ARMY INSTITUTE OF LAW, MOHALI

PROJECT ON “Critical Analysis of Minimum Wages Act, 1948”

Project Submission in the Partial Fulfillment of Periodic Evaluation of Labour

Law.

Submission To: Submitted By:

Dr KIRANDEEP KAUR AKASH TIWARI

FACULTY: 6th SEMESTER B.A. LL.B.

LABOUR LAW ROLL NO: - 1735

 ACKNOWLEDGEMENT

This project consumed a huge amount of work, research and dedication. I would like to express
my deepest appreciation to all those who provided me withthe possibility to complete this project
work.

Sincere gratitude to our Professor, whose superior knowledge and contribution in stimulating
suggestions helped me to coordinate my full effort in achieving the project.

Furthermore, I would also like to acknowledge with much appreciation the crucial role of
management of Army Institute of Law, who gave the permission to use all required equipment
and necessary material to complete this task of research.

AKASH TIWARI

Roll No. - 1735

 INTRODUCTION TO MINIMUM WAGES ACT, 1948
In a bid to bring tougher sanctions on the employers, legislators introduced the Minimum Wages
Act in India in the year 1948.1While independent India was still in its nascent stage, Minimum
Wages Act (hereinafter the Act) was enacted. The Act was a brainchild of the Shri K.G.R.
Choudhary, who was appointed to analyse the deplorable wages of the unorganised sector.  The
Act, which is older than the Constitution itself, was introduced with a communist and socialist
perspective. Soon after the independence, the learned legislators realised the impending need to
regulate the middle and lower class (these two classes constituted more than 75% of the Indian
population). It was a period when the industrial and economic revolution was burgeoning and the
wealthy abusive bourgeoisie was emerging. Soon after the independence, an array of industrial
and economic policies was introduced in a bid to control the excessive growth of the bourgeoisie.

Constitution of India conceives the concept of basic standard of living for every citizen by
promulgating suitable economic and labour legislations under Article 43 (recognised as a
directive principle and not as a fundamental right). Several state and central machineries have
been constituted to moderate and alleviate the deplorable conditions of the unorganised sector.
But despite continuous legislative and societal intervention, the unfortunate dichotomy in the
economy has not ceased to exist. The unorganised sector has not witnessed any significant
development in terms of positive work environment.2

THE MINIMUM WAGES ACT, 1948

The legislative intent of the Act is to guarantee basic remuneration and wage subsistence for the
workers in the lower strata of the society. The Act aims at revising the rates of wages at timely
intervals by the Central/state machinery. The Act confers the statutory right on the employees to
institute a suit against the employers or the other contractors if they pay less than the stipulated
amount as per the timely revision. It also appoints advisory committees and other Boards which
1
Raghav Harini, The Minimum Wages Act 1948- A Critical Analysis (June 8, 2018),
https://blog.ipleaders.in/minimum-wages-act-critical-analysis.html.
2
Ibid.
are the primary statutory institutions for effectively implementing the Act. While on a
microeconomic level, the Act seeks to improve the purchasing power of the lower class at par
with the middle class (by regulating the wages) and enforce the right to work, on a
macroeconomic level, it seeks to increase the collective bargaining power of the lower strata
against the abusive bourgeois. The Act empowers the workers to demand special allowance
which is contingent upon the cost of living index prevalent, in addition to basic pay, as per
Section 4. As per Section 9 of the Act, an adult is entitled to a weekly holiday and 1-hour
interval. The maximum working hours per day is 9 hours while the weekly working hours should
not exceed 48 hours. The Act also demands the employer to compensate appropriately for extra
working hours and overtime duty. Labour Commission is the statutory body that has been set up
under the aegis of this Act which is authorized to hear any matters regarding non-payment or
underpayment of the stipulated wages. The aggrieved party may get his claims within 6 months
from the date of intimating and filing a complaint in the office of the Labour Commission.3

Legislative intervention in regulating the unorganised sector has always been very apathetic for
various reasons. While the lack of necessary infrastructure and funds can be pointed out as a
fundamental reason, the government’s “scrap it if it’s not effective” attitude without critically
analysing the loopholes of the schemes, has exacerbated the problem. The fate of the infamous
Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) under the flagship
of the Congress government, illustrates the bureaucratic inefficiency in implementing the Act.

OBJECTIVES OF THE MINIMUM WAGES ACT4-

 To ensure that the employee can have the basic physical needs good health and a level
of comfort.

