Report on the Working of the Minimum Wages Act,1948

for the year 2003


In a labour surplus economy like India wages couldn’t be left to be determined entirely by forces of demand and supply as it would lead to the fixation of wages at a very low level resulting in exploitation of less privileged class. Keeping this in view, the Government of India enacted the Minimum Wages Act, 1948. The purpose of the Act is to provide that no employer shall pay to workers in certain categories of employments wages at a rate less than the minimum wage prescribed by notification under the Act. The Act provides for fixation / periodic revision of minimum wages in employments where the labour is vulnerable to exploitation. Under the Act, the appropriate Government, both Central and State can fix / revise the minimum wages in such scheduled employments falling in their respective jurisdiction.

The term ‘Minimum Wage Fixation’ implies the fixation of the rate or rates of minimum wages by a process or by invoking the authority of the State. Minimum wage consists of a basic wage and an allowance linked to the cost of living index and is to be paid in cash, though payment of wages fully in kind or partly in kind may be allowed in certain cases. The statutory minimum wages has the force of law and it becomes obligatory on the part of the employers not to pay below the prescribed minimum wage to its employees. The obligation of the employer to pay the said wage is absolute. The process helps the employees in getting fair and reasonable wages more particularly in the unorganised sector and eliminates exploitation of labour to a large extent. This ensures rapid growth and equitable distribution of the national income thereby ensuring sound development of the national economy.

It has been the constant endeavour of the Government to ensure minimum rates of wages to the workers in the sweated industries and which has been sought to be achieved through the fixation of minimum wages, which is to be the only solution to this problem.

II Main provisions under the Act

1.    Fixing of minimum rates of wages
    1. The appropriate Government may fix the minimum rates of wages payable to employees employed in an employment specified in Part - I or Part - II of the Schedule and in an employment subsequently added to the Schedule. The Government may review the minimum rates of wages and revise the minimum rates at intervals not exceeding five years.
    2. The appropriate Government may fix separate minimum rates of wages for time rate and for piece rate. Different wage rates may be fixed for different scheduled employments, different classes of work in the same scheduled employment, for adults, adolescents, children and apprentices and for different localities and for any one or more of the wage periods, viz., by the hour or by the day or by the month or by such larger wage period as may be prescribed.
2.     Minimum rate of wages

Any minimum rate of wages fixed or revised may consist of

    1. a basic rate of wages and a special allowance ; or
    1. a basic rate of wages with or without cost of living allowance and the cash value of concessions in respect of supplies of essential commodities at concessional rates; or
    2. an all inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of concessions, if any.

3     Procedure for fixing and revising minimum wages

The appropriate Government is required to appoint an Advisory Board for advising it, generally in the matter of fixing and revising minimum rates of wages.

The Central Government appoints a Central Advisory Board for the purpose of advising the Central and State Governments in the matters of the fixation and revision of minimum rates of wages as well as for co-ordinating the work of Advisory Boards.

The Central Advisory Board consists of persons to be nominated by the Central Government representing employers and employees in the scheduled employments, in equal number and independent persons not exceeding one third of its total number of members. One of such independent persons is to be appointed the Chairman of the Board by the Central Government.

4      Wages in kind

Minimum wages payable under this Act are to be paid in cash. However, the payment of minimum wages can be made wholly or partly in kind, by notifying in the official Gazette, where it is customary to pay wages either wholly or partly in kind.

5    Payment of minimum rate of wages

The employer is required to pay to every employee, engaged in a scheduled employment under him, wages at a rate not less than the minimum rate of wages notified for that class of employees without any deduction except as may be authorised.

6.    Fixing hours for normal working day

In regard to any scheduled employment, minimum rates of wages in respect of which have been fixed under this Act, the appropriate Government may

    1. fix the number of hours of work which shall constitute a normal working day, inclusive of one or more specified intervals;
    2. provide for a day of rest in every period of seven days which shall be allowed to all employees or to any specified class of employees and for the payment of remuneration in respect of such days of rest;
    3. provide for payment for work on a day of rest at a rate not less than the overtime rate.
7.   Overtime

If any employee whose minimum rate of wages is fixed under the Act works on any day in excess of the number of hours constituting normal working day, the employer is required to pay him for excess hours at the overtime rate fixed under this Act or under any law of the appropriate Government for the time being in force, whichever is higher.

8.    Wages for two or more classes of work

If an employee does two or more classes of work, to each of which a different rate of wages is applicable, the employer is required to pay to such employee in respect of the time respectively occupied in each such class of work, wages at not less than the minimum rate in force in respect of each such class.

9.      Maintenance of registers and records        

Every employer is required to maintain registers and records giving particulars of employees, the work performed by them, the wages paid to them, the receipts given by them and any other required particulars.

10     Inspections

The appropriate Government may, by notification in the official Gazette, appoint inspectors for the purpose of this Act and define the local limits for their functions.

