Introduction to Minimum Wages Act:

The Indian Minimum Wages Act of 1948

The India’s Minimum Wages Act of 1948 is a significant piece of labour legislation in India designed to protect workers in unorganised sectors by setting minimum wages for various occupations.

In India, certain minimum salaries to certain categories of workers or employees, as updated from time to time by the labour laws compliances. According to “India’s minimum wage” in labour laws, employers are required to pay minimum wages.

Meaning Minimum Wages

Definition of Wages:

Wages refer to the remuneration provided by an employer to an employee in return for the services rendered.

This payment is usually determined by factors such as time worked (hourly, daily, weekly, monthly, or yearly), the amount of items produced, or the completion of designated tasks.

Provisions under Minimum Wages Act:

The Minimum Wages Act of 1948 is a comprehensive piece of legislation aimed at establishing minimum wage rates to ensure that workers receive fair remuneration. 

Here is a detailed overview of the provisions in the Act:

  1. Title: The Minimum Wages Act under labour laws.
  2. It extends to the whole of India.
  3. It became operative on March 15, 1948.
  • Defines various terms such as “appropriate government,” “employer,” “scheduled employment,” “wages,” and more.
  • The Central or State Governments are referred to as “appropriate government”.
  • The term “scheduled employment” describes jobs that are listed in the Act’s schedules.

The appropriate government shall fix minimum rates of wages for employments specified in the schedule.

Minimum wage can be fixed for different localities, classes of work, or occupations.

The minimum wages can include:

  • A standard wage rate and an adjustment for the cost of living.
  • A basic rate of wages with the cost of living component computed by the government.

Section 3(1)(b): Review and Revision of Minimum Wage:

The minimum wages must be reviewed and revised at intervals not exceeding five years.

Advisory Board: The Act mandates the establishment of Central and State Advisory Boards. These advisory boards provide recommendations to the government on matters related to setting and modifying minimum wages.

The minimum rates of wages may be fixed based on:

  • Time work (minimum time rate).
  • Piece work (minimum piece rate).
  • Overtime work.

The government may appoint committees or sub-committees to hold inquiries and advise on minimum wage fixation. The government can publish proposals and invite objections and suggestions before finalizing the wages

The Central Advisory Board is responsible for advising the Central Government on minimum wages and coordinating work among State Advisory Boards.

The committees, sub-committees, and advisory boards should have an equal number of representatives from employers and employees, as well as independent persons.

The government can correct clerical or arithmetical errors in wage orders.

Wages should be paid in cash, but the government can authorize payment in kind under specific conditions.

Employers must pay wages at or above the minimum wage rate fixed by the government.

The Act specifies working hours, rest periods, and overtime payments.

It sets the maximum daily and weekly working hours and mandates overtime pay at double the ordinary rate.

Overtime work should be paid at a rate not less than twice the normal wage rate.

If a worker does two or more classes of work with different minimum wage rates, they should be paid at the highest rate for the entire period.

For piece work, the government may fix a minimum time rate to ensure fair wages for workers.

Employers are required to maintain registers and records related to wages, overtime, and other work conditions.

Employers must submit these records to the authorities as required.

The government appoints inspectors to ensure compliance with Minimum wage act.

Inspectors have the authority to examine wage records and enter premises for inspections.

  1. Workers can claim the difference between the actual wages paid and the minimum wages India.
  2. Claims must be filed within six months from when the wages were due.
  3. Claims are handled by Labour Courts or appointed authorities.

Penalties include fines and imprisonment for employers who fail to pay the minimum wage or comply with the provisions of the Act.

Section 22A: Cognizance of Offences:

Courts can take cognizance of offences under the Act only on a complaint made by or with the previous sanction of the Inspector.

No court shall entertain any suit for the recovery of wages in so far as the sum so claimed forms the subject of an application under Section 20.

The government may exempt certain employments or workers from the provisions of the Act under specific conditions.

The Central Government can issue directions to State Governments for implementing the provisions of the Act.

The appropriate government can make rules to carry out the purposes of the Act, including the procedures for wage fixation, maintenance of records, and filing claims.

The Act empowers the Central Government and State Governments to make rules for carrying out the purposes of the Act.

  • The Act includes two schedules listing employments for which minimum wages must be fixed in India.
  • These schedules can be amended by the government to include more employments as necessary.

