The Minimum Wages Act, 1948

Wages

Wages are understood as ‘price of labour.’
It is a sum of money paid under the contract of employment to a worker for the services rendered.

Salient features of the Act:
1. The Act extends to the whole of India.
2. The Act provides for the fixation of-
    a. Minimum time rate of wage
    b. Minimum piece rate
    c. guaranteed time rate
    d. an overtime rate
3. That the minimum wages consists of-
    a. Basic rate of wages and cost of living allowance or
  b. Basic rate with or without cost of living allowance or cash value of commodities supplied at concessional rates.

Concept of minimum wages

The term minimum wage has been understood in two different senses:
The first being an industrial minimum wage and,
second one a statutory.

An industrial minimum wage is sustenance wage which the employer of any industrial labour must pay in order to be allowed to continue an industry.
On the other hand, a statutory minimum wage is a minimum wage which must provide not merely for the bare sustenance of life but for the preservation of the efficiency of the worker. 

The passing of the Minimum Wage Act, 1948 is a landmark in the history of labour legislation in the country which, recognizes that the wages cannot be left to be determined entirely by market forces. The whole philosophy underlying the enactment of Minimum Wage Act is to prevent exploitation of labour through the payment of unduly low wages. The statutory minimum is the minimum wage which is prescribed by the relevant provision of the Minimum Wage Act 1948. The main object of the Act is to prevent ‘sweated’ labour as well as exploitation of unorganized labour. If proceed on the basis that it is the duty of the state that at least Minimum Wages are paid to the employees irrespective of the capacity of the industry or the unit to pay the same.

Fair Wages

Fair wages is a wage between the living wage & the minimum wage.
Express Newspaper Ltd. V/S Union of India
Das Gupta J. defined ‘fair wage’ “which may roughly be said to approximate to the need based minimum, in the sence of a wage which is adequate to cover the normal needs of the average employee regarded is a human being in a civilized society.

In Express Newspaper (P) Ltd. V/S Union of India Bhagwati Justice described fair wage as a mean between the living wage and minimum wage. Marshall would consider the rate of wage prevailing in an occupation as ‘fair’ if it is about on level with the average payment for tasks in other trades which are of equal difficulties and disagreeableness which require equally rare natural abilities and an equally expensive training.

The concept of fair wage therefore, involves a rate sufficiently high to enable the worker to provide a standard family with food, shelter, clothing, medical care and education of children appropriate to his status in life but not at a rate exceeding the wage coming capacity of the class of establishment concerned.

Living wages

The term living wage ha s not been defined under the provision of the Minimum Wages Act. However, “an instance of statutory definition of living wage is provided in South Australian Act 1912 which states the “living wage’’means a sum

sufficient for the normal and reasonable needs of the average employee living in a locality where the worker under consideration is done or is to be done”. In the famous Harvester case, The Commonwealth Arbitration Court ha s visualized a living wage as a sum which is adequate to satisfy the normal needs of the average employee regarded as human being in a civilized community

In Hindustan Time Ltd. V/S Their workman K.C. Das Gupta J. wistfully observed: “While the industrial adjudication will be happy to fix a wage structure which would give the workmen generally a living wage, economic consideration make that only a dream for future that is why the industrial tribunals in this country generally confine their horizon to the target of fixing a fair wage.

Need Based Minimum Wages

The Indian Labour Conference in its 15th session held in July 1957 suggested that minimum wage should be need based and should ensure the minimum human needs of the industrial worker, irrespective of any other consideration.

The standard working class family should be taken to consist of 3 consumption units for the earner; the earnings of women, children and adolescents should be disregarded. The minimum food requirements should be calculated on the basis of the net intake of 2700 calories, as recommended by Dr. Akroyd, for an average Indian adult of moderate activity

B. CONSTITUTIONAL VALIDITY OF MINIMUM WAGES ACT 1948

The right to minimum means to live a life with human dignity is an unwritten implication of the guarantee of human dignity which includes basic living

conditions implying some kind of employment. Unemployment is not only a social problem it is an individual problem also. An unemployment person loses self- respect and faces a discouraging and a disappointing outlook.1 His plight affects himself, his family and the society too. Equal employment opportunity is a prerequisite for equal accessibility to achieved status. Realization of human personality is only possible when there is a scope of substantial access to employment.

