Understanding the Minimum Wages Act

There are over 501 million workers in India that contribute to developing human capital and investment in the industries around the country. Since the most significant chunk of the population is dependent on labor-intensive work, the minimum wage is regarded as an indispensable part of their livelihoods.

With regards to that, the concept of minimum wages in India was brought in the year 1920 by Mr. K.G.R Chaudhary, who proposed the bill to formulate the policy of minimum wages in the International Labor Conference.

The bill was brought in 1946, and by 1948, the bill of Minimum Wages Act was enforced to save the rights of Blue-collar workers.

In this article, we will be discussing the details of the Minimum Wages Act, 1948, which covers the following:

• What is the Minimum Wages Act'1948?
• What are the objectives of the Minimum Wages Act'1948?
• Who all are applicable under the Minimum Wages Act?
• What is the term minimum wages covered under the Minimum Wages Act?
• What are the minimum rates of wages under the Minimum Wages Act?
• What is the procedure for fixing and revising Minimum Wages?
• What are the criteria of registers and records of the Minimum Wages Act?
• How is the minimum number of working hours fixed?
• What are the compliances related to wages?
• What is the time of payment of wages?
• What are the penalties issued for offenses?
• What are the cases in which the employer is exempted from liability?

What is the Minimum Wages Act'1948?

The Central Legislative Assembly enacted the Minimum Wages Act '1948 in 1948 that fixed the minimum rates of wages in certain types of employment.

The provisions of the Act are intended to achieve the objective of doing social justice to workers employed in the scheduled employment by prescribing the minimum rate of wages for them.

In other words, the Act aims to provide a statutory fixation of minimum wages with a view to preventing the exploitation of labor.

After the Act's introduction, it brought a sense of equality and justice to the blue-collar people and was guided by the standards recommended by the Fair Wage Committee.

What are the objectives of the Minimum Wages Act'1948?

The primary objective of the Act is to ensure that the Government duly recognizes the labor's rights.

However, the Act looks forward to several objectives to ensure the protection of the labor.

The objectives of the Minimum Wages Act'1948 are mentioned below:

1. To prohibit the exploitation of labor in the workplace.
2. To ensure the minimum wages to all the blue-collar workers in the organized sector.
3. To ensure the application of the Act to the maximum number of organized sector employees.
4. To empower the Government to fix minimum wages and revise those wages within five years, based on the country's economic situation.
5. To safeguard the employee such that they can meet their necessities, proper health, and comfort.

Who are all applicable under the Minimum Wages Act'1948?

The Minimum Wages Act '1948 is applicable to the entities that provide employment opportunities to 1,000 employees in the respective States of India.

However, the Minimum Wages Act doesn't apply to the entities situated in Jammu and Kashmir.

Also, the Act does not apply to the employees in an undertaking owned by the Central Government or with the central Government's consent.

What is the term minimum wages covered under the Minimum Wages Act?

Under section 2 of the Minimum Wages Act, wages are termed as remuneration capable of being represented in terms of money. The amount of wages is specified for all the government sector employees working at the center and state level.

However, the wages cover the house rent allowance as a special allowance along with the minimum payment.

i.e.

Under the Minimum Wages Act, the following are the allowances that are not included as minimum wages:

1. Value for house accommodation, i.e., payment of electricity, water
2. Contribution to the pension fund or provident fund
3. Value of any other amenities excluded by the government order
4. Allowance for traveling
5. Payable of Gratuity on discharge
6. Special expenses acquired by the nature of employment

Hence, the items mentioned above are not included in minimum wages, except the house rent allowance.

What are the minimum rates of wages under the Minimum Wages Act?

Under section 3 of the Minimum Wages Act, the minimum rate of wages fixed by the Government in respect of the scheduled employments consists of the following:

1. The basic wages and house rent allowance may vary with the cost of living index.
2. The basic rate of wages with or without house rent allowance based on the cost of living index number of the employee
3. All-inclusive rates for the basic rate of wages with the cost of living allowances and cash value of concessional supply of materials

What is the procedure for fixing and revising Minimum Wages?

As far as section 5 of the Minimum Wages Act is concerned, there are two modes of procedures for fixing and revising the minimum wages.