Inspections and Compliance under Minimum Wage:

Inspection port

Inspections under the Minimum Wages Act of India:

Minimum Wage inspections and compliance are critical components of India Minimum Wages Act, 1948, designed to ensure that employers adhere to the provisions of the Act. 

Section 19: Appointment of Inspectors

The appointment of inspectors is the responsibility of the relevant government (federal or state). Inspectors are responsible for making sure employers are adhering to the Act’s obligations.

Section 19(2): Powers of Inspection

Inspectors have the authority to:

  • Gather proof and demand that the employer reveal the amount of money that employees were paid.
  • Examine any other pertinent records or paperwork kept in relation to employment and salary disbursement.
  • Go into any location where workers are engaged to conduct inspections.
  • Examine wage books or other documentation to make sure that records are maintained properly.

The Minimum Wages Act key impacts:

Penalty Provisions under the Minimum wages Act:

The Act imposes penalties on employers who fail to pay the minimum wage or violate other provisions of the Act. This serves as a deterrent against non-compliance and safeguards workers’ rights to receive fair wages.

  • In India, the Minimum Wages Act mandates the establishment of minimum wage rates for workers in specific employments, ensuring that they can maintain a basic standard of living.
  • These wage rates must be regularly reviewed and adjusted to account for inflation and changing economic conditions.

The primary objective of the Minimum Wages Act- 1948 is to provide workers with wages that enable them to sustain a decent standard of living, thereby reducing exploitation by employers. By setting minimum wage standards, the Act ensures that employees receive compensation that aligns with the basic cost of living and inflation.

  • By establishing minimum wage standards, the Act safeguards workers, particularly those in unorganized sectors, from being underpaid.
  • It aims to eradicate extreme poverty among workers by guaranteeing a minimum income.

The legislation mandates regular reviews and adjustments of minimum wages to reflect changes in the cost of living. This requirement guarantees that minimum wages remain appropriate and adequate over time, responding to economic fluctuations.

The Minimum Wage India Act is applicable to a wide array of industries, encompassing both industrial and agricultural sectors. It establishes the framework for central and state governments to establish minimum wage rates for various sectors and regions.

Initially, India’s minimum wage Act pertained to specific employments listed in the schedule. However, its coverage has expanded over time to include a broader spectrum of industries and occupations, thereby extending its protective measures to a larger number of workers.

The Act contains provisions for the designation of inspectors to ensure adherence to the regulations. Employers who violate the minimum wage laws are subject to penalties, which may include fines and imprisonment.

Government Intervention in Minimum wage

  • The legislation grants authority to both central and state governments to determine and revise minimum wages for different employments. This intervention plays a critical role in safeguarding the interests of workers across various industries, particularly in sectors where contract labour is disorganized and susceptible to exploitation.
  • The Minimum Wages Act in India has significantly improved the living standards of millions of workers by guaranteeing fair wages, thereby reducing income inequality and promoting social justice.
  • Despite its noble intentions, the enforcement of the Act has faced challenges, particularly in the unorganized sector, due to inadequate monitoring and Minimum wages compliance. Critics argue that the fixed minimum wages are still insufficient to meet the basic needs of workers in certain regions.

Minimum wage in India 2021 Amendment

  • The Act has evolved through various amendments to adapt to changing economic conditions and labour market dynamics. The 2021 amendment focused on updating wage rates to align with current economic realities, as part of the broader reform under the Code on Wages, 2019.
  • To ensure labour laws compliance, the Act includes provisions for the appointment of inspectors and advisory boards. These mechanisms play a crucial role in monitoring and enforcing minimum wage standards, ensuring that employers adhere to the regulations.
  • The impact of the Minimum Wages Act on the labour market has been positive, promoting wage equity, improving economic conditions for low-wage workers, and reducing wage disparity. It highlights the importance of government regulation in protecting vulnerable workers and fostering equitable economic growth. Efforts are ongoing to enhance implementation and expand coverage of the Act.

26 Days minimum wage rules in India: 

In India, minimum wages are typically calculated based on a standard 26-day working month to ensure fair and consistent pay for workers across various sectors and regions.

Here are the key points regarding the 26-day minimum wage rules:

Standard Work Month

Minimum wages are calculated for a 26-day working month, assuming a 6-day workweek with one day off.

