Minimum Wages Act: Law In the interest of Labourers

India is facing a rise in unemployment rate similarly to any other developing country, and Covid-19 and lockdown worldwide boosted it.

Companies or business houses finding it hard to survive in the market started firing their employees or reduced their wages up to 50% and kept it as it is even after lockdown and the market is rebounding.

Here comes the role of the minimum wages act, 1948, which stipulates minimum wages in India for both skilled and unskilled labourers.

The act ensures a basic income level that guarantees a minimum standard of living with good health, education, dignity and provides for any contingency.

It provides categories for fixing of minimum wage, the role of wage committee and advisory board.

It also provides for the punishment for non-compliance with the minimum wages act,1948.

Minimum wages act, 1948

The minimum wages act, 1948 ensures the basic standard of life, health, education and other needs.


  1. To ensure that the employees can have the basic needs fulfilled with a normal lifestyle having a basic level of comfort.
  2. To ensure adequate wages for all labourers in the public interest.
  3. To ensure that employee has enough earning to provide a basic standard of living for his family with primary education and healthcare and,

Fixing of minimum rates of wages

The appropriate government has the power enshrined under section 3 to fix the wages rates payable to the employees having employment under parts I and II of the schedule or any other employment added to any part by notification under section 27 of this act.

There are four types of wages defined under section 3(2) of the minimum wages act, 1948:-

  1. Minimum time rate- a minimum rate of wages for time work
  2. Minimum piece-rate- a minimum rate of wages for piece work
  3. Guaranteed time rate- a minimum rate of remuneration on a time work basis
  4. Overtime rate- a minimum rate to apply in respect of overtime work done by employees

While fixing minimum wage rates for different components shall be considered in section 3(3)(a) of the act. These include:

  1. Different scheduled employments
  2. Different work classes in the same scheduled employment
  3. Children, apprentices, adults, and adolescents
  4. Different localities

While section 3(3)(b) also prescribes the periods according to which wages get fixed. These include:-

  1. By the hour
  2. By the day
  3. By the month

The minimum rate of wages

These minimum rates of wages get defined under section 4 of this act.

Any wages’ minimum rates fixed or revised by the government concerning scheduled employments under section 3 may consist of:-

  1. a basic wages rate and a special allowance at a rate adjusted as per government direction. It gets done to meet with the variation in the living cost index number applicable to such workers (in the future referred to as the “cost of living allowance”); or
  2. a basic rate of wages with or without the living allowance cost, and the cash value of the concessions concerning supplies of essential commodities at concessional rates, where so authorised, or
  3. an all-comprehensive rate, allowing for the basic rate, living allowance cost and the cash value of the concessions.

This cost of the living index number is defined under Section 2(d), “cost of living index number”, concerning employees in any scheduled employment regarding which minimum rates of wages get fixed.

“It means the index number ascertained and declared by the competent authority by notification in the Official Gazette to be the cost of living index number applicable to employees in such employment”.

Procedure for fixing and revising of minimum wages

The process for review and fixation of these minimum wages get defined under section 5 of this act.

While fixing or revising the minimum rate of wages in respect of any scheduled employment under section 3 of this act, the government should either:

  1. designate as many committees and sub-committees as it essential to hold enquiries and advise on such review and fixing of the minimum wage rate or,
  2. Publish this information in its official gazette, notify the persons concerned or directly affected, and mention the date of commencement of considering proposals, which should not be beyond two months from the date of publication of the notification.

The minimum wages act’ Section 5(2) states that after considering the advice of committees or committees appointed under 5(1)(a) or after considering all the representations received by it under 5(1)(b) before the specified expiry date, the government can fix or revise such minimum rate of wage in respect of scheduled employments.

These revised or fixed minimum wage rates shall come into force on the expiry of three months from the date of issuing the new wage rate.

The government shall consult the advisory board when assessing the minimum wages. This analysis of the government is limited to the number of jobs in the schedule.

This advisory board gets appointed under section 7 of the act.

Under section 27 of this act, the government gets empowered to add jobs to either part of the schedule.

Factors to be used to assess the minimum wages are:-

  • Cost of living in a place
  • Prevailing economic conditions
  • Condition of the work to be performed
  • Nature of the work to be performed

Factors irrelevant while assessing minimum wages for workers are:-

  • Employer’s financial skill
  • The fact that employers can have business issues
  • Losses that corporation may have suffered in the following year
  • Industrial value of the area
  • Employer’s reluctance to purchase raw materials, etc

The minimum wages payable to the labourers under the wages act shall get paid in cash as per section 11 of this act.

Under section 13 of the act, some rules get prescribed to the government to maintain a basic standard of work.

