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Minimum Wages Act, 1948

February 9, 2024  38215  0

This article is written by Abanti Bose and Arya Mittal. The article seeks to provide a brief
analysis of the Minimum Wages Act, 1948. An attempt has been made to identify the
operating provisions of the Act and the changes brought under the minimum wage law
through the Code on Wages, 2019.

Table of Contents

1. Introduction
2. Need for minimum wages
3. History of minimum wages
4. Objectives of Minimum Wages Act, 1948
5. Application of Minimum Wages Act, 1948
6. Important provisions of Minimum Wages Act, 1948
6.1. Important definitions
6.1.1. Appropriate Government
6.1.2. Cost of Living Index Number
6.1.3. Wages
6.1.4. Employee
6.2. Fixing Minimum Rates of Wages
7. Advisory board under Minimum Wages Act, 1948
8. Mode of payment of wages under Minimum Wages Act, 1948
9. Fixing hours for a normal working day under Minimum Wages Act, 1948
10. Compliance under Minimum Wages Act, 1948
11. Claims under Minimum Wages Act, 1948
11.1. Procedure before the Authority
12. Penalty under Minimum Wages Act, 1948
13. Exemption from liability in certain cases under the Minimum Wages Act, 1948
14. Power to make rules under Minimum Wages Act, 1948
15. Constitutionality of Minimum Wages Act, 1948
15.1. Bijay Cotton Mills Ltd. v. State of Ajmer (1954)
15.2. Bhikusa Yamasa Kshatriya v. Sangamner Akola Taluka Bidi Kamgar Union (1958)
15.3. N.M. Wadia Charitable Hospital & Ors. v. State of Maharashtra & Ors. (1986)
16. Code on Wages, 2019
16.1. The concept of Floor Wage under the Code
17. Recent judicial pronouncements
17.1. Mohd Imran Ahmad v. Government of NCT of Delhi & Anr. (2023)
17.2. Assistant Provident Fund Commissioner v. M/s G4s Security Solutions (India) Ltd. & Anr.
(2023)
17.3. Karnataka General Labour Union v. Union of India & Ors. (2023)
17.4. Hindustan Sanitaryware and Industries Ltd. & Ors. v. The State of Haryana (2019)
18. Conclusion
19. Frequently Asked Questions (FAQs)
19.1. Whether the appropriate government can take more than five years to revise minimum
wages?
19.2. Does the Minimum Wages Act, 1948, allow the appropriate government to enact rules only
for fixing the minimum rates of wages?
19.3. Can the employer deduct minimum wages if the worker has not completed the minimum
number of hours in a normal working day?
19.4. To what kind of employment does the Minimum Wages Act apply?
20. References

Introduction
The economic policies and labour laws complement each other in India. To ensure the social
justice and economic well-being of the workers, the Parliament enacted the Minimum
Wages Act, 1948. Enacted to address the growing concerns of worker exploitation and
inequality, the Act has far-reaching implications for both employees and employers. The
primary objective of the Minimum Wages Act, 1948 is to safeguard the interests of the
workers by providing a mechanism for ensuring a bare minimum level of remuneration.

From agriculture and manufacturing to the service industry, the Act plays a pivotal role in
establishing equitable compensation structures. Additionally, there are various challenges in
implementing and adhering to the stipulated minimum wages, considering the dynamic
nature of economic landscapes and the diverse needs of an expanding workforce.
The Act categorises the workers into skilled, semi-skilled and unskilled labourers and
provides the mechanism for fixing separate minimum wages for each class of labour. In this
article, an attempt has been made to analyse the important provisions of the Act, along
with the important judicial pronouncements by various Courts of the country. Further, the
provisions of the Act have been compared with the provisions of the Code on Wages, 2019,
in order to ascertain what changes would be implemented through the new legislation.

Need for minimum wages

The exploitation of labourers in India became a norm at one point in history. Be it the
Mughal period or the British rule, the labourers have always suffered economically as well
as socially. To improve the situation of the labourers in the country, the State strives to
eliminate poverty. By fixing the minimum wages for the labourers, the State tries to
achieve the social objective of eradicating poverty of the labourers by guaranteeing a
minimum remuneration for the work done, as well as the economic objective of motivating
the workers to put in maximum efforts for maximum benefits. These benefits include, but
are not limited to, the following:

1. Protecting workers from exploitation – By providing a minimum wage for a fixed number
of hours, the exploitation of the workers shall be reduced to a great extent.