Daily Wage Calculation

The monthly minimum wage is divided by 26 to determine the daily wage, ensuring a consistent daily rate.

Wage Protection

Employers must pay at least the minimum wage to eligible workers, with penalties for non-compliance.

Applicability

The 26-day rule applies to different sectors under central and state minimum wage laws, with variations based on state regulations or industry requirements.

Overtime Pay

Workers receive overtime pay for hours worked beyond the standard 8-hour workday, typically at twice the regular hourly rate.

Revisions & Updates

Minimum wages are periodically revised by central and state governments to account for changes in the cost of living and inflation.

Daily Wage Calculator Formula:

There are two ways to calculate this:

Method 1:
Gross Salary Per-Month = (Net Daily Wage) * (Present Days);

Method 2:
Gross Salary Per-Month = (Net Daily Wage) * (Present Days + Weekly Holidays).

Example of Daily Wage Calculation

If the monthly minimum wage for a worker is set at INR 13,000, the daily wage would be calculated as:

Daily Wage = 13,000/26 approx. 500 Rupees/Day 

For the latest and specific rules, it is recommended to consult official notifications from the Ministry of Labour and Employment or relevant state government authorities.

This standardized approach guarantees fair compensation for workers and maintains transparency and consistency in wage calculations across various employment settings.

Annual leave with wages in India:

In India, the provision for annual leave with wages is governed by the Factories Act, 1948, rather than the Minimum Wages Act. 

Here are the key details regarding annual leave with wages under the Factories Act:

Workers who have completed a minimum of 240 days of work in a calendar year are eligible for annual leave with wages.

The 240 days include all days of actual work, holidays, and paid leave.

For adults, the entitlement is 1 day of leave for every 20 days of work.

For children, the entitlement is 1 day of leave for every 15 days of work.

Unused leave can be carried forward to the following year, but it should not exceed 30 days for adults and 40 days for children.

During the leave period, wages as per  minimum wages act should be paid at the average daily wage rate. The calculation of this rate involves dividing the worker’s total earnings from the last three months by the number of days worked within that timeframe.

The wages must be paid prior to the start of the leave if it is for four or more days.

It is necessary for employees to submit written leave requests. The employer’s decision to grant leave is final and takes operational efficiency into account.

A worker must be paid the equivalent of the leave time they did not take if they quit their job before using their allotted leave.

In the event that an employee works 300 days in a year, their leave entitlement would be determined as follows:

Vacation Days = 300/20 = 15 days off

These rules take into account operational needs while ensuring that workers receive fair leave benefits. It is advised to refer to the most recent notifications and amendments made in accordance with the Factories Act, 1948, for more detailed information and any updates.

State wise Minimum wage in India

This table presents an overview of the approximate minimum wage for unskilled workers across different states in India, based on the most recent data available:

StateMinimum Wage (INR per day)
Andhra Pradesh210 - 300
Assam240 - 350
Bihar200 - 275
Chhattisgarh220 - 290
Delhi534 (Maximum wage)
Goa307 - 465
Gujarat280 - 365
Haryana318 - 401
Himachal Pradesh225 - 300
Jharkhand225 - 300
Karnataka275 - 365
Kerala310 - 600
Odisha200 - 300
Punjab312 - 415
Rajasthan225 - 300
Tamil Nadu250 - 350
Telangana237 - 350
Uttar Pradesh225 - 300
Uttarakhand225 - 300
West Bengal257 - 370
minimum wages in Maharashtra350 - 400
minimum wages in MP200 - 290
minimum wages in Bihar200 - 275

Central Minimum Wages (Approximate, as of the latest updates) in INR per day:

The approximate minimum sealery for minimum wages—notification of the Central Labour Commissioner—is summarized in the following table.

CategoryUnskilledSemi-skilled Skilled Highly Skilled 
Agriculture178 – 225202 – 250237 – 287263 – 335
Construction/Building335364395438
Manufacturing335364395438
Mining350380410450
Services (e.g., Cleaning)300330360400
Minimum wages in India
Notes:

The kind of industry and the workers’ skill level are two of the many factors that go into determining the minimum wages set by the central government.

Within the industries covered by the central government’s minimum wage regulations, the labour rates may differ slightly depending on certain conditions or locations.