3
Prasanna Mohanty, Labour Reforms: No one Knows the size of India’s Informal Workforce (July 15, 2019, 10:39),
https://www.businesstoday.in/sectors/jobs/labour-law-reforms-no-one-knows-actual-size-india-informal-workforce-
not-even-govt/story/364361.html.
4
Minimum Wages Act 1948- Objectives, Components, Case Laws (August 22, 2018),
https://www.lawnn.com/minimum-wages-act-1948.html.
  To ensure a secure and adequate living wage for all laborers in the interest of the
public.
 To ensure that the employee has enough to provide for his family.
 Ensuring a decent life standard that pertains to the social comfort of the employee.

Salient features of the Minimum Wages Act, 19485

1. The Act applied to certain employments (listed in the Schedule). Both the governments
(Central and State) have to declare minimum wages for their sphere. The appropriate government
may add any employment to the list if there are 1000 workers are working in that state.

2. Minimum wage means all remuneration in cash includes HRA (declared minimum wage +
allowances).
3. Kinds of fixing of Minimum wages: (a) a minimum time rate, (b) a minimum piece rate, (c) a
guaranteed time rate, (d) A time rate or a piece rate applicable to overtime rate.

4. Classes of fixing minimum rates of wages: (a) different scheduled employments; (b) different
classes of work in the same scheduled employment; (c) adults, adolescents, children and
apprentices; and (d) different localities (zone wise).

5. Norms to be consider for fixing minimum wage:

 Standard family of four members – three consumption units (2 adults + 2 children) for one
earner.
 Minimum food requirement should be calculated on the basis of a net intake of calories.
 Clothing a total of 72 yards;
 the rent corresponding to the minimum area (one room)
 other routine expenditure 20% of the total minimum wage.
 Social expenditure – further constitute 25% of the total minimum wage.

5
Krishna Pal Malik, Salient Features of the Minimum Wages Act, 1948 (August 18 2015),
https://krishnapalmalik.wordpress.com/2015/08/18/salient-features-of-the-minimum-wages-act-1948.html.
6. Period to revise minimum wages by appropriate government is five years.

7. The appropriate Government shall declare special allowance after each six months (i.e. 1st
April and 1st October of every year).

8. In case of not paying minimum wage a claim can be made under section 20 before the labour
authority who can make of order of payment of 10 times of difference amount.

9. Not paying Minimum wages is an offence punishable up to six months’ imprisonment or with
fine up to Rs. 500 or with both.

10. Contracting out: Any contract or agreement whereby an employee either relinquishes or
reduces his right to a minimum rate of wages or any privilege or concession accruing to him
under this Act shall be null and void.

11. Regional Labour Commissioner (C) is the authority declared by Central Government to
decide claims (less than minimum wages) made under section 20 of the Act. Assistant
Commissioner of Labour is authority in Gujarat.

PARAMETERES FOR DETERMINING THE MINIMUM WAGES6

While fixing the basic remuneration as per the Act, various parameters have to be considered.
The following are the basic factors that have to be evaluated to ascertain the wages as suggested
by the Indian Labour conference in 1957

(a) Three square meals with a minimum calorie requirement of 2700 kcal per average Indian
adult per day

6
Raghav Harini, The Minimum Wages Act 1948- A Critical Analysis (June 8, 2018),
https://blog.ipleaders.in/minimum-wages-act-critical-analysis.html.
(b) Cloth requisite of 72 yards per annum per family,

(c) Rent as per the minimum area provided under the relevant state government’s Industrial
Housing Scheme (IHS) and  

(d) Fuel requirements, electricity and other miscellaneous items of expenditure which account
for 20% of remuneration,

(e) Education of children, medical expenditure, minimum leisure including festivals/ceremonies

and provision for old age, marriage etc. should further constitute 25% of the total minimum
wage.

On a cursory perusal of the Act, it seems that the Act confers affirmative enforceable rights
against the employers, but in reality, most of these rights are nothing more than mere travesties.
Notwithstanding the bureaucratic red-tapism and apathy, the central government and the
concerned ministry have rather adopted a conservative approach in gauging the floor level pay to
the workers in the unorganised sector. Thus an important question that we need to raise is why
does this approach suggest by the committee fail? One of the basic reasons is the asymmetry to
the Consumer Price Index (CPI). CPI is an aggregate change in the prices paid by retail
customers for certain quantitative measures of goods and services. Real CPI accounts for
inflation but the nominal GDP does not account for the same.

REQUIREMENTS FOR REVIEW AND FIXATION OF MINIMUM WAGE7-

The requirements for the review and fixation of a minimum wage are under Section 5 of the
1948 minimum wage Act. The rule provides that:

 Committees and sub-committees shall be appointed by the appropriate government as

it deems fit; to inform it on the possible review and fixation of the minimum wage
rate.
7
Agarwala, Rina (2011): “Using Labour Rights for Legal Empowerment in India,” Journal of Development
Studies, Vol 55, No 3, pp 401–419. 
  The government shall notify the persons concerned by making a publication in one of
the national dailies and specify a date not later than a period of two months from the
publication date before the commencement of the hearing on the matter.

