The genesis of the Minimum Wages Act is traceable to the Minimum Wage Fixing Machinery Convention, 1928 (No. 28) of the International Labour Organisation (ILO). This Convention has become one of the most widely accepted instruments of the ILO. The Minimum Wages Bill was introduced in the Central Legislature in 1946 and was passed in 1948. The Act contains 31 Sections.
OBJECT OF THE ACT
The Act aims to extend the concept of social justice to the workmen employed in certain scheduled employments by statutorily providing for them minimum rates of wages. It is a piece of social legislation which provides protection to workers in employments in which they are vulnerable to exploitation by reason of the lack of organisation and bargaining power and where sweated labour is most prevalent.
The Act is not applicable to all employments or industries. A schedule appended to the Act gives a list of employments covered by the Act. It covers an establishment regardless of the number of workers actually employed. Some of the employments are listed in Part I of the schedule. Part II of the schedule contains employment in agriculture and other allied activities.
The appropriate government may add to the schedule any other employment in respect of which it is of the opinion that minimum rates of wages should be fixed.
The contract labour, falling within the purview of the Contract Labour (Regulation and Abolition) Act, 1970, has to be paid minimum wages under the Minimum Wages Act.
The Act contains a number of definitions. Some of the important definitions are the following:
Appropriate Government: In this Act, the term “appropriate government” means:
Central Government– for any scheduled employment carried on under the authority of Central Government or railway administrations and for a mine, oilfield or major port or any corporation established by a central act.
State Government– for any other scheduled employment carried on within its territory.
Wages: “Wages” means all remuneration capable of being expressed in terms of money, which would, if the terms of the contract of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment, and includes house rent allowance but does not include:
i) The value of any house accommodation, supply of light, water, medical attendance; or any other amenity or any service excluded by general or special order of the appropriate government;
ii) Any contribution paid by the employer to any pension fund or provident fund or under any scheme of social insurance;
iii) Any travelling allowance or the value of any travelling concession;
iv) Any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or
v) Any gratuity payable on discharge.
Employer: The term ‘employer’ means any person who employs one or more employees in any scheduled employment in respect of which minimum rates of wages have been fixed under the Act. The term ‘employer’ also includes:
- Manager of a factory as defined under the Factories Act, 1948.
- Head of department or any person appointed for the supervision and control of employees or Chief Executive Officer of a local authority in case the scheduled employment is carried on under Central Government or a local authority.
- In any other case the person responsible for supervision, control or payment of wages.
Employee: The term ‘employee’ means any person who is employed for hire or reward to do any work, skilled or unskilled, manual or clerical, in a scheduled employment.
FIXING OF MINIMUM RATES OF WAGES
When, in respect of an employment, the appropriate government has fixed and notified minimum rates of wages, the employer is bound to pay every employee engaged in that employment at rates not less than the rates notified.
The appropriate government may review wages at such intervals as they think fit but not exceeding five years, and revise them, if necessary.
The appropriate government may refrain from fixing minimum rates of wages in respect of any scheduled employment in which less than 1000 employees are employed in the whole State.
The minimum rates of wages may be fixed:
i) For different employments
ii) For different classes in the same employment
iii) For adolescents, children and apprentices
iv) For different localities.
The rates of wages may be:
i) A time rate
ii) A piece rate
iii) A guaranteed time rate
iv) An overtime rate.
The rates may be fixed by the hour, by the day or by the month or by any other longer period as may be prescribed. The rate fixed may consist of the basic rate of wages and cost of living allowance and the cash value of concessions in respect of supply of essential commodities at concessional rates.
In fixing or revising the minimum wages, the appropriate government shall either:
a) Appoint as many committees and sub-committees as it considers necessary to hold enquiries and advise it in respect of such fixation or revision, as the case may be; or
b) 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 two months from the date of the notification, on which the proposals will be taken into consideration.
After considering the advice of the said committee or representations received, the appropriate government will, by notification in the gazette, fix or revise the minimum rates of wages. Unless otherwise provided, the decision shall come into force on the expiry of three months from the date of notification. When fixation is made on the basis of representations, the appropriate government shall consult the Advisory Board also. The government is not bound to accept the committee’s recommendations.
