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Minimum wages rates in India are fixed under the Minimum wages Act, 1948 and is determined both by the Central Government and the Provincial governments. Minimum wages rates may be established for any region, occupation, and sector and declared at the national, state, sectoral and occupational levels. The minimum wages is determined by considering cost of living.
While fixing the minimum wages rate, it may be set for different work classes in the same scheduled employment or set for different scheduled employment. It may also be fixed by hour, day, month or any other wage period.
Under the Minimum Wages Act, both the Central and State Governments may notify the scheduled employments and fix/revise minimum wage rates for these scheduled employments.
There are two methods for fixing/revising minimum wages:
- Under the committee method, the government sets up committees and subcommittees to hold inquiries and recommendations for fixing and changing minimum wages.
- In the notification method, government proposals get published in the Official Gazette for persons who are likely to be affected and specifies a date (not less than two months from the time of the notification) where the proposals are taken into consideration.
The government after considering the advice of committees and all the representations received by the specified date, fixes /revises the minimum wage of the concerned scheduled employment which comes into force after three months from the date of its issue.
The minimum wage in India is fixed following certain criteria:
Here, the minimum wage is set according to the duration of the work done
This wage is set by calculating the total number of pieces manufactured in a factory
This is set by the overtime work done by the labour excluding the time or piece rate. Additionally…
• A wage committee formed by the relevant government must consist of members from both the employee and the employer side
• The Minimum Wages Act also states that an advisory board can be formed. This board provides recommendations and changes to be made to the labour and minimum wages laws.
• Non-compliance of this act and violating fixed hours are punishable by a maximum of five years imprisonment and a fine of INR 10,000.INR 146.00 per day was the average amount of minimum wage between 1965 and 2014, with INR 272.19 per day being the highest. INR 3.87 in 1965 was the lowest recorded in Indian Minimum Wage history. In 2014, the rate increased to INR 272.19 per day in 2014.The Code on Wages Act came into being in the year of 2019, effectively replacing four previous labour regulations – Payment of Wages Act, 1936, Minimum Wages Act, 1948, Payment of Bonus Act, 1965, and Equal Remuneration Act, 1976.The minimum wages were set under the regulations stated in the Minimum Wages Act, 1948 till now. The new code does not allow employers to pay their workers less than the minimum wage. It also stipulates that the minimum wages should be reviewed and revised by the respective state and the central governments every five years and not later than that.The new code also sets a National Floor Level Minimum Wage (NFLMW). The state governments have to make sure to fix their respective minimum wages the same as NFLMW or more but not below it.
Objectives of the Minimum wages Act
The scope of the Minimum Wages Act is to prevent employers from exploiting the employees. It ensures the worker is sufficiently paid to provide enough for his/her basic needs such as food, shelter and clothing. The core objectives of the Act are listed below.
• Provide minimum wages to employees in the organized sector.
• Prevent exploitation of employees.
• Empower the government to fix and revise minimum wages promptly.
• Apply this order for most of the sections in the organized sector.
Duties of an employer under Minimum Wages Act 1948
Every employer must pay wages that meet the minimum wage guidelines put forth by the government.
• Wages should be paid in cash, cheque or bank transfer.
• In order to fix the minimum wages, the employment should be in Schedule originally or must be added to the Schedule by notification under Section 27 of the act.
• Employers should double the pay for excess work hours considering 9 hours per day and 48 hours per week as the standard.
• Under the provisions of the act, every employer should assure the minimum wage as prescribed by the class-wise minimum wages notifications.
• Employer should fix the wage period at intervals not exceeding one month or as prescribed by the authorities
• If less than 1000 personnel are employed, the wages should be paid by the 7th day of the following month. For employers having more than 1000 workers, this can exceed till the 10th day of the following month.
• For discharged employees, wage settlement should be done within the 2nd working day after the discharge.
• Every employer should maintain a wages register specifying the following particulars for each worker.
o Minimum payable wages
o Days with overtime work
o Gross wages
o Wages paid and date of payment
• Employers should manage to get the signature or thumb impression of every worker on the wage register and wage slips.
