47 The Minimum Wages Act, 1948
This chapter takes up the Minimum Wages Act, 1948 — the statute that empowers governments to fix minimum wages for scheduled employments and prohibits payment below those minima. The Act has been subsumed under the Code on Wages, 2019, which introduced the floor wage concept.
47.1 Background and Object
ILO Convention C26 (1928) on Minimum Wage-Fixing Machinery prompted the Indian government to enact protective legislation. The Minimum Wages Act, 1948 was passed to fix wage floors in scheduled (low-wage) employments and to provide enforcement machinery.
| Object | What it does |
|---|---|
| Prevent exploitation | Sets a statutory floor below which payment is illegal |
| Cover scheduled employments | Industries / occupations listed in Part I (manufacturing) and Part II (agriculture) of the Schedule |
| Tripartite fixation | Through Advisory Boards / Committees with worker, employer and government representatives |
| Periodic revision | At intervals not exceeding 5 years |
47.2 Definitions — Section 2
| Section | Term | Meaning |
|---|---|---|
| 2(b) | Appropriate government | Central for industries under Union list (railways, mines, oilfields); state for the rest |
| 2(g) | Scheduled employment | Employment specified in the Schedule of the Act |
| 2(h) | Wages | All remuneration in cash; includes house rent allowance; excludes value of housing, contributions to welfare funds, gratuity |
| 2(i) | Employee | Any person employed for hire or reward to do any skilled or unskilled, manual or clerical work in a scheduled employment |
47.3 Components of Minimum Wage — Section 4
The Act allows the appropriate government to fix the minimum wage in three components:
| Component | What it covers |
|---|---|
| Basic rate of wages | The base wage |
| Special allowance (CoLA) | Cost-of-living allowance, varying with inflation |
| Cash value of concessions | If essential commodities are supplied at concessional rates |
The combination ensures that the wage tracks inflation through the special allowance.
47.4 Methods of Fixing Minimum Wages — Sections 5 and 9
Two methods are prescribed.
| Method | Procedure |
|---|---|
| Committee method | Government appoints committees / sub-committees to hold inquiries and advise; final notification follows |
| Notification method | Government publishes proposals for fixation, invites representations, considers them, then notifies the wage |
The committee method is more deliberative; the notification method is faster.
47.4.1 Advisory Bodies — Sections 7 to 9
| Body | Role |
|---|---|
| Advisory Board | State-level — coordinates work of committees; advises government on wage fixation |
| Central Advisory Board | National — advises central government and coordinates state Advisory Boards |
| Committees and sub-committees (§5) | Hold inquiries on specific scheduled employments |
All bodies are tripartite — representatives of employers, employees and independent members nominated by the government.
47.5 Periodic Revision — Section 3(1B)
The appropriate government must review and revise minimum wages at intervals not exceeding five years. In practice, many states revise more frequently (annually for VDA, every two years for full revision). The Code on Wages, 2019 retains the five-year ceiling.
47.6 Different Categories — Sections 3(2) to 3(3)
The government may fix:
- different minimum wages for different scheduled employments;
- different minimum wages for different classes of work in the same employment;
- different minimum wages for adults, adolescents, children and apprentices;
- different minimum wages for different localities (zonal classification — A, B, C zones);
- minimum time rate, piece rate, guaranteed time rate for piece-workers, overtime rate.
47.7 Payment in Cash — Section 11
Wages must be paid in cash, except where the appropriate government allows payment in kind for specified scheduled employments.
47.8 Hours of Work and Overtime — Sections 13 and 14
| Section | Provision |
|---|---|
| 13 | Number of hours of normal working day; rest interval; weekly day off |
| 14 | Overtime — twice the ordinary rate of wages |
The hours regime mirrors the Factories Act for scheduled industrial employments.
47.9 Maintenance of Registers — Sections 18 to 20
Employers must maintain registers and records as prescribed and display abstracts of the Act in the workplace.
47.10 Inspectors — Section 19
Appropriate government appoints Inspectors with powers of entry, examination of records, and prosecution of offences.
47.11 Claims and Recovery — Sections 20 and 21
| Section | Provision |
|---|---|
| 20 | Authority to hear claims for underpayment — may direct payment of difference plus compensation up to ten times the difference |
| 21 | Single application for several employees |
The compensation provision — up to 10 times the underpayment — is a strong deterrent.
47.12 Penalties — Section 22
| Section | Offence | Penalty |
|---|---|---|
| 22 | Payment less than minimum wage | Imprisonment up to 6 months or fine up to ₹500, or both |
| 22A | Other offences | Fine up to ₹500 |
| 22B | Cognisance | Only on prior sanction by appropriate government |
| 22C | Offences by companies | Persons in charge liable |
The Code on Wages, 2019 has revised these penalties substantially upward and introduced compounding.
47.13 The Code on Wages, 2019 — Floor Wage and More
The Code on Wages, 2019 consolidates the Minimum Wages Act with the Payment of Wages Act, the Payment of Bonus Act, and the Equal Remuneration Act.
| Element | Minimum Wages Act, 1948 | Code on Wages, 2019 |
|---|---|---|
| Coverage | Only scheduled employments | Universal — covers all employments |
| Floor wage | None | National floor wage fixed by central government; states cannot fix lower |
| Geographical variation | Allowed | Retained |
| Skill categories | Allowed | Retained — unskilled, semi-skilled, skilled, highly skilled |
| Revision | Maximum 5 years | Retained |
| Penalties | Modest | Substantially raised; compounding allowed |
| Enforcement | State Inspectors | Inspector-cum-Facilitators |
The shift to universal coverage is one of the most consequential changes — every employment, not just scheduled ones, now has a statutory minimum wage.
47.14 Important Case Law
| Case | Year | Holding |
|---|---|---|
| Bijay Cotton Mills v. State of Ajmer | 1955 | Constitutional validity of the Act upheld; reasonable restriction on Article 19(1)(g) |
| People’s Union for Democratic Rights v. Union of India (Asiad Workers) | 1982 | Wages below the statutory minimum amount to forced labour under Article 23 |
| Workmen of Reptakos Brett v. Management | 1992 | Need-based minimum wage augmented with 25% for education, medical, recreation, old age |
| State of Rajasthan v. Hari Ram Nathwani | 1976 | The Act applies to seasonal employments |
47.15 Practice Questions
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- Minimum Wages Act, 1948 — based on ILO C26 (1928).
- Originally — scheduled employments (Part I manufacturing, Part II agriculture).
- §4 components: basic + CoLA + cash value of concessions.
- §5 methods: committee and notification.
- Tripartite Advisory Board and Central Advisory Board.
- Different rates allowed for: scheduled employment, class of work, age category, locality (A/B/C zones), time/piece/guaranteed/overtime.
- §13 — hours of work; §14 — overtime at 2× ordinary.
- §20 — claims authority; compensation up to 10× difference.
- Landmark cases: Bijay Cotton Mills (1955), PUDR Asiad Workers (1982), Reptakos Brett (1992).
- Code on Wages, 2019 — universal coverage; national floor wage; consolidates four wage statutes.