Revision of Minimum Wages

The primary objective of the Minimum Wages Act was to safeguard the rights of workers in the unorganized sector. The Act permits the fixation and revision of the minimum wages for those who work in scheduled employment. According to the Act, it is the responsibility of both the Central government and the state governments to fix and update the minimum wages and enforce their payment for scheduled employment falling under their purview.

The Act requires the appropriate governments to review and revise the minimum wages in scheduled employment that fall under their respective jurisdictions at least every five years. However, there are significant differences in minimum wages both domestically and abroad because of things like the price of necessities, the ability to pay employees, productivity, local conditions, the components of the commodity basket, exchange rate fluctuations, etc.

Object of the Provision of Minimum Wages

The Act legislated to promote the welfare of workers by establishing minimum wage rates time-to-time. However, such minimum wage rates are not uniform for everyone, but rather varies with varying industries. The Act aims to prevent worker exploitation by ensuring that they receive the minimum wage required to support themselves and maintain their productivity.

Fixation and Revision of Wages

As per Section 3 of the Act, the Appropriate Government may establish the minimum wage rates for employees of Scheduled employment for the entire State, a specific portion of the State, or any specified class or classes of such employment. Minimum wage rates can be set for both time-rated and piece-rate workers, as well as for overtime work. The government may decide to review the minimum wage at any time up to five years apart. The minimum rate that was in effect immediately prior to the end of the specified five-year period will be maintained until the rates are revised.

The minimum wages may be established by the hour, the day, the week, the month, or any other longer wage period that may be required. The method of calculating wages for a month or a day is circumstantial and most likely indicated where such rates are fixed by the month or the day.

Different minimum wage rates may be established or changed for various scheduled employments, different classes of work within a single scheduled employment, adults, adolescents, children, and apprentices, as well as different localities. It is also possible to set various minimum wage rates in accordance with one or more of the following wage periods: by the hour, by the day, by the week, by the month, or in accordance with a longer wage period as may be necessary.

The Appropriate Government may refrain from establishing minimum wage rates for any scheduled employment in which there are less than 1,000 employees in the entire state. However, if the appropriate Government determines after an inquiry that the number of employees in any individual employment has risen to one thousand or more; in this changed circumstance, it shall fix minimum rates of wages payable to every employee working in this organization. It need to be done as soon as possible after such determination.

Minimum rates of wages

According to Section 4 of the Act, minimum wage rates fixed and revised under this Act may include −

  • A basic wage rate and a special allowance at a rate to be adjusted to variations in the cost of living index applicable to such workers at such intervals and in such manner as the Government may direct; or

  • A basic wage, regardless of whether it includes a cost-of-living allowance, and the cash value of the concession for the supply of necessities at a discount when authorized;

  • An all-inclusive rate that includes the basic rate, the cost-of-living allowance, and, if applicable, the cash value of the concession.

The competent authority shall compute the cost-of-living allowance and cash value of the concession at such intervals and in accordance with any instructions that may be provided by the appropriate Government.

Procedure for fixing or revising minimum wages

The minimum wage rates for any scheduled employment may be fixed or revised by the appropriate government using one of two methods −

  • It shall appoint as many committees and subcommittees as it deems necessary to conduct inquiries and provide recommendations regarding such fixation or revision, as the case may be.

  • Alternatively, it must publish its proposal in the Official Gazette for the benefit of those who may be affected by it, and it must specify a date at least two months after the notification by which the proposal will be considered.

  • The appropriate Government shall notify the official Gazette by a notification that it has fixed or revised the minimum wage rates for each scheduled employment after considering the recommendations of the committee or committees and all representations received by it prior to the date specified in the notification. Unless otherwise specified, the fixation or revision will take effect three months after the notification date.

  • When the relevant government proposes changing the minimum wage rates through notification, it must also consult the Advisory Board.


Wages are an important aspect of employment and a major component of collective bargaining. In India, the minimum wage system is an important component for defending workers' rights and ensuring a decent standard of living. The system has evolved over time, and the government has implemented several initiatives to improve its effectiveness and reach.

The Minimum Wage Act of 1948 allows for the establishment of minimum wages for various categories of workers in various industries. India periodically revises its minimum wage rate to reflect changes in inflation and the state of the economy. The issues that continue to arise with the application of minimum wage rates must be addressed in order to ensure that workers are fairly compensated and have the opportunity to live dignified lives.

Frequently Asked Questions

Q1. What is the Minimum Wage?

Ans. Wages that are periodically fixed or revised by the government for scheduled employment consist of the Basic Wage Plus Variable Dearness Allowance.

Q2. Why is the minimum wage required?

Ans. The minimum wage is essential to safeguarding workers' rights, ensuring their well-being, and meeting their basic needs.

Q3. Can employers pay wages lower than the minimum wage?

Ans. No, since it is a legal requirement, employers are not allowed to pay wages below the minimum wage.

Q4. What factors are considered while revising minimum wages?

Ans. Inflation, cost of living, level of skill required, productivity, and prevailing wage rates in similar occupations are all taken into account when revising minimum wages.

Updated on: 10-May-2023


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