Labour law reforms were among the more significant promises made by the
National Democratic Party (NDA) government led by Prime Minister Narendra Modi.
The argument given was that Indian industry is shackled by a number of
socialist-era laws that prevent Indian companies from becoming competitive:
workers cannot be fired, organization structures are not flexible, transfer
policies are not nimble enough, and a high human resource cost prevents
companies from growing bigger. More than 45 central laws and at least 100
state-level legislations create confusion, complexity, and chaos. The burden of
compliance is huge is the conventional wisdom.- Pradeep Gaur
The Universal Declaration of Human Rights has proclaimed that everyone who works
has the right to just and favorable remuneration ensuring for himself and his
family an existence worthy of human dignity. This should be supplemented by
other means of social protection which include not only the traditional five
components (i.e., old age, invalidity and death benefit, sickness and maternity
benefit, work injury benefit, unemployment benefit and family allowances) but
also provision for housing, safe drinking water, sanitation, educational and
cultural facilities and above all a minimum wage which can guarantee a worker
not only bare subsistence but also the above-mentioned facilities.
Convention No. 26 provides for fixing of minimum wages in manufacturing and
commercial trades or parts of trades where no arrangements exist for the
effective regulation of wages by collective agreements or otherwise and where
wages are exceptionally low. Convention 131 of the ILO adopted in 1970 requires
that every member of the ILO which ratifies the convention should undertake to
establish a system of minimum wages that covers all groups of wage earners whose
terms of employment are such that coverage would be appropriate.
India's commitment to payment of minimum wages resulted in the enactment of
the Minimum Wages Act in 1948. The Act aims to extend the concept of social
justice to workers employed in certain scheduled employments by statutorily
providing for the minimum rates of wages. It is a piece of social legislation
that provides workers protection against exploitation, especially where there is
no organized bargaining power and where sweated labor is prevalent. The
employments for which the Central and State Governments are required to fix
minimum wages are specified in Part I and Part II of the Schedule to the Act.
Though our Government has not ratified the ILO Convention 131 due to its
inability to ensure payment of minimum wages to all categories or groups of
workers, a large number of employments have been added to the Schedule by the
Central and State Governments over the years.
The concept of minimum wages first evolved with reference to the remuneration of
workers in those industries where the level of wages was substantially low as
compared to the wages for similar types of labour in other industries. As far
back as 1928, the International Labour Conference of International Labour
Organization, at Geneva, adopted a draft convention on minimum wages requiring
the member countries to create and maintain a machinery whereby minimum rates of
wages can be fixed for workers employed in industries in which no arrangements
exist for the effective regulation of wages and where wages are exceptionally
Also, at the Preparatory Asian Regional Labour Conference of International
Labour Organization held at New Delhi in 1947 and then at the 3rd session of
the Asian Regional Labour Conference, it was approved that every effort should
be made to improve wage standards in industries and occupations in Asian
Countries, where they are still low. Thus, the need of a legislation for
fixation of minimum wages in India received an impetus after World War II, on
account of the necessity of protecting the interest of demobilized personnel
seeking employment in industries.
The justification for statutory fixation of minimum wage is obvious. Such
provisions which exist in more advanced countries are even necessary in India,
where workers organizations are yet poorly developed and the workers' bargaining
power is consequently poor.
To provide for machinery for fixing and revision of minimum wages a draft Bill
was prepared and discussed at the 7th session of the Indian Labour Conference in
November, 1945. Thereupon the Minimum Wages Bill was introduced in the Central
Legislative Assembly. The Minimum Wages Bill having been passed by the
Legislature received the assent on 15th March, 1948. It came on the Statute Book
as the Minimum Wages Act, 1948.
What does Minimum wage mean:
The ILO defines Minimum wage as:
The minimum amount of remuneration that an employer is required to pay wage
earners for the work performed during a given period, which cannot be reduced by
collective agreement or an individual contract
The wage structure can be divided into three categories:
- The basic ‘minimum wage' which provides bare subsistence and is at
poverty line level,
- A little above is the ‘fair wage'&
- Finally the ‘living wage' which comes at a comfort level.
