Minimum Wages Act

Minimum Wages Act, 1948

Minimum Wages Act, 1948, India

The Minimum Wages Act, 1948(hereinafter referred to as the “MW Act”) is a Central legislation aimed at statutory fixation of minimum rates of wages in the employments where sweated labour is prevalent. In these industries there is a high possibility for exploitation of unorganized labour. The provisions of the MW Act are intended to achieve the object of doing social justice to workmen employed in the scheduled employments by prescribing minimum rates of wages for them. This Act aims at statutory fixation of minimum wages with a view to prevent exploitation of labour.  The main objectives of the Act are –

  • To prevent the exploitation of Workers by the Employers.
  • To bring social justice.
  • To enable the working class to have a minimum standard of life.
  • To fix/revise the minimum rate of wages for the scheduled employments.
  • To add any new employment to the schedule.

The term ‘Minimum Wage Fixation’ implies the fixation of the rate or rates of minimum wages by a process or by invoking the authority of the State. Minimum wage consists of a basic wage and an allowance linked to the ‘cost of living’ index and is to be paid in cash, though payment of wages fully in kind or partly in kind may be allowed in certain cases. The statutory minimum wages has the force of law and employers are strictly prohibited from paying below the prescribed minimum wage to their employees. The obligation of the employer to pay the said wage is absolute. The process helps the employees in getting fair and reasonable wages more particularly in the unorganised sector and eliminates exploitation of labour to a large extent. This ensures atleast minimum standard of living conditions and basic necessities of the employees.

  • Wages

Section 2(h) of the MW Act, defines “wages” to mean 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 –

  • the value of –
    • any house accommodation supply of light water medical attendance or
    • any other amenity or any service excluded by general or special order of the appropriate government;
    • any contribution paid by the employer to any person fund or provident fund or under any scheme of social insurance;
    • any traveling allowance or the value of any traveling concession;
    • any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or
    • any gratuity payable on discharge;

Appropriate government according to the specified schedule sets up the minimum wages which is reviewed atleast every 5 years.

  • Classification of Wages

The Supreme Court[1] has classified “Wages” into three categories. They are:

  1. The Living Wage (highest standard of wage)
  2. The Fair Wage (between living and minimum wage)
  3. The Minimum Wage.( it is the lowest standard of wage)

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To know more about Labour Law in India, read below:

Labour Law in India

[1] Express Newspapers (Pvt.) Ltd. v. Union Of India 1986 AIR 872, 1985 SCR Supl. (3) 382

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