• Employers should exhibit a notice in English and local language at the main entrance of the establishment or offices depicting the following attributes.
o Minimum wage rates
o Abstracts of applied acts and rules
o Name and details of the Labour Inspector/ Asst. Commissioner of Labour etc.
Minimum Wage Calculation in India
The central minimum wages are calculated differently based on the skill and nature of the labour. Labour in India is broadly categorised as highly skilled, skilled, semi-skilled and unskilled. The guidelines of the Indian Labour Conference of 1957 are being used to compute the minimum wage.
Indian labour conference held in 1957 suggested several norms to calculate the minimum wage for employees in any sector. They are:
(i) 3 consumption units per earner
(ii) Least food requirements of 2700 calories per average adult.
(iii) Clothing provisions of 72 yards per family per annum
(iv) Rent compared to the minimum area given under Government’s Industrial Housing Scheme.
(v) Fuel and other miscellaneous stuff of expenditure to aggregate 20% of the total minimum wage.
Non-compliance of Code on Wages Act
The Code on Wages Act states that the government should appoint inspectors/facilitators to see if the organisations are following the rules. The penalty is dependent on the essence of the non-compliance. The maximum punishment is three months imprisonment and/or fine up to 1,00,000 INR.
In case the labour minimum wage is lower than the government’s declared rates, a complaint can be registered with the labour inspector either by the worker alone or via a registered trade union or a lawyer.
According to the new act of 2019, minimum wages are fixed by the concerned state governments. Labour and their welfare are on the concurrent list making it a part of both the central and state lists. There hasn’t been any significant development in implementing a central minimum wage applicable for all Indian workers yet.
Setting and following minimum wages is a step toward social reform. This provision mandated by the constitution has ensured the livelihood of many workers to be better. The effect it has brought on is clearly visible in Delhi, where employers pay the fixed minimum wages to workers. The implementation of this regulation is still not prominent in other states and no results to say otherwise.
More effort should be made by the government and the relevant authorities to study the effects of minimum wage on different aspects like unemployment, informality, gender pay gaps, wages, hours of work, etc. Attempts should be made to raise the bare minimum wage range. Raising the minimum wages of the working class strengthens their purchasing power and also provides a boost to the country’s economy.
Minimum Rates of Wages
Any minimum rate of wages fixed or updated by the appropriate Government in respect of scheduled employments under section 3 consists of
• The basic rate of wages and a special allowance which varies with the cost of living index.
• The basic rate of wages with or without allowance for the cost of living allowance based on the cost of living index number.
• All-inclusive rate is allowing for the basic rate of wages with the cost of living allowance and cash value of concessional supply of materials.
Procedure for Fixing and Revising Minimum Wages
There are two different modes of procedure for Fixing and Revising Minimum Wages under Section 5. The main aim of both the procedures is to empower the Government to reach a favorable result about Fixation of a Minimum Wage.
The Two Modes are as follows:
Appointment of Committee
The Appropriate Government should appoint as many Committees or Sub- Committees as to hold necessary inquiries for Fixation of Minimum Rates of Wages.
Publication of Proposals in the Official Gazette
The Appropriate Government by notification in the Legal Gazette publishes its Proposals for the Information of the person who is likely to be affected by the Fixation of Minimum Rates of Wages.
Responsibility for Payment of Wages
Every employer is responsible for the payment to the persons employed by him are required to pay wages under this Act:
• Wages provided in case of persons employed other than contract works in factories by a person who has been named as the manager of the factory under section 7 of the Factories Act.
• In the case of industrial or other establishments, the person responsible to the employer for the supervision and control of the industrial or the industrial or other establishment is eligible to provide wages.
• In case of persons employed in railways other than persons in factories, the railway administration and the administration who has nominated a concerned person in behalf of the employer for the local area is responsible for providing wages to the employees.
Registers and Records under Section 18
Every employer must maintain records and registers regarding particulars about the following:
• Employees details who have been employed by the employer.
• Work performed by the employees
• The wages paid to the employees.
• The receipts provided by the employer.
• Every employer should hold the notices exhibited in such factory, workshop or place as used for giving work to employees.