After the government must have considered the inputs from representatives of the persons
concerned or the advice of the committee, is shall review or fix the minimum rate through a
publication in the official news media based on each schedule of employment. The enforcement
of the fixation or review shall not be more than three months from the date of publication.

The appropriate government shall work in conjunction with the minimum wages Advisory Board
while reviewing the wages. The review is limited to the employment that is under the schedule.
However, Section 278 of the Act empowers the appropriate government to add any employment
to the schedule.

The prevailing economic conditions, cost of living in a place, conditions which the work is
performed and nature of work to be performed shall be used as the factors to determine the
fixation of the minimum wage.

ROLE OF THE WAGE COMMITTEE

The wage committee or sub-committee inaugurated by the appropriate government shall be made
up of the same number of representatives of both employees and employers. An independent
person with no direct or indirect interest in the schedule of employment shall be made the
chairman of the committee. Experience and knowledge shall be the criteria for one’s membership
in the committee.

The government is at the discretion of regarding or disregarding the recommendations from the
committee it had appointed. The purpose of the committee is to advise; therefore, the
government is not bound to accept all of its recommendations. Irregularities that may have
occurred in the constitution of the committee will not affect the validity of a notice that may have
been published by the appropriate government.
8
The Minimum Wages Act, 1948 (Act no. XI of 1948).
 THE ROLE OF ADVISORY BOARD

Section 79 provides that the appropriate government shall shoulder the responsibility for
inaugurating an advisory board to:

 Coordinate the obligations of committees and sub-committees appointed by the

government
 Inform the appropriate government on matters related to fixing and reviewing of the
minimum wage.

The procedure for the functioning of the Advisory board is not prescribed in the minimum wage
Act. However, the board can set up its peculiar procedure. A Central Advisory Board shall be
constituted by the Central Government to advice and counsel both the Central and State
government on fixation and review of minimum wages rates and the works of the Advisory
boards as stated in the Act.

Those who are to serve as members of the board shall be nominated by the Central Government
from representatives of both the labor and the employers. Independent members of the board
shall not exceed one-third of the total members. An official of the government can be one of the
independent members and from this class shall the chairman emerge.

CONSEQUENCES OF NON-COMPLIANCE WITH THE MINIMUM WAGES ACT

Non-payment and underpayment of the minimum wage are considered as a culpable offense. The
penalty to an offender may be up to 5 years imprisonment with a fine of Rs 10000 as provided in
Section 2210 of the Act.

Constitutional validity of the Act

9
The Minimum Wages Act, 1948 (Act no. XI of 1948).
10
Ibid.
The Act is not unreasonable.

One of the directive principles of state policy, incorporated in Article 43 of the Constitution of
India, speaks of giving workers living wages, which not only ensures material subsistence, but
health and decency are important to the public interest. While it is true that individual employers
may find it difficult to do business on the basis of the minimum wage prescribed under the Act, it
should not be the entire basis and reason for declaring the law unreasonable.

In the case, Gulmuhommad Tarasaheb a bidi factory by its proprietors Shamrao vs State Of

Bombay11 it was decided by the court that “The restrictions, though they interfere to some extent
with the freedom of trade or business guaranteed under Article 19(1)(g) of the Constitution, are
reasonable and being imposed on the general interest of the general public, are protected by the
terms of  clause (6) of the Article 19.”

The determination of the minimum wage is for the preservation of public order, and if there is no
minimum wage set, it will cause employers to be arbitrary and this will undoubtedly lead to a
confrontation between the employer and labour which will create “friction in society”.

The case of Uchinoy vs. State of Kerala12 the judgement includes, “As regards to the procedure
for fixing of the minimum wages, the ‘Appropriate Government’ has undoubtedly been given
very large powers, but it has to take into consideration, before fixing wages, the advice of the
committee if one is appointed on the representations on proposals made by persons who are
likely to be affected thereby. The various provisions constitute an adequate safeguard against
any hasty or capricious decision by the ‘Appropriate Government’. In suitable cases, the
‘Appropriate Government’ has also been given the power of granting exemptions from the
operations of the Provisions of the Act. There is no provision undoubtedly, for a further review
of the decision of the Appropriate Government, but that it would not make the provisions of the
Act unreasonable”.

11
AIR 1962 Bom 97.
12
1962 SC 12.
Doesn’t violate Article 14 of the Constitution

On a careful examination of the several of the Act and the machinery setup by this Act, Section
3(3)(iv) neither contravenes Article 19(1) of the Constitution nor does it infringe the equal
protection clause of the Constitution. The Courts have also held that the Constitution of
the committees and the Advisory Board did not contravene the statutory provisions in that behalf
prescribed by the legislature; this was decided in the case of Bhikusa Yamasa Kshatriya vs
Sangammar Akola Bidi Kamgar Union13.