The government can

  • fix the hours of work that constitute a typical working day, including one or more specified intervals.
  • provide a day of rest every seven days for all the employees and provide remuneration for the day of rest and,
  • Provide payment on a day of rest at a rate not less than the overtime rate.

Applicability of minimum wages act:

  1. This act applies to the whole of India.
  2. It applies to any employment if it employs 1000 employees in the respective state.
  3. It does not apply to any person employed in any undertaking by the central government or the federal; railway except with the central government’s consent.

Central Advisory Board

Under section 8 of this act, the central government also gets empowered to appoint a central advisory board of the minimum wages act, 1948.

This central advisory board advises central and state governments on fixing or revising minimum wages. They also coordinate the work of other advisory boards.

This central advisory board consists of employers and employees to be equal in numbers as its members and,

Independent persons not exceeding one-third in number, one such independent member shall be appointed as chairman of the board by the central government.


The employer can get punished with six months of imprisonment, a fine extending to five hundred rupees, or both under section 22 of the minimum wages act 1948.

The punishment is valid if an employer does any of the following:

  • pays an employee an amount less than its minimum wage for the class of work or
  • less than the amount due to him or
  • contravenes any rule under section 13 of the act shall be Any offence punishable under this section will be a cognisable offence.

Suppose an employer commits an offence under the minimum wages act, 1948, for which no penalty gets prescribed anywhere in the act. In that case, that person will get punished under section 22C of the act, and the punishment will be a fine of five hundred rupees.

What are wages?

The payment of wages act, 1936, (Section 2), define wages as:-

It includes all remuneration: salary, allowances or otherwise payable to a person regarding his work done or employment.

The remunerations included in the section:-

  1. Any remuneration payable by order of a court or under any award or settlement between the parties
  2. Any remuneration for which an employee is entitled to overtime work or leave period or holiday
  3. Any remuneration payable under the terms of employment is called a bonus or by any other name.
  4. Any sum of money payable under any law, contract or instrument because of termination of employment, that sum is payable with or without deduction. Still, it does not provide the time limit for making the payment.
  5. Any sum of money for which a person gets entitled under any scheme framed under any law

The remunerations excluded in the section:-

  1. Any remuneration which does not form of award or settlement between the parties or order of the court
  2. Any bonus which is not payable in terms of employment
  3. The value of house-accommodation, electricity, medical or any other amenities or services excluded from the wages’ computation by a government’s general or special order
  4. Any amount paid by the employer to any pension and provident fund belonging to the employee and the interest accrued on it
  5. Any travelling allowance
  6. Any amount of money paid to the employee to avoid extraordinary expenses entailed on him by nature of his employment
  7. Any gratuity paid to the employee on termination except from the conditions specified in section 2(vi) clause (d) of the payment of wages acts 1936.

Payment of wages act, 1936

Payment of wages(PW) act, 1936 prescribes provisions

  1. For regulation of wages to employees without any arbitrary deductions
  2. Fixing wage period, time limit and mode of payments,
  3. Penalties imposed for offences committed under the act, and
  4. Regulate the rights of workers covered under this act.

Objectives of payment of wages act 1936

The act’s objective is to regulate the public payment of wages to those specific workers employed in industries without any arbitrary or wrongful deductions except the one prescribed under this act.


The provisions for the deductions get prescribed under section 7. These deductions can be made only for the following:-

  1. Fines
  2. For absence from duty
  3. Deduction due to the damage or loss caused to the goods especially entrusted with the employee, due to his neglect or default or for loss of money caused which he/she gets required to account
  4. Deduction in respect of the recovery of advances/loans and interest due to the employee
  5. Deduction for the services rendered to the employee in terms of house-accommodation amenities, services, etc., provided to him, provided they have accepted those services.
  6. Deduction for payments made to the co-operatives and housing societies and insurance schemes by the central or state government

Section 13A prescribes provision for maintenance of registers and records consisting of:-

  1. The particulars of persons employed by them,
  2. The work performed by them,
  3. The wages paid to them,
  4. The deductions made from their wages,
  5. The receipt is given by them and other information as prescribed.

Every register and record maintained under the section shall get preserved for three years after the last entry made in it.


  • The application of this act extends to the whole of India.
  • It applies to all the persons either employed directly or through a sub-contractor.
  • It applies to all those employed in any factory or upon any railway by that railway administration
  • It also applies to the persons employed in industries or any other such establishment.
  • The central government is responsible for enforcement of the act in railways, mines, oilfields, & air transport services.
  • The state government is responsible for its enforcement in factories and other establishments.
  • It excludes those employees whose wage is Rs 24,000/- or more per month.It excludes those employees whose wage is Rs 24,000/- or more per month.