The Act also empowers state governments to constitute Advisory Boards to co-ordinate the work of different committees and sub-committees and advise the government on the fixation of minimum wages. Similarly, the Central Government is empowered to constitute a Central Advisory Board to advise Central and State Government, and to co-ordinate the work of the Advisory Boards. These bodies consist of an equal number of employers’ and employees’ representatives, and of independent persons not exceeding one-third of their total strength. The non-official members hold office for a period of two years, while others hold office during the pleasure of the government.
The minimum wages payable under the Act are to be paid in cash. But it also provides for authorisation of payment in kind where the appropriate government considers it necessary. It may direct the supply of essential commodities at concessional rates by notifying it in the Official Gazette. Authorised deductions are allowed under the Act.
The appropriate government may fix the number of hours of work, rest day, payment of overtime in respect of scheduled employments.
Registers, Notices, Abstract and Returns
Every employer is required to maintain:
1) Register of wages
2) Register of overtime payment
4) Register of Fines
5) Register of deduction.
Every employer is required to:
a) Put up a notice containing the minimum rate of wages fixed
b) Exhibit an extract of the Act and Rules
c) Send annual return to the Labour Commissioner as prescribed.
The appropriate government appoints inspectors for the purposes of this Act, and defines the local limits within which they exercise their functions. The Inspectors are public servants. Any person, who is called upon to provide any relevant information, is legally bound to provide information to the inspectors under the provisions of Indian Penal Code.
AUTHORITIES UNDER THE ACT
The appropriate government appoints, by notification in the Official Gazette for any specified area, an authority to hear and decide claims arising out of payment of wages at less than the minimum rates of wages and other incidental matters. The authority so appointed has powers of a civil court.
An employee or any legal practitioner or any other official of a registered trade union, authorised in writing, or any inspector can apply to the authority for settlement of disputes with respect to non-payment or payment of less than the minimum wages. The Act prohibits civil courts from entertaining any suits for the recovery of minimum wages payable under the Act.
The Central Government is the appropriate authority for the enforcement of the Act in relation to any scheduled employment carried on by or under the authority of the central government, railway administration, a mine, oilfield, a major port, or any corporation established by a central act. The Chief Labour Commissioner (Central) is in charge of implementation of the Act in the central sphere. In the state sphere, officers of the industrial relations machinery are entrusted with the enforcement of the Act, in addition to the enforcement of other labour laws. In some states, a small number of whole-time inspectors are appointed exclusively for the enforcement of the Act. In some states, in addition to the officers of the labour department, officials of the revenue department, panchayat departments, and agricultural departments have been authorised to work as inspectors for the purposes of the Act.
OFFENCES AND PENALTIES
The Act lays down penalties for violation of the provisions of the Act.
Any contract or agreement whereby an employee relinquishes or reduces his right under this Act shall be null and void. However, the Act does not prevent an individual from entering into an agreement which is more advantageous or beneficial to him.
OBLIGATIONS OF EMPLOYERS
1) Once the minimum wages are notified and become effective the employer must pay to every employee engaged in a scheduled employment under him wages at a rate not less than the minimum rate of wages fixed by such notification for that class of employees.
2) The employer may make deductions out of wages as may be authorised.
3) The employer shall pay overtime at double the ordinary rate of wages for the period of work done beyond 9 hours on any day or 48 hours in any week or for rest day.
4) The employer must pay minimum wages in cash unless the appropriate government authorises their payment wholly or partly in kind. The government may direct the supply of essential commodities at concessional rates by notifying it in the official gazette.
5) Every employer shall issue a wage slip to every employed person in a prescribed form containing prescribed particulars.
6) Every employer shall get the signature or the thumb impression of every person employed on the wage group and the wage slips.
7) The employer or his agent should authenticate the entries in the wage books and the wage slips.
8) The employer shall allow a rest day with wages to the employees every week which ordinarily should be Sunday or any other day. No employee shall be required to work on a day fixed as rest day, unless he is paid wages for that day at the overtime rate and is also allowed a substituted rest day with wages.
9) The employer shall not make deductions from wages except those authorised by or under the rules.