Minimum Wages

Act 1948 and

Rules
Girish Balasubramanian
Introduction

• What is wage?
• Remuneration given by employer to an employee in return of work

• Theories of wage
• Subsistence theory
• Marginal productivity
• Residual claimant theory

• Key points
• Commoditizing labour
Types of wage

Living wage – Article 43 Directive Principles:

sufficient for normal and reasonable needs of life,
amenities which a citizen living in a modern civilized
society was entitled

Fair wage – somewhere

between Lw and Mw: fair wage
criteria: prevailing rates of wages
in same industry or similar
occupation, level of national
income, place of industry in the
economy

Minimum wage: sustenance of

life, preserving efficiency,
wage necessary for mere
subsistence
Wage Related Legislations in India

• Payment of Wages Act 1936

• Pre-independence days

• Minimum Wages Act 1948

• Post independence

• Philosophy

• History/background  ILO conventions

• Principles for wage fixation

1. Minimum wage to be paid in any event

2. Wages must be sufficient enough

Objectives of MWA

• Prevent exploitation of workers

• Protection of unorganized labour

• Absence of machinery for regulation of wages

• Attain social justice for workmen employed

• Beneficial legislation liberal construction

Norms for MW

• Norms: recommended at ILC-1957, Nainital

• 3 consumption units
• Minimum food requirement of 2700 calories per average Indian Adult
• 72 yards of clothing requirement
• Rent – minimum area provided under Government’s Industrial Housing
Scheme
• Fuel, electricity, other miscellaneous expense 20% of total minimum wage

• Case1: Hydro (engineers)Pvt. Ltd. M/s v The Workmen AIR 1969

SC 182
• Physical need
• Protect efficiency

• Reptakos Brett Vs its Workmen, 1991 (1992 AIR 504)

• Child education, medical requirement, festivities rainy day: 25% of total
minimum wage
Minimum Wages Act

MWA

Wage related Sections related Compliance and

Other sections
sections to procedures rules

Understand the applicability

2(g) + 27

Schedule I- mines and other

establishments, addition of
sweeping and cleaning,
watch and ward per 2008 s. 27 AG can
amend the
2 (g) scheduled
employments 
time limit of 3
Schedule II - agriculture months
related establishments
Constitutional validity challenged

Edward Mills Co. Ltd Beawar Vs State of Ajmer AIR

1955 SC
• Section 27 excessive • Safe guard unorganized
delegation labour or places where
relatively weak bargaining
• No proper guidelines • Diversity in conditions across
the country
• Completely under discretion • Inclusion of a particular
of AG schedule depends on a lot of
facts
• Authority under AG would be
the best person to judge
whether a particular
employment needs to be
included or not
Applicability – S. 2(b) + 27, S. 2(g)

Appropriate
government (2(b))

Central government State government

• (Schedule of employment) • Others (schedule

• Authority of GOI of employment)
• Corporation set up by
Central Act
• Railways, mines, oil field,
major port
Master – Servant Relationship

S. 2(e) Employer S 2(i) Employee

• Employer is (pre-condition • Employee (scheduled
scheduled employment)
• Factory manager if it is a employment is pre-
factory (Section 7(1)(f) – FA) condition)
• In line of ID Act where MW is
• Person/authority appointed fixed
for supervision and control of
employees
• Out worker
• CEO of employment under
local authority
• Employee declared to be
• Any person responsible to employee by AG
the owner for supervision • But not members of armed
and control of the forces of the Union of
employees or for the
payment India
• Exception of S. 26(3)
Teacher is an employee?

• Case: Haryana unrecognized Schools Association Vs State of

Haryana AIR 1996 SC
• Court relied on Sundarambal case

• Dominant nature of duties

• Noble work, cannot be classified under skilled/unskilled, manual/clerical work

• Teacher is not an employee

• Case: Hindu Inter College, Kandhala, Muzaffarnagar Vs

Prescribed authority and others
• MW to be given to teacher of a private insti.

