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PRM/U5 Topic 5 The Minimum Wages Act 1948

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. In fact the sole purpose of this act is to prevent exploitation of sweated and unorganized labour, working in competitive market.

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 unorganized 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.

Essential Ingredient

  • Wage should be by way of remuneration
  • It should be capable of being expressed in terms of
  • It should be payable to a person employed in respect of his employment or of work done in such employment.
  • It should be payable to a
  • It should be payable if the terms of employment, express or implied, are fulfilled.
  • It includes house rent allowance.
  • It does not include house accommodation, supply of light, water, medical attendance, traveling allowance, contribution of employer towards provident fund, gratuity , any scheme of social insurance etc.

Classification of Wages

The Supreme Court has classified “Wages” into three categories. They are:

  • The Living Wage ( highest standard of wage)
  • The Fair Wage (between living and minimum wage)
  • The Minimum Wage.( it is the lowest standard of wage)

Procedure for fixing and revising minimum wages (section 5)

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-coordinating 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.

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