Unit 6 Topic: Minimum Wage Act,1948, B.Com Hons., IIIrd Sem, DU - B Com PDF Download

 Page 1


 
Institute of Lifelong Learning, University of Delhi 1 
 
 
 
 
 
 
 
 
 
Paper: Company and Compensation Law 
Lesson: Minimum Wages Act 1948 
Lesson Developer: Sakshi Verma 
College: Assistant Professor, PGDAV (M) 
 Delhi University 
 
 
 
 
 
 
 
 
 
 
 
 
Page 2


 
Institute of Lifelong Learning, University of Delhi 1 
 
 
 
 
 
 
 
 
 
Paper: Company and Compensation Law 
Lesson: Minimum Wages Act 1948 
Lesson Developer: Sakshi Verma 
College: Assistant Professor, PGDAV (M) 
 Delhi University 
 
 
 
 
 
 
 
 
 
 
 
 
 
Institute of Lifelong Learning, University of Delhi 2 
 
 
Lesson: Minimum Wages Act, 1948 
Table of Contents 
1. Learning Objectives 
2. Introduction 
2.1 Objectives of the Act 
2.2 Applicability of the Act 
3. Definitions 
3.1. Employer 
3.2. Employee 
3.3. Wages 
4. Fixing Minimum Rates of Wages 
5. Minimum Rate of Wages 
6. Wages in Kind 
7. Procedure for Fixing and Revising Minimum Wages 
8. Advisory Board  
9. Central Advisory Board  
 9.1. Purpose 
 9.2. Composition 
10. Maintenance of Register and Records  
11. Inspectors 
11.1. Who can be an Inspector? 
11.2. Functions of an Inspector 
12. Claims  
13. Penalties for Certain Offences  
Summary 
Exercises 
References 
 
1. Learning Objectives: 
After studying this chapter, you should be able to: 
? understand the purpose and importance of Minimum Wages Act 1948, 
? understand some important definitions given in the Act, 
? learn how the minimum wages are computed, 
? gain insights into different wage rates, 
? understand different methods by which minimum wages can be fixed and revised, 
? know about the role of Advisory Board and Central Advisory Board, 
? analyse the role of Inspectors appointed under this Act, 
? understand provisions related to claims and penalties under the Act, 
? appreciate the usefulness of this Act for the workers of different classes and the 
consequences of its absence. 
 
 
2. Introduction: 
The Article 43 of our Constitution states that every worker shall be entitled to a „living 
wage? to ensure a decent standard of living. The Minimum Wages Act 1948 was also 
Page 3


 
Institute of Lifelong Learning, University of Delhi 1 
 
 
 
 
 
 
 
 
 
Paper: Company and Compensation Law 
Lesson: Minimum Wages Act 1948 
Lesson Developer: Sakshi Verma 
College: Assistant Professor, PGDAV (M) 
 Delhi University 
 
 
 
 
 
 
 
 
 
 
 
 
 
Institute of Lifelong Learning, University of Delhi 2 
 
 
Lesson: Minimum Wages Act, 1948 
Table of Contents 
1. Learning Objectives 
2. Introduction 
2.1 Objectives of the Act 
2.2 Applicability of the Act 
3. Definitions 
3.1. Employer 
3.2. Employee 
3.3. Wages 
4. Fixing Minimum Rates of Wages 
5. Minimum Rate of Wages 
6. Wages in Kind 
7. Procedure for Fixing and Revising Minimum Wages 
8. Advisory Board  
9. Central Advisory Board  
 9.1. Purpose 
 9.2. Composition 
10. Maintenance of Register and Records  
11. Inspectors 
11.1. Who can be an Inspector? 
11.2. Functions of an Inspector 
12. Claims  
13. Penalties for Certain Offences  
Summary 
Exercises 
References 
 
1. Learning Objectives: 
After studying this chapter, you should be able to: 
? understand the purpose and importance of Minimum Wages Act 1948, 
? understand some important definitions given in the Act, 
? learn how the minimum wages are computed, 
? gain insights into different wage rates, 
? understand different methods by which minimum wages can be fixed and revised, 
? know about the role of Advisory Board and Central Advisory Board, 
? analyse the role of Inspectors appointed under this Act, 
? understand provisions related to claims and penalties under the Act, 
? appreciate the usefulness of this Act for the workers of different classes and the 
consequences of its absence. 
 