Code on wages act, 2019

It seeks to regulate wages and bonuses in all occupations where any business, trade, manufacturing, industry gets carried out.

As per section 69 of the code, it repealed the previous labour laws like:

  • the payment of wages act, 1936,
  • the payment of bonus act, 1965,
  • the minimum wages act, 1948,
  • the payment of remuneration act, 1976

The application of this code will be in all employment in both organised and unorganised sectors.

It mandates that the minimum wages shall get revised at every five-year interval.

Payment of bonus gets applied to those employees whose monthly wages do not exceed a certain amount fixed by central and state governments.

It prohibits gender discrimination in wage payment in any employment conditions under section 3 of this code.

According to section 9 of this code, the central government can fix floor wages by keeping the minimum living standard of workers based on geographical areas.

It is the minimum value standard that has to be maintained by central and state governments.

The minimum wage fixed shall not be less than the floor wage, and if it is already above floor wage, then the new minimum wage shall not be less than the previous one.

It received presidential assent on 8th august, 2019 but yet not came into force.

What is the difference between salary and wages?

  1. Salary is the fixed amount of remuneration given to an employee for services rendered by them. Wages is the variable amount of remuneration paid based on hourly work incurred by the employee.
  2. A salary gets fixed, so it gets paid monthly. Wages are paid based on performance daily because performance can vary on a day-to-day basis.
  3. Salary holders are not paid for the overtime work, while wage holders get paid the overtime incurred on the given work.
  4. Salary is paid to skilled employees, while wages get paid to semi-skilled and unskilled labourers.
  5. Employees who get paid salaries have KRA (key resultant area) set monthly, whereas those who get paid wages are judged on hourly work.
  6. Salary gets defined under section 17(1) of the income tax act, 1961 and wages get defined under section 2(s) of the payment of wages act, 1936.


The companies act, 2013 (Section 2(78)) define remuneration as:-

“It means any money or its equivalent given or passed to any person for services rendered by him and includes perquisites as defined under the income-tax act 1961”.

Any money paid to any person in any form for services rendered by him will amount to remuneration. Similarly, any other facility or amenities provided by the industries to any person will amount to remuneration. Its monetary equivalent gets considered as remuneration of the person for services rendered by him.

Case Study Involving Minimum Wages Act

B.Y. Kashatriya v. S.A.T bidi kamgar union

According to the Minimum wages act, 1948, is it compulsory to have representatives of any particular industry or each scheduled employment on the schedule board?

No, in the case of B.Y. Kashatriya v. S.A.T bidi kamgar union AIR (1963) SC 806, it is not compulsory to have representatives of any particular industry or every scheduled employment on the advisory board.

French Motor Car Co. Ltd. Workers Union v. French Motor Car Co. Ltd.

If the workman gets forced to be absent from carrying out his duty due to the employer’s circumstance, can the wage deduction be made under section 7(2) of the minimum wages act?

To make a deduction under section 7(2) of the said Act, the absence must be of the employee’s volition, and in the circumstances mentioned above, no deduction can get made. In the case of French motors car co. Ltd., workers union v. french motor car co. ltd. (1990) LLR 366 employees were not allowed to resume work without signing the guarantee bond, and no deduction could be made under the act.


The minimum wages act, 1948 and the payment of wages act, 1936, gets drafted to fulfil one objective, i.e., to protect workers’ rights covered under these acts.

These acts also guarantee wages to workers, whether skilled, semi-skilled or unskilled, to guarantee them a basic standard of living, including healthcare, education, food, etc., for them and their families.

Minimum wages act, 1948 ensures that a certain amount of wage that gets fixed is by the appropriate government payable to an employee shall be paid to him for the work he/she performs.

Payment of wages act, 1936 guarantees that the persons employed and covered under the act shall get paid the wages fixed for the work performed and accepted by them without any deductions (except those prescribed in the act)

FAQs Regarding Minimum Wages Act

What is the maximum wage period prescribed under the payment of wages act, 1936?

The wage period prescribed under the act is 30 days(i.e. one month).

What is the time of payments as per payment of wages(PW) act, 1936?

Every establishment having employees more than 1000 in number shall pay wages before the 10th day.

The other establishments shall make payment of wages in 7 days.

What should be the mode of payments as per PW Act, 1936?

The wages shall get paid in coins or currency notes as per section 6 of the act.

It can be paid by cheque or by bank transfer after obtaining the prior permission of the employee.

Under which section of the minimum wages act, the 1948 government is empowered to add more jobs to parts I or II of the schedule?

Section 27.

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