Minimum Wages Act 1948- Objectives, Components, Case Laws
Workers in developing countries like India with a high rate of unemployment can be exploited by employers because of their existing low bargaining power. In such a circumstance, the worker may receive wages that is much below the expected level and can result in the inability of the workers to meet his daily needs.
In view of this fact, the legislature stepped in to control the excesses of the employers by enacting laws that will prohibit the payment of wages below the employee’s subsistence level. The minimum wages 1948 Act provides the employer with the necessary conditions for the payment of wages to the worker.
The wages that must be received by an employee from the employer must be as provided in this Act. In this case, the wages are statutory.
The validity of the Act was viewed by the employers as having violated their fundamental freedom as enshrined under Article 19 (g) of the Constitution. However, the Supreme Court of India ruled that the 1948 Minimum Wages Act was in tandem with the constitution in accordance with the principles of state policy directives under Article 43 of the Constitution.
WHAT IS THE MINIMUM WAGES ACT 1948?
The Minimum Wages Act 1948 is a legislative labor law that stipulates wages for both skilled and unskilled laborers in India.
DEVELOPMENT OF THE CONCEPT OF MINIMUM WAGE-
The living wage is defined by the Constitution of India as a level of income for a worker that can ensure a basic living standard which includes good health, comfort, education, dignity and can cater for any emergency. In view of the employer’s ability to pay, the concept of a fair wage been incorporated in the constitution which is a level of wage that which is not only capable of maintaining a certain employment but can be increased based on the employer’s capacity of payment.
In a view to setting the concept of the fair wage in motion, the Central Advisory Committee during her session in November 1948 appointed a working committee of the fair wage. The concept of Minimum Wage was introduced by this committee to provide the employee’s basic needs and other requirements like education, medical care and a level of comfort.
The minimum wages Act of 1948 was introduced to give both the Central and State governments of India a level of jurisdiction in the fixing and payment of wages. Any payment by the employee be the statutory minimum wage rate is forced labor. Wages boards bear the responsibility of reviewing the minimum wages periodically so that they can provide for the minimum needs of a family of four with basic requirements like food, shelter, education, clothing, medical care, and entertainment.
OBJECTIVES OF THE MINIMUM WAGES ACT-
- To ensure that the employee can have the basic physical needs, good health and a level of comfort.
- To ensure a secure and adequate living wage for all laborers in the interest of the public.
- To ensure that the employee has enough to provide for his family.
- Ensuring a decent life standard that pertains to the social comfort of the employee.
REQUIREMENTS FOR REVIEW AND FIXATION OF MINIMUM WAGE-
The requirements for the review and fixation of a minimum wage is under Section 5 of the 1948 minimum wage Act. The rule provides that:
- Committees and sub-committees shall be appointed by the appropriate government as it deems fit; to inform it on the possible review and fixation of the minimum wage rate.
- The government shall notify the persons concerned by making a publication in one of the national dailies and specify a date not later than a period of two months from the publication date before the commencement of the hearing on the matter.
After the government must have considered the inputs from representatives of the persons concerned or the advice of the committee, is shall review or fix the minimum rate through a publication in the official news media based on each schedule of employment. The enforcement of the fixation or review shall not be more than three months from the date of publication.
The appropriate government shall work in conjunction with the minimum wages Advisory Board while reviewing the wages. The review is limited to the employment that are under the schedule. However, Section 27 of the Act empowers the appropriate government to add any employment to the schedule.
The prevailing economic conditions, cost of living in a place, conditions which the work is performed and nature of work to be performed shall be used as the factors to determine the fixation of the minimum wage.
OUTSTANDING COMPONENTS FOR FIXING OF MINIMUM WAGE
The government is empowered to fix the minimum wage on the components of:
- Cost of Living Index – the government may fix:
- Minimum time rate which is the time factor on which the minimum wage can be fixed.
- Minimum piece rate which allows the minimum wage to be fixed based on the pieces of items manufactured by the industry.
- Guaranteed time rate which is a combination of piece rate and time rate with reference to time work basis and pieces of items manufactured by the industry on which the minimum wage is based.