One common thing among both of the procedures is to empower the Government in reaching a favorable result about the fixation of minimum wage.

The two modes of fixing and revising minimum wages can be categorized as follows:

1. Appointment of committee
2. Publication of proposals in the Official Gazette

Let's take a look at both of the procedures in detail:

1. Appointment of committee

In this procedure, the Government is required to appoint a committee and subcommittee that will be in a position to advise on the fixation of minimum wages.

As for section 7 of the Act, a committee of the Advisory Board is formed by the Government. The advisory board holds the necessary inquiries for the fixation of a minimum rate of wages, based on the living cost in indices and requirements.

2. Publication of proposals in Official Gazette

In this procedure, the Government should publish the minimum wage fixation proposal in the newspapers and inform the stakeholders regarding the changes. It is recommended to share the publication at least before the two months of the implementation. After going through the proposal, the stakeholders can raise issues or share their suggestions.

Based on that, the minimum wage is published in the Official Gazette.

As far as a revision of wages is concerned, the Advisory Board can consult regarding the same. The advisory board will then convey to the Government, and after the final approval, it is passed in the legislation.

What are the criteria of registers and records of the Minimum Wages Act?

As far as Section 18 of the Minimum Wages Act is concerned, the employer is required to maintain the records and registers of the employees regarding certain particulars.

The employer is required to maintain the records regularly such that they can reflect the amount of work done by the employee and facilitate the payments on time.

The particulars are as follows:

1. Employees detail who the employer has employed
2. Work performed by the employees
3. Wages paid to employees
4. Receipts provided by the employer
5. Every employer must hold a notice exhibiting in the factory, workshop, or place used for giving the work to employees.
6. As per the rule, the Government can provide the issue of wages book or wage slips to employees.

How is the minimum number of working hours fixed?

Under section 13 of the Minimum Wages Act, regular working hours are fixed in a working day that an employee needs to perform.

The fixation of normal working hours includes the following:

1. The fixed number of working hours will consist of the intervals as per time
2. The fixed period will consist of a day of rest every seven days
3. The rest day must be included in the pay; no money shall be deducted.

Though there are certain exceptions related to the fixed hours of regular working days, employees whose work is of irregular nature.

If that is the case, then the consent of the appropriate Government is required.

What are the compliance related to wages?

As per section 3 of the Minimum Wages Act, the following are a few of the compliances related to wages:

1. Rate of Wages
2. Wages during Overtime
3. Wages for two or more classes of work
4. Minimum time-rate wages for piece work
5. Wages in the form of kind

1. Rate of Wages

The Government fixes the rate of wages based on:

1. Minimum piece rate
2. Minimum time rate
3. Overtime rate that is the substitution of great pre-decided by the employer
4. Guarantee time rate

In addition, the rates may vary from every locality, employment, apprentices, children, adolescence, and adult.

The rates may be fixed monthly, weekly, daily, or hourly.

2. Wages during Overtime

If the employee works for more than the prescribed hours, then the person is entitled to accept payment for that particular period.

The wages are required to be paid on collective terms based on hourly, weekly, or monthly basis.

3. Wages for two or more classes of work

As per section 16 of the Minimum Wages Act,

If a single employee performs two or more classes of work, the minimum wages will be altered as per the time invested for each particular job performed by the employee.

In addition, the employee will be paid separate remuneration for each work.

4. Minimum time-rate wages for piece work

As per section 17 of the Minimum Wages Act, a minimum time rate should be fixed for those employed on the piece-rate system.

The minimum time is a system where the wages are paid based on the time worked by the employee.

For example, if the employee works for 7 hours, then the payment of wages will be made in accordance with the time delivered for each piece of work.

5. Wages in the form of kind

As per Section 11 of the Minimum Wages Act, the wages need to be paid only in cash form. However, if there are any concessions or allowances provided to stakeholders by the Government, then they can be paid in the prescribed manner.

What is the time of payment of wages?

As per the Act, every person employed in railways, factories, industries, establishments who employs 1000 persons in their work needs to be paid before the expiry of the seventh day of the month.

That is, the 7th of every month.

If there are establishments other than railways or factories, then the wages have to be paid before the expiry of the tenth day of the month.