2. Ensuring a basic income – Minimum wages are fixed and revised based on adequate
living standards. Thus, fixing minimum wages for the workers shall ensure a basic
income for them.

3. Reducing income inequality – The disparity in income can be reduced by fixing the
minimum wages of the workers.

4. Promoting economic stability – Fixing minimum wages for the workers shall provide a
way to promote economic stability by improving the standard of living.

5. Setting labour standards – By reducing the exploitation of workers, the standard of work
would improve to a great extent.

6. Addressing poverty – Fixing minimum wages of the employees paves the way for
poverty eradication by encouraging more people to undertake work of any kind.

History of minimum wages

With the onset of the Industrial Revolution, the gap between the rich and the poor became
wider. The poor were forced to work in factories and establishments to sustain themselves.
This was the period when the need to have a law to protect the workers was felt. The
Industrial Revolution in India arrived as late as 1854 when India was still a colony of the
British. The first discussion in India regarding minimum wages followed its international
counterpart, i.e., the Draft Convention adopted at the International Labour Conference,
1928, in the form of the Royal Commission on Labour. The Commission pointed out the
need to adopt a structured wage system for the labourers. The question of wage-fixing
machinery was again raised at the third and fourth meetings of the Standing Labour
Committee held in 1943 and 1944 respectively. Lastly, the Minimum Wages Bill was
introduced in 1946 and enacted in 1948.

Objectives of Minimum Wages Act, 1948

The main objectives of the Minimum Wages Act, 1948 are as follows:

1. To fix and revise the minimum wages to be paid by the employer to the employees in
certain employments;

2. To fix an adequate minimum wage for all employees in the interest of the public;

3. To fix the daily working hours of an employee according to the employment type;

4. To prevent exploitation of the workers;

5. To resolve any issues pertaining to the non-payment or less payment of wages;

6. To establish and provide the powers and duties of inspectors;

7. To establish and provide the powers and duties of labour commissioners and other
important labour officers;

8. To provide the powers to make rules to the appropriate government.

Application of Minimum Wages Act, 1948

The Minimum Wages Act, 1948, is applicable to the whole of India as provided under
Section 1 of the Act. The appropriate government may fix minimum wages for scheduled
employment if more than one thousand employees are employed in the given industry in
the whole State, as provided under Section 1A of the Act. However, it is pertinent to note
that this is not a mandatory condition for the application of the Act. The appropriate
government may fix and revise minimum rates of wages for employment wherein less than
one thousand employees are employed.

Important provisions of Minimum Wages Act, 1948

Important definitions

Appropriate Government

Since labour law is a subject under the Concurrent List in the Seventh Schedule to the
Indian Constitution, both the Central Government and the State governments are
authorised to legislate on the subject. Section 2(b) of the Act defines an appropriate
government. In relation to industries such as railways, oilfields, major ports, or any
establishment under central legislation, the Central government is the appropriate
government. In every other industry, the State government is the appropriate government
for the purpose of the Act.

Cost of Living Index Number

Section 2(d) of the Act defines the cost of living index number as an index number as
ascertained by the appropriate government in the Official Gazette in relation to the
employees. Under the Act, the appropriate government determines the scheduled
employment, in respect of which it notifies the minimum wages to be paid by the employer
to the employees. The minimum wages are determined on the basis of the cost of living
index number. The cost of living index number signifies the cost of a constantly changing
standard of living.

Wages

Section 2(h) of the Act provides an inclusive definition of wages, including all remuneration
capable of being expressed in terms of money that the employer pays to the employee
during the course of employment. It also includes house rent allowance. However, it does
not include any accommodation, supply of light, water, medical attendance, or any other
amenity as the appropriate government may deem fit; any contribution of the employer
towards the Pension Fund or Provident Fund; travel allowance; defrayed special expense;
and any gratuity payable on discharge of the employee.