Right to employment has been crystallized as basic human rights in the Universal Declaration of Human Rights (UDHR), 1948. Socialist systems recognize the right to work as an obligation; the State may extract the work that is socially and economically useful. For example, the Chinese Constitution of 1982 declares that the right to work is “a glorious duty of every able-bodied citizen.” However, it is inexperienced to suppose that the right to work can be guaranteed only in socialistic systems. The word “socialist’’was added in the preamble of the Constitution by the Forty-second Amendment in 1976 incorporating the philosophy of “socialism’’ aims at elimination of inequality in income and status and standard of life.3 It does not however envisage doctrinaire socialism in the sense of insistence on state ownership as a matter of policy. The Supreme Court has in a number of decisions referred to the concept of socialism and has used this concept along with the Directive Principles of the State Policy to assess and evaluate economic legislation. The Court has derived the concept of social justice and of an economically egalitarian society from the concept of socialism.

According to the Supreme Court, “the principle aim of socialism is to eliminate inequality of income and status and standards of life and to provide a decent standard of life to the working people.” Another idea propounded by the Court is that socialism means distributive justice so as to bring about the distribution of material resources of the community so as sub serve the common good.4 After the adoption of new economic policy which is oriented towards free market and privatization doubts were raised if that policy was consistent with socialism as envisaged in the preamble. The Supreme Court of India however, used the word socialist in the preamble for evolving a concept of social democracy which comes very closure to the concept of social welfare state expressed as „social state’.6 While defining socialism the Supreme Court in Samtha v. State of Andhra Pradesh stated that establishment of the egalitarian social order through rule of law is the basic structure of the Constitution.

The right to work is expressed in the Indian Constitution as a directive principle of State policy, which is not enforceable in the courts. Article 41 provides that „the State shall within the limits of its economic capacity and development, make effective provision for securing the right to work, to education and to public, assistance in cases of unemployment , old age, sickness and disablement, and in other cases of undeserved want.

Article 42 enjoins the State to make “provisions for securing just and humane conditions of work and for maternity relief”. Article 43 provides that the State shall endeavor to secure a living wage and a decent standard of life for all workers. In

State of Maharashtra v. Manubhai Pragaji Vashi the Court has considerably widened the scope of the right to free legal aid. The right to free legal aid and speedy trial are guaranteed fundamental rights under Art. 21. Art 39A provides “equal justice” and “free legal aid”. It means justice according to law. In a democratic policy, governed by rule of law, it should be the main concern of the State to have a proper legal system. The crucial words are to “provide free legal aid” by suitable legislation or by schemes” or “in any other way” so that opportunities for securing justice are not denied to any citizen by reason of economic or other disabilities. These words in Article 39A are of very wide import. In order to enable the State to afford free legal aid and guarantee speedy trial vast number of persons trained in law are needed.”

Article 41 requires that “the State shall within the limits of its economic capacity and development, make effective provision, for securing the right to work, to education and to public assistance in cases of unemployment, old age, sickness and disablement, and in other cases of undeserved want”. The principle enshrined in Article 41 read with Article 45 provides that it is not only necessary but also desirable for the performance of the State‟s ultimate duty and responsibility, to provide education to all citizens. It has been held that Article 29 and 30 relating to Culture and Educational Rights should be read in the backdrop of Article 41 and 45.

C.  Procedure For Fixation And Revision Of Minimum Wages Section 3(1)(a)]

Section 3 lays down that the Government shall fix the minimum rates of wages which is payable to employees in the course of employment specified in Part I and Part ii of the Schedule, and in an employment added to either part by notification under Section 27.

In fixing minimum rates of wages in respect of any scheduled employment for the first time or in revising minimum rates of wages, the appropriate Government can follow either of the two methods described below.

First Method [Section 5(1)(a)] This method is known as the ‘Committee Method’.