As it was held in the case of “C.B. Boarding & Lodging14 it added to the mentioned case that,”
nor the reason that two different procedures are provided for collecting information”.

Notification of fixing different rates of minimum wages for different areas is not
discriminatory.

It was stated that where the determination of wage rates and their revision was detected by
detailed survey and investigation and the rates were implemented after considering the
representation made by a section of the employer, it would be difficult To place that notification
on the basis of fixed rates of minimum wages for various sectors, it was based on rational
deliberation with the purpose of the Act, and thus violated Article 14.15

As the matter came into light by one of the India’s Union Labour and Employment Minister
Shri Mallikarjuna. The variation of minimum wages between the states is due to differences in
socio-economic and agro-climatic conditions, the prices of essential commodities, paying
capacity, productivity and local conditions influencing the wage rate. The regional disparity in
minimum wages is also attributed to the fact that both the Central and the State Governments are
the Appropriate Governments to fix, revise and enforce minimum wages in Scheduled
employments in their respective jurisdictions under the Act.

13
AIR 1963 SC306.
14
AIR 1970
15
Aniruddh Shastree, The Constitutional Validity of the minimum Wages Act, 1948 (March 2, 2015),
https://www.linkedin.com/pulse/constitutional-validity-minimum-wages-act1948-aniruddh-shastree.
Despite saying nothing in the above statements, it was decided in the case of N.M.Wadia
Charitable Hospital vs. State of Maharashtra 16 that “fixing of Different minimum wages are
allowed for different localities under the Constitution and Indian labour laws, hence the question
whether any provision of the Minimum Wages Act is wrong against the provision of the
Constitution.”

The Constitution of India accepts the responsibility of the state to create an economic system, in
which every citizen gets employment and receives “fair pay”. This made it necessary to set clear
criteria for identifying fair pay. Therefore, in its first session of November 1948, a Central
Advisory Council appointed a Tripartite Committee on fair pay. The Committee consisted of
employers, employees and Government representatives. Their job was to inquire and report on
the subject of fair wages of labour.

Sanctity of the Act

It is a clear decision of the Supreme Court in their three rulings held that non-payment of
minimum wages leads to “forced labour” which is prohibited under Article 23 of The Indian
Constitution. ‘Forced labour’ can arise in many ways like hunger and poverty, want and
destruction.

In the case of Sanjit Roy Vs. State of Rajasthan17, the Supreme Court has decided that ‘The
Exemption Act in so far as it excluded the applicability of the Minimum Wages Act, 1948 to the
workmen employed in famine relief work is “clearly violative” of Article 23. Thus, even public
works ostensibly initiated by the Government for the sole purpose of providing employment are
subject to the Minimum Wage Act.

After considering the decision of the Supreme Court, the Andhra High Court set aside the
notification of Government of India which makes the payment of minimum wages mandatory in
prevailing states. This is outlined in a legal opinion provided by Ms. Indira Jaisingh, Additional
Solicitor General to the Working Group of wages of the Central Employment Guarantee Council
(CEGC), where she made it clear that Section 6(1) to allow payment less than minimum wages

16
AIR 1993
17
AIR 1983
in MNREGA works will lead to forced labour. Eminent jurists and lawyers from India have also
asked the Government of India to immediately cancel its Unconstitutional notification and ensure
that all workers in India are paid the minimum wage.

The Act and the decision are in favour of equality provided under Article 14 of the Constitution
and a decision in the case namely “Engineering Workers Union Vs. Union of India 18, “The
provision under Section 3(2)(a), that the fixed rate of wages fixed or revised in the prescribed
employment shall not apply to the employees during the period, has violated the equality clause
of Article 14 and hence this section is void. “.

In view of the Directive Principles of State Policy contained in Article 43 of the Constitution of
India, it is beyond doubt that the labourers receive a living wage which not only ensures physical
subsistence, but maintains health and decency.

Conclusion

India consists of 487 million workers, the second largest after China. India has numerous labour
laws for prohibiting discrimination and child labour. The Act aims to guarantee fair and human
conditions of work, provide social security, minimum wages, right to organize, form trade union
and enforce collective bargaining. It protects the exploitation of those who are poor in majority,
who are socially and economically disadvantaged people. Therefore, it seems necessary for such
law not only appears on paper but serve some assurance from exploitation to gain the trust of
people. Governments are bound to comply with the socio-economic laws, failure of which will
be a violation of Article 21 of the Constitution of India. India is considered to be the highly
regulated and most rigid labour laws countries in the world. They need to be flexible for their
proper implementation and should be reviewed from time to time according to the need of labour
and economy’s dynamics.

18
AIR 1994