In Workman represented by Secretary v. Reptakos Bret & Company Ltd. & Anr. (1992), the
Hon’ble Supreme Court took into consideration the Tripartite Committee of the Indian
Labour Conference of 1957. The report of the Committee stated that the structure of the
minimum wage policy has to be nothing more than at a subsistence level.

In Municipal Corporation of Delhi v. Ganesh Razak (1995), the Supreme Court held that the
entitlement to minimum wages under the Act is an existing right of the workman and does
not require any further adjudication than that of the Labour Court.

Employee
Section 2(i) of the Act defines an employee as any person who is engaged to do any skilled
or unskilled, manual or clerical work, in respect of which minimum rates of wages have
been fixed. It is an important definition under the Act as it defines the scope of its
application. Not all employer-employee relations are governed by the Minimum Wages Act.
Moreover, not all kinds of employees would fall under the ambit of claiming the benefits of
minimum wages fixed by the appropriate government.

Fixing Minimum Rates of Wages

Section 3 of the Act provides for fixing the rates of the minimum wage by the appropriate
government. Sub-section (1) provides that the appropriate government shall fix the
minimum rate of wages payable to the employees in employment mentioned under Part I
or Part II of the Schedule to the Act (Scheduled Employment) and review the minimum
wages for a period of five years. Sub-section (1A) provides that the appropriate
government may refrain from fixing minimum wages for any Scheduled Employment where
the number of employees in the whole State is less than one thousand until such number
remains less than one thousand.

Sub-section (2) provides that the appropriate government may fix:

1. Minimum time rate;

2. Minimum piece rate;

3. A guaranteed time rate; and

4. An overtime rate.

Sub-section (3) provides the power to the appropriate government to fix different rates of
minimum wages for the following:

1. Different scheduled employments;

2. Different classes of work in the same scheduled employment;

3. Adults, adolescents, children and apprentices; and

4. Different localities

These minimum wages can be fixed either on an hourly basis, by the day, by the month, or
by any other time period as prescribed by the appropriate government.

Section 4 of the Act provides the minimum rates of wages. Minimum rates of wages shall
consist of either:

“(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 at concessional rates,
where so authorised; 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.”

Further, Section 5 of the Act provides that the appropriate government may fix or revise
minimum wages either by appointing committees and sub-committees or by publishing its
proposal for the people likely to be affected by such proposals in the Official Gazette.
In Standard Vacuum Refining Company v. Its Workmen (1961), the Apex Court held that
the following shall be the guiding principles for the determination of minimum wages by all
wage fixing authorities:

1. A standard working-class family should contain 3 units for every earning member, in
which the earnings of women, children, and adolescents must be disregarded;

2. Minimum food requirement must be calculated on the basis of net calorie intake;

3. Clothing must be calculated at the rate of 18 yards per person per annum;

4. With respect to housing, the rent corresponding to the minimum area provided for under
the Government’s Industrial Housing Scheme should be taken into consideration; and

5. Fuel, lighting, and other miscellaneous items of expenditure must constitute 20% of the
total minimum wage.

Later, in Reptakos Brett & Company’s case, the Court added another factor for fixing
minimum wages in addition to the above five. It was held that the education of the
children, medical requirements, minimum recreation, including festivals, etc., and provision
for old age, etc. should further constitute 25% of the total minimum wage.

With regards to the question of whether dearness allowance would constitute a part of the
minimum wages, the Bombay High Court in the case of Harilal Jechand Doshi Ghatkopar v.
Maharashtra General Kamgar Union (2000) held that the provisions of the Minimum Wages
Act, 1948 do not postulate different criteria for the calculation of minimum wages. If the
employer pays a total wage that is above the minimum wages fixed under the Act, he
cannot be held to be in contravention of the provisions of the Act, as the total wages would
comprise of basic wages and a dearness allowance.

A similar view has been taken by the Hon’ble Supreme Court in the case of Airfreight Ltd.
v. State of Karnataka & Ors. (1999). The Court held that in cases where the minimum
wages are linked with the cost of living index, the amount paid on the basis of dearness
allowance is not to be taken as an independent component but rather has to be considered
a part and parcel of the minimum wages.