 
2. Introduction: 
The Article 43 of our Constitution states that every worker shall be entitled to a „living 
wage? to ensure a decent standard of living. The Minimum Wages Act 1948 was also 
 
Institute of Lifelong Learning, University of Delhi 3 
 
enacted for the same. The aim of the Act is to provide social justice and „living wages? so 
that the workers can live a life of dignity. The Act makes it compulsory for the employers 
to pay minimum wage rate to its employees, irrespective of the size and capacity of 
industry and unit.  Thus, it aims to safeguard the interests of workers in certain specified 
employments by providing minimum wages to them. 
Both the Central and the State Governments are the appropriate Governments under the 
Act. They are required to fix, revise, review and enforce the payment of minimum wages 
to workers in respect of 'scheduled employments' under their respective jurisdictions.  
 
Value Addition 1: Know It Better 
Article 43 of the Constitution 
Article 43 of the Constitution is as follows: 
“Living wage, etc, for workers The State shall endeavour to secure, by suitable 
legislation or economic organisation or in any other way, to all workers, agricultural, 
industrial or otherwise, work, a living wage, conditions of work ensuring a decent 
standard of life and full enjoyment of leisure and social and cultural opportunities and, 
in particular, the State shall endeavour to promote cottage industries on an individual 
or co operative basis in rural areas.”  
 
 
Value Addition 2: Know More 
Minimum Wages Act, 1948 
Click on the link below to gain an insight into the history of Minimum Wages Act, 1948. 
Source: http://en.wikipedia.org/wiki/Minimum_Wages_Act_1948  
 
2.1. Objectives of the Act: 
The objectives of the Act are as follows: 
a. To fix minimum rates of wages for scheduled employments. 
b. To ensure wage paid are not below the prescribed minimum limits. 
c. Periodically revise the minimum wage rates. 
d. Recovery of minimum wages along with penalty in case of default. 
e. Appointment of Advisory Committee and Advisory Boards. 
If the above stated objectives are fulfilled, it will ultimately stop exploitation of the 
workers. Providing minimum wages to all the workers will ensure financial security to 
certain extent and will reduce discrimination, especially for the poor and illiterate 
workers. 
2.2. Applicability of the Act: 
a. As per Section 1, the Act is applicable to whole of India.   
b. The Act is applicable to the scheduled employments or specified class of work in 
respect of which minimum wages have been fixed. 
Page 4


 
Institute of Lifelong Learning, University of Delhi 1 
 
 
 
 
 
 
 
 
 
Paper: Company and Compensation Law 
Lesson: Minimum Wages Act 1948 
Lesson Developer: Sakshi Verma 
College: Assistant Professor, PGDAV (M) 
 Delhi University 
 
 
 
 
 
 
 
 
 
 
 
 
 
Institute of Lifelong Learning, University of Delhi 2 
 
 
Lesson: Minimum Wages Act, 1948 
Table of Contents 
1. Learning Objectives 
2. Introduction 
2.1 Objectives of the Act 
2.2 Applicability of the Act 
3. Definitions 
3.1. Employer 
3.2. Employee 
3.3. Wages 
4. Fixing Minimum Rates of Wages 
5. Minimum Rate of Wages 
6. Wages in Kind 
7. Procedure for Fixing and Revising Minimum Wages 
8. Advisory Board  
9. Central Advisory Board  
 9.1. Purpose 
 9.2. Composition 
10. Maintenance of Register and Records  
11. Inspectors 
11.1. Who can be an Inspector? 
11.2. Functions of an Inspector 
12. Claims  
13. Penalties for Certain Offences  
Summary 
Exercises 
References 
 
1. Learning Objectives: 
After studying this chapter, you should be able to: 
? understand the purpose and importance of Minimum Wages Act 1948, 
? understand some important definitions given in the Act, 
? learn how the minimum wages are computed, 
? gain insights into different wage rates, 
? understand different methods by which minimum wages can be fixed and revised, 
? know about the role of Advisory Board and Central Advisory Board, 
? analyse the role of Inspectors appointed under this Act, 
? understand provisions related to claims and penalties under the Act, 
? appreciate the usefulness of this Act for the workers of different classes and the 
consequences of its absence. 
 