• Teacher still not employee under MWA

Can ex-employee raise a claim

Pali Devi Vs Chairman Managing Committee AIR

1996 SC 1589

• Read 2(i) • Liberal construction

• employee = who is employed • Beneficial legislation

now
• Form VI specifies duration
of employment
Other definitions

• 2 (a) ‘adolescent’  14<=age<18

• 2(aa) ‘adult’ age>=18

• 2(bb) ‘child’  age<14

• 2 (c) – ‘competent authority’ cost of living index number

• 2(d) – ‘cost of living index number’ index number ascertained

and declared by competent authority
Minimum Wages Act

MWA

Understand the Sections related Compliance and

applicability Other sections
to procedures rules

Wage related sections
Wage Related Sections

Cash (2(h))

Wage (2h) +S. 11

Procedures/notifications
Kind (S. 11)
customary
Wage Related Sections

Exceptions for wage calculations:-

• Value of house acco, supply of light, water medical attendance or
any other amenity or any service excluded by general or special
order of government
• Any contribution paid by the employer to any pf, pension fund, or
any social insurance scheme
• Travelling allowance or value of any travelling concessions
Cash (2(h))
• Any sum paid to employee to defray special expenses
Wage (2h) +S. 11 • Any gratuity payable on discharge

Procedures/notifications
Kind (S. 11)
customary
Section 4

• Cost of living index number (S. 2(d))

• Wages and cost of living index number

• Actual Wage >MW  need not pay VDA separately (Air Freight Case)

• India divided into 5 Regions

• Northern 9 States/UT
• Eastern 6 States/UT
• Western 6 States/UT
• Southern 6 States/UT
• North Eastern 8 states/UT
Attendance bonus and cash value of
commodities

Manganese Ore (India) Ltd. Vs Chandi Lal Saha AIR 1991 SC 520
• Wages can be in kind or cash (2(h) read with Section 11)

• No notification on the concessional grains hence grain cannot be a

part of wages

• PSUs bound by directive Principles living wage, just and humane

conditions of work, secure amenities etc

• But cannot be a part of wages under 2(h)

• Attendance bonus is an incentive. Wage to be given. Incentive to be

earned.
• Airfreight Ltd. V State of Karnataka, AIR 1999 SC 2459
• The employees claimed that VDA to be paid under S. 3 read with S. 5 if MWA

• One of the question wage paid is more than the Prescribed

minimum wage, VDA to be paid separately
• The court referred to
• Definition of wage under MWA
• S. 4
• MW does not provide for separation into various components
• Wage calculation to be done as per S.2(h)
• Thus in cases where the MW is linked with VDA, it would not mean that is a separate
component which is required to be paid separately
Section 3

Who fixes MW AG

(S. 3.1.(a))
proviso Limit of employees
1000 (not binding)
When appropriate (S.3.1A)
intervals or 5 years
(S.3.1.(b))
proviso
Wage under dispute
(S.3.2A)
Mw may be fixed in terms
of (S.3.2):-
• Minimum time rate
• Minimum piece rate
• Guaranteed time rate Different rates of
• OT as applicable MW(S.3.3) proviso
Case laws on S.3

Can MW fixed by Tribunal be If < than 1000 employees,

greater than MW fixed by Govt. can AG fix MW
• Jaydip paper • Ram Kumar Misra V
industries M/s V State of Bihar, AIR
Workmen, AIR 1972 1984 SC 537
SC 605 • “refrain”
• Tribunal not bound by discretionary
govt. notification. • Does not preclude AG
• Tribunal free to fix MW from fixing MW
Hours of work

Section 13 Rule 24
• AG may • Work durations:-
• Fix no. of hours of work with • Adult 9 hours
interval
• Provision of rest day (6+1) • Child 4.5 hours
• Provision of payment for rest day
• Total work duration for a day not
more than 12 hours
• Emergency
• Working hours of adolescent 
• Intermittent work period of depends on certificate of
competent medical practitioner
inaction in which employee is approved by CG
on duty
• No display of physical activity
• Sustained attention
Overtime

Section 14
• Pay OT fixed under MWA, if
• Employee under MW
• MW fixed under the act
• Works more than the normal
working day
• Not to affect Section 59 of FA
• Rule 24
Rule 25
• Calculation of over time
wages - >9 hrs in a day,
subject to >48 hrs in a week
• Wage = basic + allowances
(cash equivalent of
allowances like concessional
sale of food grains and other
articles)
• 25(2)  Form IV

• Provisions of FA
Case on overtime

• Workmen of Bombay port trust Vs Trustee of Port of Bombay

AIR 1966 SC
• Explain the calculation of OT
• In this particular case, the problem is whether fixing of 2 hour rest and 2 hours rest
involves a breach of relevant sections of MWA
• Court observed
• MWA (or the rules) does not explicitly divide the work hours and the rest hours
• S. 13 authorizes the AG to fix the hours of work and hours of rest
• S. 13(c)(2) and 13(3) indicates what is rest
• Rule provides for hours or work and hours of rest both together to be = 12
• 12 hour shift  fix 48 hours of work for 6 days
• It is employers’ discretion to spread out the hours of rest provided they are
mentioned in advance.
• No need to pay OT for hours of rest.