In some cases, the wages can be paid after the last day of the payment, regarding which the wages are usually payable.

However, some deductions in wages may occur during the time of payment to an employee.

While calculating the wages of an employed person, the payment has to be made without deductions, except in the case of authorized deductions from wages under the Minimum Wages Act.

The authorized deductions from wages are represented as follows

1. Deduction from wages for fines
2. Deductions from wages for absence from duty
3. Deductions from wages for damage or loss of goods of organization
4. Directions from wages for house accommodation supplied by the employer

What are the penalties issued for offenses?

As per section 22 of the Minimum Wages Act, the penalties may be charged in the case if,

1. The employees pay less than the minimum wages prescribed by the Act
2. The employer does not comply with the provisions given in section 13 of the Act

If there is an act of omission of acts by the employer, then a notice specifying the same can be exhibited in a prescribed manner on the premises in which the employment is carried on.

If the offense is found guilty and is proved under the Act, the offenders will have to pay a fine and land up in jail.

The granted jail term can extend up to 6 months and will be imposed a fine that may extend to 500 rupees.

Provisions for the punishment of other offenses

Apart from the general offenses, specific provisions of other offenses may occur during employment.

Let's take a look at each of the following:

1. Offenses by companies
2. Payment of undisbursed amounts
3. Protection against attachment of assets

1. Offenses by companies

As per section 22C, the penalties will be considered in case of an offense committed by the negligence of the company's director, secretary, or manager.

2. Payment of undisbursed amounts

As per section 22D, if there is an amount that employees were due to be paid, and the employer fails to pay the given amount, then the Government has the power to disburse the amount to employees in a prescribed manner.

3. Protection against attachment of assets

Employers need to detach their personal property for the security of employees working in the organization.

The amount is kept as a security with the Government and can be used at the time of contract payment with employees.

What are the cases in which the employer is exempted from liability?

As per the Minimum Wages Act, the employer may be exempted from the liability if they are able to justify the court regarding the following:

1. The person took due diligence before taking action. That is, there is a particular reason attached to it.
2. The action was done without their consent or knowledge.

If the employee is discharged from the liability, the person responsible for the fault will be liable and penalized as per the Act.

Conclusion

The Minimum Wages Act '1948 is more of a revolution to the employee's wage systems. With the introduction of this Act, many manual laborers and workers are protected against exploitation at the workplace and are paid a justified rate for their work.

The minimum wage prescribed by the Government for scheduled employment on a per-day basis ranges as follows:

The rates may differ based on the States of India.

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Key Takeaways

This article covered A to Z about the Minimum Wages Act '1948 along with the detailed compliances and regulations.

Let's take a look at the key takeaways of the article:

• The Minimum Wages Act '1948 fixes the minimum rate of wages in certain types of employment
• The Act aims to provide a statutory fixation of minimum wages with a view to preventing the exploitation of labour in the workplace
• The primary objective of the Act is to ensure the protection of labour, assuring the minimum wages to the Blue-collar workers and safeguarding the employee to meet their necessities
• The Minimum Wages Act is applicable to the entities that provide employment opportunities to 1,000 employees in the respective states of India
• Minimum wages are termed as remuneration capable of being represented in money and a special allowance of house rent allowance
• The Government fixes the minimum rate of wages with respect to the scheduled employment
• There are two procedures for fixing and revising the minimum wages
• The two procedures are the appointment of a committee and publication of proposals in the official gazette
• The employer maintains the registers and records of the minimum wages to be paid to the employee
• The normal working hours fixed in a working day include intervals and days of rest
• As per section 3 of the Act, there are five compliance related to wages
• These are the rate of wages, wages during overtime, wages for two or more classes of work, minimum time rate wages for piece work, and wages in the form of a kind
• The payment of wages for employees is due every 7th day of the month
• There are few authorized deductions from wages that may happen during payment
• Section 22 of the Act states that specific penalties may be charged upon the employers
• Under the Act, certain provisions for punishment of other offences include offences by companies, payment of undisbursed amounts, and protection against the attachment of assets
• The employer may be exempted from the liability if he has a strong reason or if the work was done against his permission
• The minimum wages act 1948 is more of a revolution to the employee's wage systems

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