- Overtime rate which is minimum wage fixed based on overtime work performed by employees, irrespective of the time work or piece rate.
- The Different minimum wage for various industrial areas – Section 3 (3) (a) of the Act provides that different minimum rates may be fixed for different:
- scheduled employment
- classes of work in a schedule of employment
Adults, children, adolescent and apprentices have different rates of wages.
Section 3 of the minimum wages Act set rates for wages based on hour, day, month or any other wages period that may be prescribed. On conditions that wages are fixed by the month or any prescribed period, the manner for calculating the wages shall be indicated based on the period. In the case of wages that are fixed based on the period indicated in Section 4 of the 1936 Payment of Wages Act, the fixing of the minimum wages shall be as indicated in the Act.
- The Minimum rate of wages on the basis of a basic rate of wages featured in other allowances – Section 4 provides that any minimum rate of wages revised or fixed based on the scheduled employments under Section 3 may contain:
- A special allowance and a basic rate of wages that shall be known as ‘cost of living allowance’. The rate of cost of living allowance shall be reviewed periodically in a manner that is directed by the appropriate government. The fixed rate shall correspond with the present living cost in the country and with the number of workers.
- A basic rate of wages that is not only limited to the cost of living allowance, cash value based on prices of commodities.
- An all-inclusive rate that is based on the cost of living allowance, and the value of cash.
The cost of living allowance and cash value in respect of the essential commodities supplied shall be calculated by an authorized body. The calculation shall be carried out by the competent body based on the directives of the appropriate government.
FACTORS CONSIDERED AS IRRELEVANT IN FIXATION OF MINIMUM WAGES
The following factors are irrelevant in fixation of minimum wages:
- The fact that an employer may have difficulties in business
- Financial abilities of the employer
- Losses that may have been incurred by the company in the previous year
- The inability of the employer to import raw materials
- The regional industrial principles.
ROLE OF THE WAGE COMMITTEE
The wage committee or sub-committee inaugurated by the appropriate government shall be made up of the same number of representatives of both employees and employers. An independent person with no direct or indirect interest in the schedule of employment shall be made the chairman of the committee. Experience and knowledge shall be the criteria for one’s membership in the committee.
The government is at the discretion of regarding or disregarding the recommendations from the committee it had appointed. The purpose of the committee is to advise; therefore, the government is not bound to accept all of its recommendations. Irregularities that may have occurred in the constitution of the committee will not affect the validity of a notice that may have been published by the appropriate government.
THE ROLE OF ADVISORY BOARD
Section 7 provides that the appropriate government shall shoulder the responsibility for inaugurating an advisory board to:
- Coordinate the obligations of committees and sub-committees appointed by the government
- Inform the appropriate government on matters related to fixing and reviewing of the minimum wage.
The procedure for the functioning of the Advisory board is not prescribed in the minimum wage Act. However, the board can set up its peculiar procedure. A Central Advisory Board shall be constituted by the Central Government to advise and counsel both the Central and State government on fixation and review of minimum wages rates and the works of the Advisory boards as stated in the Act.
Those who are to serve as members of the board shall be nominated by the Central Government from representatives of both the labor and the employers. Independent members of the board shall not exceed one-third of the total members. An official of the government can be one of the independent members and from this class shall the chairman emerge.
CONSEQUENCES OF NON-COMPLIANCE WITH THE MINIMUM WAGES ACT
Non-payment and underpayment of the minimum wage are considered as a culpable offense. The penalty to an offender may be up to 5 years imprisonment with a fine of Rs 10000 as provided in Section 22 of the Act.
- In the case between the State of Madras and P.N. Ram Chander Rao in 1956, the court ruled that any notification not specifying the manner and what interval special allowance made payable to be adjusted is a defect and impaired by an apparent error of law.
- In the case between Cashew Manufacturers and Exporters Association v/s State of Kerala in 1999, the high court ruled that the government is not bound by the Advisory Board’s report.
- In the case between S.D. Basha and the State of Madras, it was held that in a condition where the members appointed into the committee are bereft of knowledge and experience, such a committee shall be invalid. A committee with men of no knowledge and experience is illegal.