 
2. Introduction: 
The Article 43 of our Constitution states that every worker shall be entitled to a „living 
wage? to ensure a decent standard of living. The Minimum Wages Act 1948 was also 
 
Institute of Lifelong Learning, University of Delhi 3 
 
enacted for the same. The aim of the Act is to provide social justice and „living wages? so 
that the workers can live a life of dignity. The Act makes it compulsory for the employers 
to pay minimum wage rate to its employees, irrespective of the size and capacity of 
industry and unit.  Thus, it aims to safeguard the interests of workers in certain specified 
employments by providing minimum wages to them. 
Both the Central and the State Governments are the appropriate Governments under the 
Act. They are required to fix, revise, review and enforce the payment of minimum wages 
to workers in respect of 'scheduled employments' under their respective jurisdictions.  
 
Value Addition 1: Know It Better 
Article 43 of the Constitution 
Article 43 of the Constitution is as follows: 
“Living wage, etc, for workers The State shall endeavour to secure, by suitable 
legislation or economic organisation or in any other way, to all workers, agricultural, 
industrial or otherwise, work, a living wage, conditions of work ensuring a decent 
standard of life and full enjoyment of leisure and social and cultural opportunities and, 
in particular, the State shall endeavour to promote cottage industries on an individual 
or co operative basis in rural areas.”  
 
 
Value Addition 2: Know More 
Minimum Wages Act, 1948 
Click on the link below to gain an insight into the history of Minimum Wages Act, 1948. 
Source: http://en.wikipedia.org/wiki/Minimum_Wages_Act_1948  
 
2.1. Objectives of the Act: 
The objectives of the Act are as follows: 
a. To fix minimum rates of wages for scheduled employments. 
b. To ensure wage paid are not below the prescribed minimum limits. 
c. Periodically revise the minimum wage rates. 
d. Recovery of minimum wages along with penalty in case of default. 
e. Appointment of Advisory Committee and Advisory Boards. 
If the above stated objectives are fulfilled, it will ultimately stop exploitation of the 
workers. Providing minimum wages to all the workers will ensure financial security to 
certain extent and will reduce discrimination, especially for the poor and illiterate 
workers. 
2.2. Applicability of the Act: 
a. As per Section 1, the Act is applicable to whole of India.   
b. The Act is applicable to the scheduled employments or specified class of work in 
respect of which minimum wages have been fixed. 
 
Institute of Lifelong Learning, University of Delhi 4 
 
c. The Act is applicable if there are at least 1000 employee is the State in the 
employment. 
Value Addition 3: Understand It Better 
Case Laws 
The employer is obliged to pay the minimum rate of wages irrespective of his financial 
capacity. 
Case: Wool Combers of India vs Workers Union, 1973 SC 2758: 1973 (27) FCR 
38 
 
Minimum Wages Act will not be applicable to an establishment where the wages are 
more than the prescribed rates. 
Case: Airfreight Ltd. Vs State of Karnataka, 1999 LLR 1008 (SC) 
 
Value Addition 4: Quick Facts  
Highest and Lowest Minimum Wages  
As already stated that minimum wage rate differs from industry to industry and place to 
place. You will be surprised to know that in 2012, the highest minimum wage rate was 
Rs. 322 per day in Andaman & Nicobar island. On the contrary, lowest was Rs. 38 per 
day in Tripura. 
 
Value Addition 5: Quick Fact 
State’s Declaration 
In 2007, the Tamil Nadu State Government had announced that minimum wages were 
fixed by it for 90% of all occupations. 
 