Advisory board under Minimum Wages Act, 1948

Section 7 of the Act establishes the Advisory Board. The scope of the Advisory Board
appointed by the appropriate government is the coordination of the committees and sub-
committees established under Section 5 of the Act and advising the appropriate
government on fixing and revising the minimum wages for Scheduled Employment. A
Central Advisory Board (CAB) shall be established under Section 8 of the Act. The Central
Government shall establish CAB and appoint its members. The members shall consist of an
equal number of representatives of both the employers and the employees, along with
independent members nominated by the Central Government. The Chairman of CAB shall
be an independent member. The scope of work of the CAB is to ensure coordination with
the Advisory Board and other matters under the Act.

Mode of payment of wages under Minimum Wages

Act, 1948
All the wages shall be paid in cash only, as provided under Section 11 of the Act. However,
where it has been a practice to pay the wages in kind, either wholly or partly, authorisation
from the appropriate government is necessary. This includes concessions on essential
commodities as required.

Section 12 of the Act provides the manner in which the employees have to make the
payment of the minimum wages. The provision provides that the employer shall pay the
minimum rates of wages to every employee working under him within the prescribed time
period.

Fixing hours for a normal working day under

Minimum Wages Act, 1948
Section 13 of the Act provides that the appropriate government may fix the working hours
in the following manner:

1. Fix the working hours of a normal day, including one or more specified intervals.

2. Provide a day of rest in every period of seven days to all the employees or a class of
employees, and adequate remuneration must be provided to the employees during the
day of rest.

3. Provide payment to the employees on the day of rest, which shall not be less than the
overtime rate.

Section 14 of the Act provides that where an employee works over the specified number of
hours in a normal working day, he shall be entitled to receive such overtime wages at the
rate fixed under the Act for every hour after his normal working hours.

In case an employee works for less number of hours in a normal working day than
prescribed, he shall still receive the minimum wages fixed under the Act. However, this
provision shall apply only if the lower number of hours of work was not caused by the
unwillingness of the employee. The provision has been provided under Section 15 of the
Act.

Compliance under Minimum Wages Act, 1948

Section 18 of the Act mandates the maintenance of records and registers by every
employer under the Act. The records shall contain the particulars of the employees
employed by the employer, the work performed by them, the wages paid to them, the
receipts given by them, and any other information prescribed by the appropriate
government. The employer also has to keep an exhibit of the factory, workshop, or place
where the scheduled employment is carried out. Such registers and records may be
perused by the inspector appointed by the appropriate government under Section 19 of the
Act. The inspector may:

1. In order to examine the register, a record of wages, etc., the inspectors may enter the
premises or places within the local limits of their authority where the employees are
employed to work and for which minimum rates of pay have been determined under the
Act.

2. Examine any person whom the inspector may have reasons to believe is an employee.

3. Require any contractor to provide information relating to the employees.

4. Seize or make copies of the wage registers, etc., which he may have reasons to believe
were committed by the employer.

5. The appropriate government may provide any other powers or duties under the Act.

Every inspector under the Act shall be deemed to be a public servant as prescribed under
the Indian Penal Code, 1860.

Claims under Minimum Wages Act, 1948

The appropriate government may, by notification to 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
not below the rank of Labour Commissioner, or any other officer with experience as a judge
of a Civil Court or as stipendiary Judicial 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
wages or in respect of wages not paid within the prescribed time limit. A Block
Development Officer, Tahsildar, Additional Tahsildar, or Naib Tahsildar can also be appointed
as an Authority by the State Government by notification in the Official Gazette.

For the procedure under an application under Section 20 of the Act is made to the
Authority, both the employers and the employees shall be granted an equal opportunity of
being heard. Under this Section, every direction of the Authority shall be binding and final.
The Authority appointed under the Act shall have the powers of a Civil Court under the
Code of Civil Procedure, 1908 for the purposes of taking evidence, enforcing the
attendance of witnesses, production of documents, etc.

Procedure before the Authority

The following is the procedure to be followed before the Authority under the Act in cases
relating to non-payment or payment of less than minimum wages fixed under the Act, as
prescribed under Section 20:

Both the employers and the employees shall be granted an equal opportunity to present
their case.