It is not possible to demarcate these levels of wage structure with any
The principle is that there is a minimum wage which, in any event must be paid,
irrespective of the extent of profits, the financial condition of the
establishment or the availability of workmen on lower wages. This minimum wage
is independent of the kind of industry and applies to all alike big or small. It
sets the lowest limit below which wages cannot be allowed to sink in all
humanity. Kamani Metals & Alloys v. Their Workmen
Minimum Wages Act 1948
The Act provides for fixation by the appropriate Governments of minimum wages
for employment covered by Schedule to the Act. The Central Government is the
appropriate Government in respect of 45 scheduled employments in the Central
Sphere. The minimum wages fixed for the Central sphere are applicable to the
scheduled employment in the establishments under the authority of Central
Government, railway administrations, mines, oil-fields, major ports or any
corporation established by a Central Act. Employments other than the scheduled
employment for Central Sphere come under the purview of the State Government and
accordingly State Government wages are applicable in such employments.
Some Salient Features of the Act
The Act is legally not binding but statutory. Wage Boards are set up to review
the industry's capacity to pay and fix minimum wages such that they at least
cover a family of four requirements of calories, shelter, clothing, education,
medical assistance, and entertainment.
Section 3 of the Minimum Wages Act of 1948 states that the Appropriate
government must be allowed, in the manner specified in the Act, to set the
minimum wage rate. It shall set the wages to be paid under Part I and Part II of
the schedule to employees covered.
The Appropriate Government shall be allowed, at intervals deemed appropriate,
to review the minimum wage levels and, if applicable, revise the minimum pay.
There must be no periods greater than 5 years. Subsection (1-a) stipulates that
appropriate Government may refrain from fixing minimum wage levels for any
scheduled employment with fewer than a thousand employees in such employment.
Not paying Minimum wages is an offence punishable up to six months' imprisonment
with fine up to Rs. 500 or with both
Minimum Wages Act : Constitutional Validity
A Draft Convention on the question of minimum wages was adopted at
the International Labour Conference held in Geneva in 1928. Draft Convention
contemplated the creation of a minimum wage fixation machinery only in the case
Traders or parts of Trades (and in particular in home working trades) in
which no arrangements exist for the effective regulation of wages by collective
agreement otherwise and wages are exceptionally low.
India in it's obligation to ratify the International Convention has incorporated
a Minimum Wages for the scheduled employments mentioned in the act. But
repeatedly the employer class has challenged the validity of the said act in the
halls of the supreme court.
The Supreme Court in its rulings has held that non-payment of minimum wages
leads to forced labour which is prohibited under Article 23 of the Indian
Where a person provides labour or service to another for remuneration which is
less than the minimum wages, such labour is forced labour within the meaning
of article 23 of the Constitution and thereby entitles the person to
invoke article 32 or article 226 of the Constitution of India: Union for
Democratic Rights v. Union of India
It was said that the provisions of this Act also violates Article 14 of the
Constitution which provides for equality before the law.
The court in N.M.Wadia Charitable Hospital vs State of Maharashtra Fixing
different minimum wages for different localities is permitted under the
constitution and under labour laws , hence the question that any provisio of the
Minimum Wages Act is in any way against the provisio of constitution is wrong
On a careful examination of the various of the Act and the machinery setup by
this Act, Section 3(3)(iv) neither contravene Article 19(1) of the constitution
nor does it infringe the equal protection clause of the constitution(Art 14)
.The Courts have also held that the constitution of the committees and the
Advisory Board did not contravene the statutory provisions in that behalf
prescribed by the legislature Bhikusa Yamasa Kshatriya vs Sangammar Akola Bidi
The contention of the employers that the said act breaches their right to free
trade and profession guaranted under the Art was rejected by the supreme
court.Whether the act offends fundamental rights guaranteed under Art.
19(1)(g) byt Minimum Wages Act, 1948 was challenged in the case of BIJAY COTTON
MILLS LTD vs THE STATE OF AJMER
It was held that the restrictions imposed upon the freedom of contract by the
fixation of minimum rates of wages though they interfere to some extent with the
freedom of trade or business guaranteed under Art. 19(1)(g) of the Constitution
are not unreasonable and being imposed in the interest of general public and
with a view to carry out one of the Directive Principles of State Policy as
embodied in Art. 43 which talks about living wages in the Constitution are
protected by the terms of clause (6) of Art. 19.
It can scarcely be disputed that securing of living wages to labourers which
ensure not only bare physical subsistence but also the maintenance of health and
decency is conducive to the general interest of the public. This is one of the
directive principles of State policy embodied in Article 43 of our Constitution.