• In present case no violation of relevant sections, OT payable

would be for 2 additional hours
• Municipal Council, Hatta Vs Bhagat Singh AIR 1998 SC 1201
• Explain the applicability of OT
• Peons working with Municipal Council, Hatta claimed OT under MWA
• Claim was applicability of OT under MWA employment as peons was under Local
Authority
• Hence OT of Rs 50/- to be paid
• The question to be decided was applicability of OT to persons
receiving more than MW
• OT payable to employees getting wage under MWA
• In this case employees getting much more than prescribed MW
• So the peons are not waged employees as per MW Act

• Thus OT payable to
• Employee under MWA
• Wage to be calculated as per definitions given in S.2(h)
Minimum Wages Act

MWA
Understand the Wage related Compliance and
Other sections
applicability  sections  rules

Sections related to
procedures
Procedures

To set
S. 5,7,8,9
MWA
Procedures
Claims S. 20
Section 5

MW wage setting

First time Review

Set up committee, sub- Publish proposals in

committee, hold adequate Gazette, time limit of 2
enquiries (S.5.1.(a)) months  consult CAB
(S.5.1.(b)) and proviso S.5.2
Comments and Comments and
suggestions not suggestions(S.5.2)
binding in nature
Notification of
change, effective
after three months
Section 3,4,5 constitutional validity challenged

Bijay Cotton Mills Ltd Vs State of Ajmer AIR 1955

SC
• Article 19 (1)(g) was being • Living wage is the dream
infringed upon Article 43 DP
• Unreasonable restrictions
MW may not be paid due to • Protection from exploitation
economic reasons by employers
• No malefide intention to
exploit labour • Restraints for preventing
exploitation cannot be
• Provisions for fixing the MW termed unreasonable
arbitrary and unreasonable
• Too much discretion with AG • Economic reasons cannot be
suggestions of committee not cited to strike down law or
binding its provisions
• Adequate safe guards
Chandra Bhavan Boarding
and Lodging, Bangalore V St
of Mysore, AIR 1970 SC
2042
• S.5 violates Article 14
• Power given to AG and not
petty official
• Responsible and capable
SAIL vs NWFWU 2001
SC-I LLJ 1087
• Biju Patnaik revised MW from
Rs 11 to Rs 25
• Challenged in the court
• Court quashed the hike, citing
lack of proper procedures,
appropriate notifications and
consultations
S. 9 Composition of Committee

Committee (x)

Independent person –
Employer Employee
y < = 1/3(x)

Any one person to be

chairman of the
committee  Ag
decides
Who is independent?

State of AP Vs Narayana Velur Beedi

Manufacturing Factory, AIR 1973 SC 1307
View Counter view
• Jaswant Rai Beri vs State of • Narottamdas Harjivandas Vs PV
Punjab AIR 1958 Punj 425 – not Gowarikar AIR 1961 MP 182 –
• Employee relied on dictionary meaning of
• Employer
the word independent
• DMS Rao Vs State of Kerala AIR • State would work in interest of
1963 Ker 115 – 2(i) IDA labour
• Unconnected to the dispute
• Person under gov. is under
• Bengal Motion Pictures Employees external control
union Calcutta Vs Kohinoor • Govt official may be biased
Picture Pvt ltd. AIR 1964 Cal 519 towards the policy or would have
– policy level considerations formulated the policy
• Aim/object of act necessary that
persons who know the conditions
are consulted. LC/DLC appropriate
persons
SC took the majority view of HC – Govt officials are
responsible and capable of taking an impartial view
Claim S.20

Prerequisite 
S 13 or S 14
• Commissioner for WC
• Officer of CG  LC of any region
Who can be • Officer of SG > = rank of LC
authority • Any officer with experience as a
(s.20.1) judge of a civil court
• Stipendiary Magisterate

• Self
Time limit
• Any legal practioner
within which
Who can claim • Any official of a registered TU
claim needs to
(S.20.2) • Any Inspector
be raised
• Any person acting with Permission
(proviso)
of Authority
Section 20 continued..