11.    Claims

The appropriate Government may, by notification in the official Gazette, appoint Labour Commissioner or Commissioner for Workmen’s Compensation or any officer not below the rank of Labour Commissioner or any other officer with experience as a judge of a civil court or as a Stipendiary Magistrate, to hear and decide for any specified area, all claims arising out of the payment of less than the minimum rates of wages as well as payment for days of rest or for work done.

12.    Penalties for Offences

Any employer who contravenes any provision of this Act shall be punishable with imprisonment for a term, which may extend to six months or with fine, which may extend to five hundred rupees or with both.

III Statistics collected under the Minimum Wages Act, 1948

All establishments covered under the Act are required to furnish to the concerned authority (Central or State) an annual return in prescribed form as per the rules framed under the Minimum Wages Act, 1948. The Centre / State Governments in turn send a consolidated return to the Labour Bureau which compiles an all India report based on the data contained in these returns. Besides, Quarterly returns sent by these agencies to the Bureau are also made use of in compiling information at all India level.

i    Addition of New Employments

The State Governments and the Union Territories review the Scheduled Employments under their jurisdiction from time to time and add new employments in respect of which it is of the opinion that minimum rates of wages should be fixed statutorily in addition to the existing ones.

During the year 2003, five State Governments / U.T’s., namely Karnataka, Rajasthan, Tamil Nadu, Tripura and Andaman and Nicobar Islands have added employments to the Schedule appended to the Act. (Table 1)

ii     Fixation of Minimum Wages during 2003

During the year 2003, the minimum wages were fixed for the first time by six States / U.T’s./Central Govt. namely Karnataka, Rajasthan, Tamil Nadu, Tripura, A & N Islands and CLC (Central).

iii     Scheduled Employments and Prevailing Minimum Wage Rates

The Central Government and the different State Governments have been maintaining a set of scheduled employments for fixing minimum rates of wages under their respective jurisdiction. This set undergoes a change as and when there is an addition of an employment in the schedule appended to the Minimum Wages Act, 1948 by these appropriate Governments.

The details of prevailing minimum wages relating to unskilled workers fixed / revised in different scheduled employments in different States / Union Territories as on 31.12.2003 are presented in Table 3. The components of wage rates like Basic Wage and Dearness Allowance have also been presented separately wherever fixed / available. It was noticed that in some of the scheduled employments more than one rate of minimum wages have been prescribed for different Areas / Regions / Zones in a particular State / Union Territory.

iv    Scheduled Employments and Range of Minimum Wage Rates

The total number of employments in respect of which the minimum wage rates have been fixed / revised and the range of minimum wage rates in different States / Union Territories as on 31.12.2003 have been presented in Table 4.

It emerges from the table that the number of scheduled employments was highest in the State of Tamil Nadu (90) followed by Orissa (83) and Karnataka (72).

The dispersion of wage rates as measured by the range between the lowest minimum wage rate and highest minimum wage rate at all States / U.Ts. level is very large, which is reflected by the fact that Rs. 22.20 was the lowest minimum wages (in the State of Karnataka ) and Rs. 319.00 was the highest minimum wages (in the state of Kerala).

v    Minimum Wage Rates in Scheduled Employments in Central Sphere / States /

Union Territories

Table 5 depicts a comparative picture of the minimum wage rates per day prevailing in the scheduled employments in Central Sphere / States / Union Territories. The main purpose of classifying this information is (a) to study the inter-State variations in the minimum wage rates in a particular scheduled employment and (b) to present the number and names of the States / U.Ts. fixing minimum wages for a particular employment, at one place.

It could be seen that as on 31.12.2003 there were in all 290 different types of scheduled employments all over India for which minimum wage rates have been fixed / revised by the Central Government / States / Union Territories.

vi    Submission of Returns

Details regarding the number of establishments covered under the Minimum Wages Act, 1948 and those submitting returns as well as average daily employment have been presented in Table 6.

vii  Enforcement of the Act

Mere fixation / revision of wages would not be sufficient unless it is ensured that the workers are paid accordingly. Thus provision of adequate staff is a must for successful implementation of the Minimum Wages Act. However, in most of the States and Union Territories, there was no machinery appointed exclusively for the enforcement of the Minimum Wages Act and the inspection staff appointed under other labour Acts was entrusted with the enforcement of the Minimum Wages Act also.

The State-wise details of Inspections made, irregularities detected, prosecutions launched and claims preferred have been given in Table 7.

viii  Limitations of Data :

The following States have not submitted their returns or have submitted defective returns and are therefore excluded.

    1. Assam
    2. Chhatisgarh
    3. Bihar
    4. Delhi
    5. Daman & Diu
    6. Gujarat
    7. Jammu and Kashmir
    8. Jharkhand
    9. Maharashtra
    10. Madhya Pradesh
    11. Manipur
    12. Mizoram
    13. Nagaland
    14. Pondicherry
    15. Sikkim
    16. West Bengal