The appropriate Government may appoint as many committees and subcommittees as it considers necessary to hold inquiries and advise it in respect of such fixation or revision as the case may be. After considering the advice of the committee or committees, the appropriate Government shall, by notification in the Official Gazette fix or revise the minimum rates of wages. The wage rates shall come into force from such date as may be specified in the notification. If no date is specified, wage rates shall come into force on the expiry of three month of such notification. Second Method [Section 5(1)(b)] The method is known as the ‘Notification Method’. When fixing minimum wages under Section 5(1)(b), the appropriate Government shall by notification, in the Official Gazette publish its proposals for the information of persons likely to be affected thereby and specify a date not less than 2 months from the date of notification, on which the proposals will be taken into consideration.

The representations received will be considered by the appropriate Government. It

will also consult the Advisory Board constituted under Section 7 and thereafter fix or   revise   the   minimum   rates   of   wages   by    notification    in the    Official Gazette. The new wage rates shall come into force from such date as may be specified in the notification.

However, if no date is specified, the notification shall come into force on expiry of three months from the date of its issue. Minimum wage rates can be revised with retrospective effect.

C.  Fixation of minimum rates of wages by time rate or by piece rate

Section 3 lays down that the Government shall fix the minimum rates of wages which is payable to employees in the course of employment specified in Part I and Part ii of the Schedule, and in employment added to either part by notification under Section 27. In case of the employments specified in Part II of the Schedule, the minimum rates of wages may not be fixed for the entire State. Parts of the State may be left out altogether. In the case of employment specified in Part I, the minimum rates of wages must be fixed for the entire State, no parts of the State being omitted. The rates to be fixed need not be uniform. Different rates can be fixed for different zones or localities: [Basti Ram v. the State of A.P]

The constitutional validity of Section 3 was challenged in Bijoy Cotton Mills v. State of Ajmer, The Supreme Court held that the restrictions imposed upon the freedom of contract by the fixation of the minimum rate of wages, though they interfere to some extent with freedom of trade or business guaranteed under Article 19(1)(g) of the Constitution, are not unreasonable and being imposed and in the

interest of general public and with a view to carrying out one of the Directive Principles of the State Policy as embodied in Article 43 of the Constitution, are protected by the terms of Clause (6) of Article 9. According to Section 3(2), the Government may fix minimum rate of wages for:

time work, known as a Minimum Time Rate; piece work, known as a Minimum Piece Rate;

a “Guaranteed Time Rate” for those employed in piece work for the purpose of securing to such employees a minimum rate of wages on a time work basis; (This is intended to meet a situation where operation of minimum piece rates fixed by the appropriate Government may result in a worker earning less than the minimum wage), and

a “Over Time Rate” i.e. minimum rate whether a time rate or a piece rate to apply in substitution for the minimum rate which would otherwise be applicable in respect of overtime work done by the employee.

Section 3(3) provides that different minimum rates of wages may be fixed for – different scheduled employments; different classes of work in the same scheduled employments; adults, adolescents, children and apprentices; different localities.

Further, minimum rates of wages may be fixed by any one or more of the following wage periods, namely: by the hour, by the day, by the month, or by such other large wage periods as may be prescribed; and where such rates are fixed by the day or by the month, the manner of calculating wages for a month or for a day as the case may be, may be indicated. However, where wage period has been fixed

in accordance with the Payment of Wages Act, 1986 vide Section 4 thereof; minimum wages shall be fixed in accordance therewith [Section 3(3)].

D.  Procedure for Hearing and Deciding clams

Section 20 (1) of Minimum Wages Act, 1948 says that the appropriate Government, by way of notification in Official Gazette, appoint Commissioner for Workmen’s Compensation or any officer of the Central Government exercising functions as a Labor Commissioner for any region, or any officer of the State Government not below the rank of Labor Commissioner or any officer with experience of a Judge of Civil Court of as a Stipendiary Magistrate to be the authority to hear and decide for any specified area all claims arising out of payment of remuneration for days of rent less than the minimum rate of wages or in respect of the payment of or for work done on such days, or of wages at the overtime rate, etc.

Section 20 (2) says a claim petition can be submitted by the employee

by any legal practitioner on behalf of the employee

by a registered trade union authorized in writing to act on behalf of the employee by any inspector

by any person acting with the permission of the Authority.