The Authority shall direct the refund of such amount of wages as has not been paid by
the employer to the worker or has delayed in paying the wages, along with
compensation to the extent of damages suffered by the worker.

However, if the employer proves that the delay in payment of wages was due to a bona
fide error, the Authority shall not direct any payment of compensation. An example of a
bona fide error could be that the person authorised to make the payment of wages did
not pay such wages even after due diligence of the employer.

Penalty under Minimum Wages Act, 1948

For a malicious or vexatious application of a claim under the Act, a penalty of not more
than fifty rupees may be levied on the applicant to be paid to the employer, as has been
provided under Section 20(4) of the Act. Sub-section (5) of Section 20 of the Act provides
the mechanism for recovery of the penalty. If the Authority is a Magistrate, the penalty
may be recovered by the Authority as if it were a fine imposed by the Magistrate. If the
Authority is not a Magistrate, the Authority has to make an application to the Magistrate
and the penalty shall be recovered by the Magistrate as a fine imposed by such Magistrate.

For employers who have paid less than the minimum wage under the Act, or who are in
contravention of an order passed under Section 13 of the Act, the punishment may extend
to a term of not more than six months or a fine of not more than five hundred rupees may
be imposed, subject to the amount of compensation awarded to the Applicant under
Section 20 of the Act.

Exemption from liability in certain cases under the

Minimum Wages Act, 1948
Section 23 of the Act provides that where an employer has been accused of committing any
offence under the Act, and he charges the offence upon any other person, the employer
shall be entitled to be discharged of such an offence if the following conditions are fulfilled:

1. The employer shall make a complaint against such other person before the Authority
under the Act;

2. The employer shall bring before the Court such other person upon whom he places the
charge of the offence;

3. The employer shall satisfy the Court that due diligence for the execution of the
provisions of the Act was conducted on his behalf;

4. The employer shall satisfy the Court that such an offence was committed by such other
person without his knowledge, consent, or connivance.

In such cases, the other person shall be convicted for the offence and the employer shall
be discharged. If the Court deems it necessary, it may examine the employer under oath.

Power to make rules under Minimum Wages Act,

1948
Section 30 of the Act provides that the Appropriate Government may, by notification in the
Official Gazette, make rules for the following purposes:

1. Term of office of members of the committees, sub-committees, and the Advisory Board;

2. Method of summoning the witnesses, production of documents relevant for enquiries

before the committees, sub-committees, and Advisory Board;
 3. Mode of computation of cash value of wages in kind;

4. Time and conditions of payment of, and deductions permissible from wages;

5. Adequate publicity of minimum wages fixed under the Act;

6. Provide a day of rest in every period of seven days and for the payment of remuneration
in respect of such a day;

7. Prescribe the number of hours constituting a working day or week, as may be

applicable;

8. Prescribe the manner in which the wages of an employee employed for less number of
hours/days is to be computed;

9. The form of registers and records to be maintained, along with the particulars to be
entered in such registers and records;

10. Provide for the issue of wage books for wage slips and attendance cards;

11. Powers of the Inspectors under the Act;

12. Regulate the costs of proceedings under the Act;

13. Prescribe the court fee for the cases under the Act;

14. Provide for any other matter that is to be or may be prescribed.

Constitutionality of Minimum Wages Act, 1948

The constitutionality of the Act has been challenged on the grounds of violation of Article
14 and Article 19 of the Constitution in the following cases:

Bijay Cotton Mills Ltd. v. State of Ajmer (1954)

In this case, there was an industrial dispute between the employers and employees of the
mill regarding the enhancement of wages. The dispute was taken to the Industrial Tribunal,
which dismissed the petition of the employees, stating that the financial capacity of the mill
precludes the enhancement of wages for the workers. An appeal was preferred before the
Appellate Tribunal. Meanwhile, the Government of Ajmer implemented the provisions of the
Act and prescribed the minimum wages for industries in Ajmer. The Appellate Tribunal
remanded the case and the final award of the Industrial Tribunal was passed, wherein the
basis on which the minimum wages were fixed was rejected by the Tribunal. The minimum
wages fixed by the Commissioner were challenged by various industries on the ground that
the Act itself was violative of Article 19(1)(g) of the Constitution, as the employers were
unable to carry out their businesses due to the condition of paying the minimum wages.

