Minimum Wage Act: An Overview

State and federal governments both have the authority to enact laws on this topic, although some issues are solely within the purview of the federal government. These laws were created to create job possibilities as well as to protect and help workers, including those in the poor, disadvantaged, and underprivileged sectors of society, and to create a safe working environment for greater production and productivity.

The government's priorities are to support charitable causes and offer social security to workers in both organized and unorganized industries. These goals can be accomplished by passing labour laws, which set down the requirements for employment, compensation, and wage payments. The functioning of their subordinate bodies is ensured by the existence of separate labour ministries in both the Central and State governments, which are governed by respective Central and State labour laws.

Historical Background

The idea of a minimum wage was first applied to worker compensation in professions where pay levels were much lower than those of workers in occupations in related fields. Wage decisions were made by free negotiation between employees and employers until the state got involved in the issue. However, it was discovered during the investigation into these issues that women and children are exploited in small-scale companies.

The first Indian law about labourers' working rights was the Minimum Wages Act of 1948. For setting and defining minimum wages in various businesses, the Act offers detailed recommendations. The competent governments at the central and state levels determine pay for a period of time in India under its purview for a variety of scheduled jobs based on skilled and unskilled labour, agricultural and non-agricultural work, and minimum wages in various states. The Minimum Wages Act's objective was to give the working class additional rights as a result.

Objective

Workers will profit from the passage of the Minimum Wage Act. By requiring a minimum wage for some jobs, it was created to protect and promote the welfare of workers in a cutthroat market. It gives the Central and State governments the authority to set the minimum wage in some occupations to stop the exploitation of workers or underprivileged groups of workers. The purposes are −

• It is to assign a fixed minimum wage for employment on a set schedule.

• It gives the government the authority to take action to fix wages and adjust them every five years.

• Preventing labour exploitation.

• To make sure that boards and advisory committees are appointed with an equal number of representatives from employers and employees.

• This law applies to the majority of the organized sector to apply it.

Features

Major features are −

• The minimum hourly wage rate.

• Basic wage and living allowance rates.

• Basic rate of pay, with or without the expense of a living allowance.

• The basic hourly wage is the basic rate of pay, with or without the expense of a living allowance.

• Additionally, this grants the appropriate government the power to establish the daily work hours, a weekly holiday, and the payment of overtime for any scheduled employment for which the Act provides for the fixation of a minimum salary.

• It also provides for the appointment of inspectors and competent authorities to hear and resolve disputes relating to the payment of wages at a rate lower than the minimum wage or compensation for rest days or work completed on such overtime days. Additionally, it outlines how to handle complaints of Act violations and strengthens the penalty for crimes committed in violation of this Act.

Fixing the Minimum Rate of Wages

The Appropriate Government must be empowered to determine the minimum rate of wages in a way that is stipulated by the Act, according to Section 3 of the Minimum Wages Act of 1948. It will set the wages that must be paid to workers who are employed in jobs covered by Parts I and II of the schedule. At such intervals, as may be judged appropriate, the competent government shall have the authority to evaluate the minimum rates of wages and determine and amend the minimum rate as may be necessary. The gap must be no more than five years. By subsection (1-a), the appropriate government may refrain from setting minimum pay rates for any scheduled employment in which less than 1,000 employees are involved.

Minimum hourly wage

According to Section 4, any minimum rates of pay set or changed by the competent government about employment that is scheduled in Section 3 may include −

• The basic wage rate and a special allowance must be changed at intervals that the appropriate government, which fluctuates with the cost of living index, may specify.

• A basic rate of pay that is dependent on the cost of living index number and may or may not include a cost-of-living allowance.

• The base rate of salaries, along with a cost-of-living allowance and the cash value of a discounted supply of materials, are included in all-inclusive prices.

Method for Setting and Updating the Minimum Wage

According to Section 5, the appropriate government must choose one of the following options when setting minimum wage rates for any scheduled employment under this Act or amending minimum wage rates already set

• Create as many committees and subcommittees as necessary to do research and provide advice on such fixes and amendments.

• Publicize its proposal using a notice in the official gazette for the information of those who are likely to be impacted by it and include a date—which cannot be shorter than two months from the date of notification—when the proposals will be taken into consideration.

Advisory Board

Section 7 states that the appropriate government must appoint an advisory board with the following objectives −

• Coordinating the efforts of Section 5 designated committees and subcommittees.

• Giving the appropriate government advice on the issue of setting and updating minimum wage rates.