3. DEFINITIONS: 
3.1. Employer: 
Section 2(e) defines employer as “any person who employs, whether directly or through 
another person, or whether on behalf of himself or any other person, one or more 
employees in any scheduled employment in respect of which minimum rates of wages 
have been fixed under this Act, and includes- 
i. in a factory where there is carried on any scheduled employment in respect of 
which minimum rates of wages have been fixed under this Act, any person named 
under 1[clause (f) of subsection(1) of section 7 of the Factories Act, 1948 (63 of 
1948)], as manager of the factory; 
 
ii. in any scheduled employment under the control of any Government in India in 
respect of which minimum rates of wages have been fixed under this Act, the 
person or authority appointed by such Government for the supervision and 
control of employees or where no person or authority is so appointed, the head of 
the department; 
 
Page 5


 
Institute of Lifelong Learning, University of Delhi 1 
 
 
 
 
 
 
 
 
 
Paper: Company and Compensation Law 
Lesson: Minimum Wages Act 1948 
Lesson Developer: Sakshi Verma 
College: Assistant Professor, PGDAV (M) 
 Delhi University 
 
 
 
 
 
 
 
 
 
 
 
 
 
Institute of Lifelong Learning, University of Delhi 2 
 
 
Lesson: Minimum Wages Act, 1948 
Table of Contents 
1. Learning Objectives 
2. Introduction 
2.1 Objectives of the Act 
2.2 Applicability of the Act 
3. Definitions 
3.1. Employer 
3.2. Employee 
3.3. Wages 
4. Fixing Minimum Rates of Wages 
5. Minimum Rate of Wages 
6. Wages in Kind 
7. Procedure for Fixing and Revising Minimum Wages 
8. Advisory Board  
9. Central Advisory Board  
 9.1. Purpose 
 9.2. Composition 
10. Maintenance of Register and Records  
11. Inspectors 
11.1. Who can be an Inspector? 
11.2. Functions of an Inspector 
12. Claims  
13. Penalties for Certain Offences  
Summary 
Exercises 
References 
 
1. Learning Objectives: 
After studying this chapter, you should be able to: 
? understand the purpose and importance of Minimum Wages Act 1948, 
? understand some important definitions given in the Act, 
? learn how the minimum wages are computed, 
? gain insights into different wage rates, 
? understand different methods by which minimum wages can be fixed and revised, 
? know about the role of Advisory Board and Central Advisory Board, 
? analyse the role of Inspectors appointed under this Act, 
? understand provisions related to claims and penalties under the Act, 
? appreciate the usefulness of this Act for the workers of different classes and the 
consequences of its absence. 
 
 
2. Introduction: 
The Article 43 of our Constitution states that every worker shall be entitled to a „living 
wage? to ensure a decent standard of living. The Minimum Wages Act 1948 was also 
 
Institute of Lifelong Learning, University of Delhi 3 
 
enacted for the same. The aim of the Act is to provide social justice and „living wages? so 
that the workers can live a life of dignity. The Act makes it compulsory for the employers 
to pay minimum wage rate to its employees, irrespective of the size and capacity of 
industry and unit.  Thus, it aims to safeguard the interests of workers in certain specified 
employments by providing minimum wages to them. 
Both the Central and the State Governments are the appropriate Governments under the 
Act. They are required to fix, revise, review and enforce the payment of minimum wages 
to workers in respect of 'scheduled employments' under their respective jurisdictions.  
 
Value Addition 1: Know It Better 
Article 43 of the Constitution 
Article 43 of the Constitution is as follows: 
“Living wage, etc, for workers The State shall endeavour to secure, by suitable 
legislation or economic organisation or in any other way, to all workers, agricultural, 
industrial or otherwise, work, a living wage, conditions of work ensuring a decent 
standard of life and full enjoyment of leisure and social and cultural opportunities and, 
in particular, the State shall endeavour to promote cottage industries on an individual 
or co operative basis in rural areas.”  
 
 
Value Addition 2: Know More 
Minimum Wages Act, 1948 
Click on the link below to gain an insight into the history of Minimum Wages Act, 1948. 
Source: http://en.wikipedia.org/wiki/Minimum_Wages_Act_1948  
 
2.1. Objectives of the Act: 
The objectives of the Act are as follows: 
a. To fix minimum rates of wages for scheduled employments. 
b. To ensure wage paid are not below the prescribed minimum limits. 
c. Periodically revise the minimum wage rates. 
d. Recovery of minimum wages along with penalty in case of default. 
e. Appointment of Advisory Committee and Advisory Boards. 
If the above stated objectives are fulfilled, it will ultimately stop exploitation of the 
workers. Providing minimum wages to all the workers will ensure financial security to 
certain extent and will reduce discrimination, especially for the poor and illiterate 
workers. 
2.2. Applicability of the Act: 
a. As per Section 1, the Act is applicable to whole of India.   
b. The Act is applicable to the scheduled employments or specified class of work in 
respect of which minimum wages have been fixed. 
 