The Hon’ble Supreme Court of India, rejecting the contention of the employers, held that
the Minimum Wages Act, 1948, is not violative of the right to freedom of trade, as it has
been implemented as a part of the Directive Principles of State Policy, specifically under
Article 43 of the Constitution. While it may be difficult for certain employers to start their
business while complying with the payment of minimum wages, the provisions of the Act
have been adopted keeping the larger interests of people in mind. Thus, the Act was held
to be constitutional.

Bhikusa Yamasa Kshatriya v. Sangamner Akola Taluka

Bidi Kamgar Union (1958)
In this case, the validity of the Minimum Wages Act, 1948, was again challenged before the
Hon’ble Bombay High Court. There were various claims under Section 20 of the Act on the
applicability of minimum rates of wages in certain districts of the State of Bombay. Inter
alia other contentions, the employers challenged the validity of the Act on the grounds that
it was violative of Article 14 and Article 19(1)(g) of the Constitution and that the State of
Bombay did not follow the requisite procedure for determining the minimum rates of
wages.

Rejecting the contentions of the employers, the Court held that the petitioners failed to
establish that the requisite procedure was not followed by the State of Bombay while
determining and revising the minimum wages and that the provisions of the Act were
violative of Article 14 or Article 19(1)(g) of the Constitution.

N.M. Wadia Charitable Hospital & Ors. v. State of

Maharashtra & Ors. (1986)
In this case, the State of Maharashtra appointed a committee to advise on the matter of
the revision of the minimum wages payable to hospital employees. However, the
government did not adopt the rates of wages recommended by the committee in its report
but rather adopted a higher rate of minimum wages. The notification was challenged by the
petitioners on the ground that there was no application of mind by the government.

It was held by the Court that fixing different rates of minimum wages for different localities
was permissible under the Act and did not violate any provisions of the Constitution.

Code on Wages, 2019

In order to codify the existing labour laws and bring them in conformity with contemporary
times, the Central Government in 2019-20 consolidated 29 statutes into four Codes,
namely, the Code on Wages, 2019; the Occupational Safety, Health and Working Conditions
Code, 2020; the Code on Social Security, 2020; and the Industrial Relations Code, 2020.
Although these codes are yet to be enforced, they hold importance in contemporary times.

The Code on Wages, 2019 consolidates four major statutes, namely, the Payment of Wages
Act, 1936; the Minimum Wages Act, 1948; the Payment of Bonus Act, 1965; and the Equal
Remuneration Act, 1976. While a microscopic view of the differences between the two
statutes (the Minimum Wages Act, 1948 and the Code on Wages, 2019) would be a
redundant task as the Code has not been enforced yet, a preliminary comparison has been
provided as follows:

1. The definition of cost of living index number has been omitted from the Code and no
alternative has been provided.

2. The definition of appropriate government has been changed to include certain important
industries such as air transport services, telecommunications, banking and insurance
companies established by the Central Government, and the Central Government shall be
the appropriate government for such industries.

3. The definition of employer now includes contractors and the legal representative of a
deceased employer.
4. The scope of wages has been defined with more clarity as to what would constitute a
wage and what would not constitute a wage. For instance, dearness allowance and
retaining allowance would now be included as wages under the Code on Wages, 2019.

5. The categorization of employment has been changed significantly. Under the Minimum
Wages Act, 1948, the categorization was based upon agricultural and non-agricultural
work. However, under the Code on Wages, the categorization has been done on the
basis of skill level, and employment has been divided into highly skilled, semi-skilled,
and unskilled. This aids in a more systematic division of labour for the purposes of fixing
minimum wages.

6. The concept of floor wage has been introduced by the Code. Floor wage shall be the
basis of the determination and fixing of minimum wages under the Code.

7. The time frame for revising minimum wages has been reduced from five years to three
years. Moreover, the appropriate government cannot exceed the limit of three years in
any case.