• The appropriate government can provide for the issue of wages books or wage slips to employees as per the rules made under the Act.
Time of payment of wages
The wages of every person employed in any railway, factory or industrial or other establishment or in which less than one thousand persons are engaged in the workplace has to be paid with wages to employees before the expiry of the seventh day from the month.
Any other railway, factory or industrial or other establishment has to be paid with wages before the expiry of the tenth day from the month and also can be paid after the last day of the payment in respect of which the wages are usually payable.
Method of Payment of Wages
Wages need to be paid in current coin or currency notes or both. Wages can also be paid by cheque or by crediting them in the bank account if so authorized in writing by an employed person.
Deduction under Section 7
As per the provisions under section 7(1) says that every payment made by the employed person to the employer or his agent will be deemed to be the deduction from wages of this act.
Authorized Deductions from Wages
The wages of an employed person have to be paid to an employee without deductions except in case of those authorized deductions from wages under this Act are represented below.
• Deductions from wages for fines.
• Deductions from wages for absence from duty.
• Deductions from wages for damage to or loss of goods of the employed person.
• Deductions from wages for house-accommodation supplied by the employer.
Deductions for absence from duty
Deductions can be performed in the absence of an employee for the whole or any part of the time during which he is required to work.
If ten or more person employed remains absent, then the deduction from the payment of wages should not exceed his wages for eight days.
Deduction for damage or loss
In case of any damage or loss performed by the employee for an employer in such cases deduction made from the wages of an employee should not exceed the amount of the damage or loss caused to the employer. Then the employee can apologies for the reason for this cause. And all such deduction has to be recorded in a register.
Deductions for recovery of Advance
The deduction can be made in case of recovery of advance given before employment can be made from the first payment. The deduction can be made in case of recovery of an advance given after employment can subject to such conditions as the Appropriate Government may impose.
Penalties
The fine or penalties cannot be imposed on any employed person in respect of omissions of such acts by the employer, with the previous approval of the State Government or the prescribed authority specifying in the form of notice under sub-section (2).
A notice specifying such acts and omissions can be exhibited in the prescribed manner on the premises in which the employment is carried on or in the case of a person employed upon a railway (otherwise than in a factory), at the prescribed place or places.
The fine cannot be imposed on any employed person until he has been with the reason against the fine or following such procedure as may be prescribed for the imposition of fines.
The total amount of fine which can be imposed in any one wage-period on any employed person should not exceed an amount equal to 3% of the wages payable to him in respect of that wage-period. The fine cannot be imposed on any employed person who is under the age of fifteen years.
The authority under Payment of Wages
Appointment
The appropriate government by notification in the legal gazette may appoint the following officers are listed below.
• The presiding officer of any Labour court.
• The presiding officer of any Industrial tribunal.
• Any Commissioner for Workmen’s Compensation.
• Any officer with experience as a Judge of a Civil Court or as a Judicial Magistrate to be the ‘Authority’ to hear and decide the claims arising out of deductions from the wages, or delay in payment of the wages of employed persons.
Application
Where payment of wages have been delayed, or any deduction has been made from wages, the request can be made to the Authority by the Person himself or any legal practitioner or any official of a registered trade union, duly authorized in writing or an inspector under this Act or any other person acting with the permission of the authority.
Process
• The prescribed authority can hear the applicant and the employer or another person responsible for the payment of wages.
• The Authority will direct the refund to the employed person of the amount deducted, or the payment of the delayed wages, together with the payment of such compensation.
• The compensation should not exceed ten times the amount deducted in the former case and not exceeding 3000 rupees but not less than 1500 rupees.
• No compensation can be made in the case of delayed wages if the authority is satisfied with
• The delay was due to bonafide error or dispute as to the amount payable to the employed person.
• The person responsible was unable to make the payment due to exceptional circumstances, even though exercised due diligence.
• The delay was due to the failure of the employed person to apply for or accept payment.
Appeal
An appeal against an order of the Authority should be made within 30 days of the date of the concern order or direction, before Court of Small Causes and otherwise before the District Court.
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