Pay < MW  pay

the difference +
appropriate
compensation
Not exceeding 10
times (20.3.(i)) Malefide
Assess
intentions,
True the False penalty of Rs 50
claim
Other cases  pay max (S.20.4)
(S.20.3)
the due with
compensation not
exceeding RS. 10
Recovery of dues
(20.3.(ii))
and powers
(S.20.5/6/7)
Mn ore Case of 20(1) and 33 C(2) of IDA

• Dispute was raised under 33 Court verdict

C(2) validity was questioned • MWA has provisions for fixing
• Procedure to recover wage wages, time, OT etc.
already mentioned under
Section 20. • 20(1) gives remedy  application

• Labour court does not have • This is only incidental to the

jurisdiction under 33-C(2) nature of work of ‘authority’
under ID Act

• The question then would be

• MW though beneficial payment at agreed rate is due or
legislation, has provision of not
remedies also

• In current case MW fixed by AG,

employee demanded and
employer denied
Minimum Wages Act

MWA
Understand the Wage related Sections related to
Compliance and
applicability  sections  procedures  rules

Other sections
Other Sections

• S. 7 & S. 8  constitution of Advisory Boards (relate to 5 (1)(b)

• Actual work duration < normal working day S.15

• No wages if unwillingness to work
• Any circumstances as may be prescribed

• Payment for Work of two or more classes  S.16

• Register and Records  S.18

• S. 21  Single application in respect of a number of employees

• On behalf of any number of employees
• Authority may deal with separate applications as one

• Relinquishing of MW null and void S. 25

Inspector and associated powers under MW

• S. 19  Inspector and associated powers

• AG appoints through notification in official gazette defines jurisdiction – 19 (1)

• Functions:-19(2)
• Enter premise of work to inspect registers/necessary documents (along with assistant)
• Examine any person  reasonable cause to believe about employment
• Any person (includes both employer, his rep, employee) to give relevant info
• Seize relevant documents as evidence
• Exercise other prescribed powers

• Inspector is deemed to be a public servant – 19(3)

• Provisions of IPC 175/176 – 19(4)

Penalties and punishments

• S.22 punishment to employer – 6 months jail/500 Rs fine or both

(proviso  consider any compensation awarded)
• If wages paid < MW
• Violation of S. 13 or associated rule

• S. 22A  no punishment provided under MW then fine of Rs 500

• S. 22C offences committed by companies

• Once established any person responsible/in charge/responsible is liable
• Provided ignorance of the person is established
• Punishment to directors/managers/secretaries/other such officers of company
• S. 22D  undisbursed amounts due to employees – deposited with
prescribed authority.

• S.22F  non obstante clause for Payment of Wages Act

• S.23  exemptions for employer in certain cases

• Convince the court about use of due diligence to enforce the Act
• The ‘other’ person committed the offence without the
knowledge/consent/connivance of the employer
• Proviso  follow principles of natural justice
 Minimum Wages Act

MWA
Understand the Wage related Sections related Other sections
applicability  sections  to procedures 

Compliance and rules
Compliance according to rules

Rule Form number Purpose

21 (4) Form I Register of fines
21(2) Form II Register of deduction for damage or loss
21(4-A) Form III Annual return before 1st of February of following
year
22 Form IX – A Publicity of prescribed MW (English, local lang)
25(2) Form IV Register for overtime of workers
26(1) Form X Register of wages
26(5) Form V Muster Roll
26(2) Form XI Wage slip
27 Forms VI, VI-A, VII Claims
28 Form VIII Authorization to Act on behalf
MW to worker working for Famine Relief

Sanjit Roy Vs State of Rajasthan AIR 1983 SC

• Rajasthan Famine Relief • Court relied on famous Asiad
Works Employees exempt Case and directed to pay MW
from Labour Laws • Article 23 was to eradicate
• Hence non applicability of MW forced labour
to the construction work as a • Wide interpretation of ‘other
part of the Famine Relief forms of forced labour’
program • Individual would not ‘supply’
labour for less than the due
• Famine is an exceptional value, willingly
situation hence exempt from
• Hence violation of Article 23
application of MW
• Nature of work is not
• Counter argument of Article worthless/or it is not merely
14 and Article 23 handing out favours
• State exacts labour for useful
productive work, pay MW
Resources and future issues

Resources Future issues

• Labour and • Government’s plan
Industrial Laws 2e, to have a uniform
Prof. P.K. Padhi, floor rate of
minimum wages
• Taxman’s Labour across
Laws 2014 industries/states
• Repealing of various
legislations
• LLJ, LLR, AIR