Central Advisory Board

According to Section 8, the Central Government must appoint a Central Advisory Board for the following reasons

• Guiding the Central and State governments on problems related to the establishment and revision of minimum wage rates and other issues covered by the Act.

• For coordinating the Advisory Boards' work

According to Section 8(2), the Central Advisory Board shall be composed of −

• Representatives of companies and employees in the planned employment will be appointed by the central government and will be equal in number.

• Independent individuals who make up no more than one-third of the group's members.

Payment of the Minimum Wage

According to Section 12, the employer must pay wages to every employee engaged in the scheduled employment under him at a rate not less than the minimum wage rate fixed by such notification for that class of employees in that employment, without any deductions other than those that may be authorized within the timeframe and subject to the conditions that may be prescribed. The Payment of Wages Act, 1936's provisions should not be impacted by Section 12's provisions.

Establishing the Usual Workday Schedule

By any minimum wage rates for scheduled employment that have been set under this Act, as per Section 13(1), the appropriate government may −

• Determine the number of hours that will make up a typical workday, including any specified breaks.

• Make provisions for a day of rest every seven days that all employees, or any designated class of employees, shall be permitted to take, as well as for the payment of compensation for such a day of rest.

• Insist that the pay for work performed on a day off must not be less than the pay for overtime.

According to Section 13(2), the following types of employees are covered by the requirements of sub-section (1) only to the extent and subject to the conditions set out in the applicable Act

• Employees working on urgent projects or in any emergency that couldn't have been anticipated or avoided.

• Employees who are required to operate in a preparatory or supplemental capacity outside the parameters established for the general work in the aforementioned employment.

• Employees were employed in a job that was dependent on erratic natural force action to be done.

• Employees engaged in any job that, for technical reasons, must be finished before the assignment.

Register and Keeping a Record

• Every employer is required to keep records and register with information about the people they employ.

• According to the rules established under the Act, the relevant government may arrange for the issuance of wage books or wage slips to employees engaged in any scheduled employment.

• Every employer is required to display the signs in a factory, workshop, or other location where workers are given work.

Penalties

In respect to the neglect of such acts by the employer with the power stated as the prior government approval or notice under sub-section, Section 22 addresses fines or penalties that cannot be imposed on any employed person (2). The entire amount of the penalties imposed on any employee during any pay period must not be more than 3% of the earnings due to them in connection with that pay period. Anyone under the age of fifteen who is employed cannot be subjected to a fine.

MNREGA

An employment guarantee under the Mahatma Gandhi National Rural Employment Guarantee Act is for 100 days at a salary of INR 120 per day (determined in 2009). Any family, regardless of whether they live in poverty or above it, can qualify for these benefits. When states like Uttar Pradesh, Rajasthan, and Maharashtra updated and increased their minimum pay rates in January 2009, the Central Government withdrew the MNREGA salary rates from the state's lowest minimum wage rates. As the Minimum Wages Act of 1948 was being examined for dissolution, the decision to end the MGNREGA programme caused unrest in several regions and communities of India.

Five states had MNREGA wage rates that were below the federal minimum wage as well as below the state minimum wages in their respective jurisdictions. Until an expert committee led by Pranab Mukherjee presented a satisfactory index, the prime minister consented to accept the recommendations and reduced MNREGA earnings to minimum wage rates. To prevent an increase in the budget due to the modification of state-by-state minimum rates, he nevertheless maintained a distinct separation between MGNREGA wage rates and minimum wage rates.

Conclusion

India has 487 million workers, which is the second-highest number after China. India has a wide variety of labour regulations that forbid discrimination and underage labour. The Act strives to protect the right to organize, create unions, and enforce collective bargaining while also guaranteeing fair and humane working conditions. The bulk of the impoverished and other socially and economically disadvantaged people are protected from exploitation.

Therefore, it would be necessary for such a law to do more than just exist on paper and offer protection from abuse to win over the trust of the public. Socio-economic laws must be followed by governments; otherwise, Article 21 of the Indian Constitution will be broken. India is regarded as having some of the strictest and most controlled labour laws in the entire world.

Frequently Asked Questions

Q1. What is the Minimum Wage Act 1948?

Ans. It is a law establishing a minimum salary that must be paid in specific jobs. It grants authority to both the federal government and state governments to set wages. Legally, the act is not binding. Forced labour is when wages are paid below the minimum wage rate.

Q2. What is the scope of the Minimum Wage Act?

Ans. It includes

• To ensure that the employee has access to the fundamental necessities of life, good health, and comfort.

• To make sure that the labourer has a reputable reputation in society and leads a decent life.

• Make sure that the workers receive appropriate pay.