The employers cannot be heard to complain if they are compelled to pay the
minimum wages to their labourers even though the labourers, on account of their
poverty and helplessness are willing to work on lesser wages in Bijay Cotton
Mills Ltd v/s The State Of Ajmer
Code On Wages, 2019
The Code on Wages, 2019 was introduced in Lok Sabha by the Minister of Labour,
Mr. Santosh Gangwar on July 23, 2019. It seeks to regulate wage and bonus
payments in all employment where any industry, trade, business, or manufacture
is carried out. The landmark Labour Code on Wages Act (henceforth referred to as
the Wage Code), enacted in August 2019, has been celebrated for codifying
India's four wage related laws, namely:
The Minimum Wages Act, 1948, The
Payment of Wages Act, 1936, The Equal Remuneration Act, 1976 and The Payment of
Bonus Act, 1965.
The Code proposes to do away with the concept of bringing specific jobs under
the Act, and mandates that minimum wages be paid for all types of employment –
irrespective of whether they are in the organized or the unorganized sector
An analysis published by S. B. Bajaj and S. P. Bajaj in Administrative
Processes of the Minimum Wages Act, 1948: A Study in Delhi observed that in no
industry were the rates revised in the first instance, within the stipulated
period .The time gap between the fixation and the revision of rates was seven to
nine years, and in one case it was even 13 years.What the past has shown us is
that history repeats itself from time to time and the trend which the government
follows can be termed out to be anti-workers where revision not done for years
and years tend to increase the inequality difference between its people.
In India, small and unorganized businesses employ more than 90% of the
workforce, an estimated 500 million people. The Code on Wages seeks to cover all
employees, just as recommended in the Directive Principles. This is where the
major problem with compliance will come up, leading to the threat of harassment
from labour officials. In an atmosphere where businesses are reeling under the
impact of a hurriedly passed goods and services tax (GST) system, this new
requirement will certainly impose higher costs which should be tackled by the
government at the first instance.
The Union cabinet when approved the Wage Code Bill,it raised the national
minimum to one hundred seventy eight rupees per day, despite the internal
labour ministry committee recommending setting the single value of the NMW(
national Minimum wage ) for India at ₹ 375 per day (or ₹ 9,750 per month) as of
July 2018, irrespective of sectors, skills, occupations and rural-urban
locations. This clearly showed the blatant disregard by the politicians refusing
to listen to the recommendations made by the brightest minds in our country.
After COVID- 19
Economists have predicated that after the world pandemic Coronavirus/COVID-19
has passed us the world will face a recession which it hasn't faced in the past
100 years. The working class which is suffering even during the lockdown will
have face hardships on another level. The government needs to make sure that no
employee be subjected to wages which are below the minimum wages set by the
Just like in Sanjit Roy Vs. State of Rajasthan
, the Supreme Court decided
that ‘The Exemption Act in so far as it excluded the applicability of the
Minimum Wages Act, 1948 to the workmen employed in famine relief work is clearly violative
of Article 23. Thus, even public works ostensibly initiated by the Government
for the sole purpose of providing employment are subject to the Minimum Wage
In a November 2018 report, ILO said that around 41% of Indian employees feel
they are poorly paid—India stood fourth from the bottom in salary satisfaction
among the 22 countries of the Asia-Pacific region, above only Bangladesh,
Pakistan and Mongolia.Recently USA has removed India from its list of developing
nation and put in the category of developed nation therefore India also needs to
move from mindset of minimalism wages to fair wages.
The Minimum Wages Act which has been consolidated into Wage Code of 2019 the
challenges tend to still subsist where the fixation and revision of the wages is
entirely in the hands of bureaucrats which can in turn lead to lobbying by the
big private players in the country. But the research presented in this paper has
clearly shown the validity and existence of the Minimum wage in the countries
cannot be shaken amd has been protected by judiciary from time to time.
- Code on Wages, 2019
- Constitution of India, 1950
- Minimum Wages Act, 1948
- Convention on Minimum Wage-Fixing Machinery Convention, 1928
- S.N. Misra, Labour & Industrial Laws (Central Law Publications, Allahabad,
29th edn., 2019).
- Sozhiya, Gayathiri J, Minimum wages in India: A special reference to
agricultural sector 120 International Journal of Pure and Applied Mathematics
- International Labour Organisation, India Wage Report: Wage policies for
decent work and inclusive growth (2018).
- Hartman Dennis. Importance of Wages available at:
https://bizfluent.com/info8228392-importance-wages.html. (last visited on
March 23rd, 2020).
- Press Information Bureau, Minimum Wages, available at:
https://pib.gov.in/newsite/PrintRelease.aspx?relid=81227 (last visited on March
23rd , 2020).
- D. V. Giri and B. P. Rath The Minimum Wages Act: A Study of Its Workingin
Orissa Indian Journal of Industrial Relations, Vol. 33, No. 4 (Apr., 1998), pp.463-478