment of less than one thousand employees if it considers it appropriate to do so.

Main Provisions of Minimum Wages Act 1948

The main provisions stated in the Minimum Wages Act 1948 are as follows:

• The State and Central Government should fix a minimum wage, taking into consideration the cost of living of workers.
• Wages paid to employees include remuneration or other form of compensation expressed in monetary terms.
• Discrimination is prohibited based on gender for employee recruitment and wages.
• The minimum wages are revised from time to time in the Rules of the various states made under the Act.
• The State and Central Government should fix the number of hours of work per day for which minimum wages are to be paid.
• When an employee works more than the fixed hours of work per day, the employer must pay him/her the fixed overtime rate for every hour or part of an hour worked in excess.
• The Act also charges a penalty and punishment for paying wages less than the minimum wage payment.

Types of Wages Under Minimum Wages Act 1948

Under the Minimum Wages Act 1948, wages are classified as follows:

• Minimum Wages:- Minimum wages are the minimum amount that the employer of scheduled employment must pay their employees. The government fixes the minimum wages for all scheduled employment covered under the Act.
• Overtime Wages:- Overtime wages are the wages paid to an employee for each hour that he/she works overtime. Overtime means when an employee works more than the fixed number of working hours in a day.
• Cost of Living Allowance:- This is the basic wage rate and a special allowance rate paid to employees. The government may revise the special allowance rate at such intervals to match the practicable variation in the cost of living index number of the workers.
• Wages in Kind:- Wages in Kind are the minimum wages paid to an employee wholly or partly in kind. Though the Act provides that the minimum wage must be paid in cash, wages in kind can be given in circumstances where there is a custom to pay wages in kind and the government also approves it by notification in the Official Gazette. The government will estimate the wages in kind in a prescribed manner.

Minimum Wage Under Minimum Wages Act

Section 2 of the Minimum Wages Act 1948 defines wages as all remuneration payable in cash to an employee for fulfilling the work mentioned in the employment contract, including house rent allowance.

However, wages paid to an employee do not include the following:

• The value of any house accommodation, supply of water, light, medical attendance, or any other service or amenity excluded by a general or special order of the appropriate government.
• Any contribution paid by the employer to a pension or provident fund or any social insurance scheme.
• Any travelling allowance or travelling concession.
• Any amount paid to the employee to defray special expenses borne by him/her due to the nature of the employment.
• Any gratuity payable on discharge.

The appropriate government will fix the minimum wages paid to employees or workers in the scheduled employment covered under the Act. Appropriate government means:

• The Central Government in the case of any scheduled employment under the authority of the Central Government, railway administration, mine, oilfield, major port, or any corporation established by a Central Act.
• The State Government in the case of all other scheduled employment.

Fixation and Revision of Minimum Wages

Section 3 of the Minimum Wages Act 1948 gives power to the appropriate government to fix the minimum wage rates for workers in scheduled employment. The appropriate government also revises the minimum wage at intervals not exceeding five years.

However, the appropriate government can refrain from fixation on minimum wages for any scheduled employment where the total number of employees in the state is less than one thousand.

The appropriate government can fix the below wage rates under the Act:

• Minimum Time Rate: This is the minimum wage rate fixed for the work duration of a worker.
• Minimum Piece Rate: This is the minimum wage fixed for a piece of work done by the worker.
• Guaranteed Time Rate: This is a minimum remuneration rate fixed for employees employed on piece work to secure a minimum wage rate on a time work basis to such employees.
• Overtime Rate: This is the minimum time rate or piece rate fixed for the overtime work performed by a worker.

The appropriate government can fix rates of minimum wages for the following sections:

• Different categories of work in the same scheduled employment
• Different scheduled employment
• Different regions
• Adolescents, adults, children, and apprentices

The minimum wage rate is determined according to days, hours, months or any other wage period. However, the rates to be fixed might not be uniform. Different zones may have diverse rates.

Section 4 of the Act provides that the minimum rates of wages fixed can  comprise of:

• Cost of living allowance. The cost of living allowance is the basic wage rate plus the special allowance at an adjustable rate as the appropriate government directs as per the variation in the cost of living index numbers.
• A basic wage rate with or without considering the cost of living allowance and the cash value of concessions provided to the supplies of essential commodities at fixed concessional rates.
• An all-inclusive rate providing for the basic wage payment, the cost of living allowance, and the cash value of concessions, if any.

The appropriate government has the right to fix and revise the minimum wages either by appointing committees and sub-committees or by publishing proposals through a notification in the Official Gazette.

Minimum Wage Rates in India

The Central Government has made certain changes in the Variable Dearness Allowance (VDA) because of the rise in the cost of living. This ultimately results in changes in the minimum wage rates of workers employed in the unorganised sector. Thus, workers in different sectors, such as construction, sweeping, housekeeping, cleaning, mining, and agriculture, benefit from revised wage rates.

The below tables outline the minimum wage rates effective from 1 October 2024 for various workers.

The minimum wages for construction and maintenance workers are as follows:

The minimum wages for loading and unloading workers of railways, ports, docks, etc., are as follows:

The minimum wages for industrial workers of stone mines are as follows:

The minimum wages for watch and ward duties without arms are as follows:

The minimum wages for watch and ward duties with arms are as follows:

The minimum wages for sweeping and cleaning workers are as follows:

The minimum wages for employees working in agriculture are as follows:

Claims Under Minimum Wages Act 1948

The appropriate government, through a notification in the Official Gazette, may appoint the following persons as Authority to hear and decide all claims of payment of wages less than the minimum wage rate, payment of remuneration for rest days/ work done on working days or payment of overtime rate wage for any specified area:

• Commissioner for workmen’s compensation
• Any officer of the Central Government serving the role of Labor Commissioner for any particular area
• Any officer of the State Government not below any rank of Labor Commissioner
• Any officer who has the experience of a Judge of a Civil Court or stipendiary Magistrate

The Authority shall hear the employee and the employer, conduct any further inquiry if required and direct the following:

• In the case of a claim of payment of wages less than the minimum wage rate, the Authority may direct the employer to pay the employee the deficit amount of the actual wages paid and the minimum wages and compensation not exceeding ten times the amount of the deficit amount to be paid
• In any other case, the Authority may direct the payment of the amount due to the employee and compensation not exceeding Rs.10

Summary

Thus, a legislative framework for regulating and stabilizing minimum wages has been established by the Minimum Wages Act 1948. Additionally, it ensures that workers will eventually receive a stable salary. As a result, labor exploitation is eliminated and economic stability is enhanced. As a result, the Act provides workers with a set income in exchange for their labor.

According to the Act, both the federal government and state governments are suitable governments. As a result, they have the authority to set and modify the minimum wage in accordance with worker needs. Most significantly, the Act can be easily applied in each state by the State Governments through the development of rules.

References:-

1. https://cleartax.in/s/minimum-wages-act

2. https://blog.ipleaders.in/minimum-wages-act-1948-2/

3. https://unacademy.com/content/bpsc/study-material/labor-and-social-welfare/minimum-wages-act-1948/

4. https://thelegalschool.in/blog/salient-features-of-minimum-wages-act-1948 https://juslextra.in/f/minimum-wages-act-1948-blog-1\

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Author: Anu Sharma | Fourth Year, B.A. LL.B. (Hons.) | Lovely Professional University, Punjab