8. The Code also takes into consideration the geographical aspect, such as the fixation of
minimum wages for workers employed in hills, plains, deserts, etc. Consequently, the
minimum wages may be fixed according to time work, piece work, or periods of hours by
day or month. Another aspect that shall be taken into consideration is the arduous
nature of the job like underground work, hazardous work conditions, etc.

The concept of Floor Wage under the Code

The concept of floor wage has been introduced under the Code on Wages, 2019, which was
not provided under the Minimum Wages Act, 1948. Floor wages can be understood as the
basis on which the appropriate government has to decide the minimum wages. Floor wages
may be differentiated on the basis of location and type of work. For example, the floor
wages of a work in the hills to be performed by an unskilled labour may be different from a
similar work to be performed in a desert.

It is pertinent to note that the rationale behind introducing floor wages is to bring
uniformity to the minimum wages to be paid to employees. It would also help keep the
migration of workers in check.

Floor wages are to be fixed by the Central Government under Section 9 of the Code on
Wages. The Central Government may prescribe the floor wages of a particular area. The
appropriate government is obliged to follow floor wages while fixing minimum wages. The
appropriate government, under no circumstances, can fix the minimum wages below the
level of the floor wages fixed by the Central government. Moreover, the appropriate
government cannot reduce the minimum wages already fixed if it is higher than the floor
wages.

The Central Government can seek the advice of the Central Advisory Board under the Code
for the determination of floor wages. Additionally, the revision of floor wages cannot exceed
the time limit under the Code, i.e., five years.

The concept of floor wages was introduced by the Bhootlingam Committee in 1978 in the
name of “National Wage.” Thereafter, in 1991, the National Commission on Rural Labour
Floor suggested the “National level floor minimum wages.” However, the Code on Wages,
2019 is the first statute to implement this concept.

Recent judicial pronouncements

Mohd Imran Ahmad v. Government of NCT of Delhi & Anr.

(2023)
In this case, the petitioner filed a Public Interest Litigation (PIL) against the Government of
NCT of Delhi under Article 226 of the Constitution, praying for the issue of a writ of
mandamus. The Government of Delhi maintains a job portal where several vacancies are
posted. It was the case of the petitioner that the jobs posted under the portal were not in
compliance with the provisions of the Minimum Wages Act, 1948, as well as notifications
fixing minimum wages notified by the Government of Delhi. The portal allowed employers
to post advertisements regarding vacancies.

The Court directed the Government of the NCT of Delhi to not allow any advertisements
that are not in compliance with the provisions of the Minimum Wages Act, 1948.

Assistant Provident Fund Commissioner v. M/s G4s

Security Solutions (India) Ltd. & Anr. (2023)
In this case, the Assistant Provident Fund Commissioner preferred an appeal against the
order passed by the Hon’ble Punjab and Haryana High Court which stated that the basic
wages under the Employee Provident Fund Act, 1952, are not required to comply with the
minimum wages fixed under the Minimum Wages Act, 1948. The appellant contended that
for the purpose of determining the liability of the employer towards the employee’s
provident fund, the employers have deliberately reduced the basic wages below the
minimum wage so as to evade liability.

However, the Hon’ble Supreme Court rejected this contention and upheld the order of the
Hon’ble High Court, stating that there is no need to equate the basic wages under the EPF
Act with the minimum wages under Section 4 of the Minimum Wages Act, 1948.

Karnataka General Labour Union v. Union of India & Ors.

(2023)
In this case, the Labour Union was seeking relief against the retrenchment of contractual
employees as well as non-payment of wages. Several cases were filed under the Minimum
Wages Act, 1948, to obtain relief through conciliation. In the conciliation proceedings, the
conciliator directed the respondent to maintain the status quo. As the respondent refused
to do so, the conciliation proceedings failed. The case was presented before the Hon’ble
Karnataka High Court.
The Labour Union contended that the respondents were bound by the undertaking given to
the conciliator, and violation of the same must not be tolerated. On the other hand, the
respondents claimed that the Labour Union misrepresented themselves as permanent
employees of the respondents, and hence the case must be dismissed.