Institute of Lifelong Learning, University of Delhi 4 
 
c. The Act is applicable if there are at least 1000 employee is the State in the 
employment. 
Value Addition 3: Understand It Better 
Case Laws 
The employer is obliged to pay the minimum rate of wages irrespective of his financial 
capacity. 
Case: Wool Combers of India vs Workers Union, 1973 SC 2758: 1973 (27) FCR 
38 
 
Minimum Wages Act will not be applicable to an establishment where the wages are 
more than the prescribed rates. 
Case: Airfreight Ltd. Vs State of Karnataka, 1999 LLR 1008 (SC) 
 
Value Addition 4: Quick Facts  
Highest and Lowest Minimum Wages  
As already stated that minimum wage rate differs from industry to industry and place to 
place. You will be surprised to know that in 2012, the highest minimum wage rate was 
Rs. 322 per day in Andaman & Nicobar island. On the contrary, lowest was Rs. 38 per 
day in Tripura. 
 
Value Addition 5: Quick Fact 
State’s Declaration 
In 2007, the Tamil Nadu State Government had announced that minimum wages were 
fixed by it for 90% of all occupations. 
 
3. DEFINITIONS: 
3.1. Employer: 
Section 2(e) defines employer as “any person who employs, whether directly or through 
another person, or whether on behalf of himself or any other person, one or more 
employees in any scheduled employment in respect of which minimum rates of wages 
have been fixed under this Act, and includes- 
i. in a factory where there is carried on any scheduled employment in respect of 
which minimum rates of wages have been fixed under this Act, any person named 
under 1[clause (f) of subsection(1) of section 7 of the Factories Act, 1948 (63 of 
1948)], as manager of the factory; 
 
ii. in any scheduled employment under the control of any Government in India in 
respect of which minimum rates of wages have been fixed under this Act, the 
person or authority appointed by such Government for the supervision and 
control of employees or where no person or authority is so appointed, the head of 
the department; 
 
 
Institute of Lifelong Learning, University of Delhi 5 
 
iii. in any scheduled employment under any local authority in respect of which 
minimum rates of wages have been fixed under this Act, the person appointed by 
such authority for the supervision and control of employees or where no person is 
so appointed, the chief executive officer of the local authority; 
 
iv. in any other case where there is carried on any scheduled employment in respect 
of which minimum rates of wages have been fixed under this Act, any person 
responsible to the owner for the supervision and control of the employees or for 
the payment of wages.” 
 
Table 1: Employer under Minimum Wage Act 1948 
Establishment Employees Entitled 
to Receive Minimum 
Wages? 
Case Law 
1. Pertol Pump  Yes Ajay Bansal vs. State, 
2007 LLR 1040 (Del 
HC) 
2. Society Yes Delhi Council For Child 
Welfare vs. Sheela 
Devi, 2006 LLR 1181  
(Del HC) 
 
3.2. Employee: 
As per Section 2(i), "employee" means “any person who is employed for hire or reward 
to do any work, skilled or unskilled, manual or clerical, in a scheduled employment in 
respect of which minimum rates of wages have been fixed; and includes an out-worker 
to whom any articles or materials are given out by another person to be made up, 
cleaned, washed, altered, ornamented, finished, repaired, adapted or otherwise 
processed for sale for the purposes of the trade or business of that other person where 
the process is to be carried out either in the home of the out-worker or in some other 
premises not being premises under the control and management of that other person; 
and also includes an employee declared to be an employee by the appropriate 
Government; but does not include any member of the Armed Forces of the Union.” 
 
Table 2: Employees under Minimum Wage Act 
Person Considered 
Employee or 
Not? 
Case Law 
1. Ex-Employee  Yes Pali Devi vs. Chairman, 
Managing Committee, Army 
School, Jallandhar, 1996 LLR 
830 (SC) 
2. Piece Rate Employees Yes Delhi Admn. Through 
Directorate of Social Welfare