The Ministry of Labour and Employment may periodically review and amend these rates.

Please consult the official notifications from the Indian government’s Ministry of Labour and Employment for the most accurate and recent information.

All compliances registers maintaining under The Minimum wage Act

The Minimum Wages Act, 1948, mandates that employers maintain specific registers to ensure compliance with minimum wage standards and related provisions. Below is a detailed list of the compliance registers required under this act in India, along with the details for each:

Minimum Wages Act, 1948 Compliance Registers

Register NameDetails
Register of Fines (Form I)Records all fines imposed on employees, reasons for the fines, amounts, and dates of imposition.
Register of Deductions for Damage or Loss (Form II)Details all deductions made from employees' wages for damage or loss caused by the employee, including reasons and amounts.
Register of Wages (Form IV)Comprehensive record of wages paid to each employee, including basic wages, allowances, deductions, and net pay.
Overtime Register (Form V)Records overtime hours worked by each employee, rates of overtime wages, and amounts paid for overtime work.
Wage Slip (Form XI)Issued to each employee at the time of wage payment, detailing gross wages, deductions, and net pay.
Register of Employment (Form III)Details of all employees, including name, designation, rate of wages, attendance, and other relevant employment details.
Register of Loans and Advances (Form VI)Records details of loans and advances given to employees, including amounts, dates, and repayment terms.
Register of Muster Roll (Form V)Daily attendance record of all employees, capturing their presence and absences.

Detailed Explanation of Minimum Wages Act Compliance Registers:

  • Purpose: To document fines imposed on employees for various infractions.
  • Details to Include:
    • Name of the employee
    • Nature and date of the offense
    • Amount of fine
    • Date of imposition
    • Details of employee’s explanation (if any)
    • Date of credit to the fine fund
  • Purpose: To record deductions made from employees’ wages for causing damage or loss to the employer.
  • Details to Include:
    • Name of the employee
    • Particulars of damage or loss
    • Date of damage or loss
    • Amount of deduction
    • Date of deduction
    • Remarks
  • Purpose: To maintain a detailed record of wages paid to each employee.
  • Details to Include:
    • Name of the employee
    • Designation
    • Wage period
    • Basic wages
    • Allowances (e.g., house rent, conveyance)
    • Gross wages
    • Deductions (e.g., fines, loans, advances)
    • Net wages paid
    • Date of payment
  • Purpose: To track overtime work and payments.
  • Details to Include:
    • Name of the employee
    • Designation
    • Dates and hours of overtime work
    • Rates of overtime wages
    • Total overtime wages paid
  • Purpose: To provide employees with a written record of their wages at the time of payment.
  • Details to Include:
    • Name of the employee
    • Wage period
    • Basic wages
    • Allowances
    • Gross wages
    • Deductions
    • Net wages paid
    • Date of payment

Maintaining these registers is essential for ensuring compliance with the Minimum Wages Act, 1948. They help in tracking wages, overtime, fines, deductions, and other employment details, ensuring transparency and fairness in wage payments. Regular updates and accurate record-keeping are necessary for legal compliance and to safeguard employees’ rights.

  • Purpose: To document loans and advances given to employees.
  • Details to Include:
    • Name of the employee
    • Amount of loan or advance
    • Date of disbursement
    • Terms of repayment
    • Balance outstanding
    • Date of recovery installments
  • Purpose: To keep a daily attendance record of all employees.
  • Details to Include:
    • Name of the employee
    • Date
    • Attendance status (present, absent, on leave, etc.)
    • Total attendance for the wage period

Summary of the 1984 Minimum Wage Act

  • India’s Minimum Wages Act of 1948 is a critical piece of legislation in the context of labour laws in India. It fixes the minimum wage rates for specific occupations in an effort to protect workers’ welfare. The Minimum Wages Act of 1948 is a key piece of legislation that ensures economic justice for Indian workers.
  • By mandating minimum wage standards, the Act seeks to protect workers from exploitation, provide them with a basic standard of living, and promote social equity. While it has positively impacted workers’ lives, effective implementation remains a challenge, necessitating ongoing efforts to enhance labour laws compliance and enforcement.
  • Minimum pay India is a vital component of the framework for Indian labour laws since it demonstrates the nation’s dedication to just labour practices and workers’ rights.