While remanding the case to conciliation proceedings, the Court highlighted the importance
of conciliation proceedings in industrial disputes. The Court also directed the conciliator to
settle the issue regarding the payment of minimum wages to the workers.
Hindustan Sanitaryware and Industries Ltd. & Ors. v. The
State of Haryana (2019)
In this case, the Haryana Government issued a notice fixing the minimum wages under
Section 5 of the Minimum Wages Act, 1948. In the said notification, a criterion for
considering unskilled labour as semi-skilled and semi-skilled labour as skilled on the basis
of experience level was prescribed.

The said notification was challenged before the Hon’ble Punjab & Haryana High Court. The
High Court upheld the validity of the notification. A Special Leave Petition was preferred by
Hindustan Sanitaryware and Industries Ltd. before the Hon’ble Supreme Court. The
Supreme Court, while overturning the decision of the High Court, held that such
classification of workers based on their experience level would be in contravention of the
contract between the workers and the employers, which is beyond the jurisdiction of the
government.

Conclusion
The Minimum Wages Act, 1948, is a pivotal piece of legislation under the labour laws of
India. It provides a guarantee of minimum remuneration for the work done by the
employee. Both the Central Government and the State Governments are appropriate
governments under the Act, as labour law is a subject under the Concurrent List.
Accordingly, both governments can fix and revise minimum wages according to the
requirements of the employees falling thereunder. Moreover, the State Governments can
also make amendments to the Act for application in their respective States.

Apart from providing provisions for minimum wages, the Act also contains provisions
relating to the fixation of work hours, providing a day off after six days of work, provision
for minimum wages for overtime, etc. This ensures that not only the economic interests but
also the social interests of the labourers are protected.

The Parliament has enacted the Code on Wages, 2019, which shall repeal and replace the
Minimum Wages Act, 1948, to consolidate all the laws related to wages into one code.
However, the Code has not been enforced yet. The Code will bring along certain important
changes, as has been discussed in the article. The implementation of the Code is expected
to overcome the lacunae and inconsistencies in all the labour legislations relating to wages.

Frequently Asked Questions (FAQs)

Whether the appropriate government can take more than

five years to revise minimum wages?
Under the Minimum Wages Act, 1948, the proviso to Section 3(1)(b) provides that nothing
in the Act shall prevent the appropriate government from reviewing the minimum wage
even after five years if the appropriate government cannot revise it within the stipulated
time. However, under the Code on Wages, 2019, the appropriate government cannot
breach the stipulated period of three years for revising the minimum rates of wages.

Does the Minimum Wages Act, 1948, allow the

appropriate government to enact rules only for fixing the
minimum rates of wages?
No, the Minimum Wages Act, 1948, in addition to fixing and revising the minimum rates of
wages, also allows the appropriate government to fix the number of working hours,
minimum wages for overtime, powers of the inspectors, authority for adjudicating dispute
claims, etc. under the Act. The same powers have been provided to the appropriate
government under the Code on Wages, 2019.

Can the employer deduct minimum wages if the worker

has not completed the minimum number of hours in a
normal working day?
The number of hours that would constitute a normal working day has to be fixed by the
appropriate government under Section 13 of the Act. Even if the worker has not completed
the prescribed number of hours in a day, the employer cannot deduct wages for that day.
The only exception where the employer is allowed to deduct the wages is the unwillingness
of the employee to work, which has been provided under the proviso to Section 13.

To what kind of employment does the Minimum Wages

Act apply?
The Schedule to the Act provides the employments where the Minimum Wages Act shall be
applicable. The appropriate government is required to fix and revise the minimum wages
for the scheduled employment if there are more than one thousand employees employed
under the same.

References
Introduction to Labour and Industrial Laws, Avtar Singh (4th ed., 2017)

Handbook on Labour Wage Code, Saurabh Munjal, Vaibhav Munjal (1st ed., 2021)

Labour and Industrial Laws, S.N. Mishra (29th ed., 2019)

Labour and Industrial Laws, K.M. Pillai (16th ed., 2015)

Textbook on Labour and Industrial Laws, Dr. H.K. Saharay (7th ed., 2017)

TAGS Labour Laws minimum wages Minimum Wages Act Penalty under Minimum Wages Act
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