Object, Constitutional Validity and Salient Features of Minimum Wages Act 1948

Objective of Minimum Wages Act 1948

The Minimum Wages Act came into existence to safeguard the interests of the workers engaged in the unorganized sector. This Act provides for fixation and revision of minimum wages of the workers engaged in employment. Under this Act, both central, as well as State Government, are responsible, in respect of scheduled employments within their jurisdictions to fix and revise the minimum wages and enforce payment of minimum wages.

In case of Central sphere, any Scheduled employment carried on by or under the authority
of the Central Government or a railway administration, or in relation to a mine, oil-field or major port, or any corporation established by a Central Act, the Central Government is the appropriate Government while in relation to any other Scheduled employment, the State Government is the appropriate Government. The Act is applicable only for those employments, which are notified and included in the schedule of the Act by the appropriate Governments.

According to the Act, the appropriate Governments review/revise the minimum wages in the scheduled employments under their respective jurisdictions at an interval not exceeding five years. However, there is large-scale variation of minimum wages both within the country and internationally owing to differences in prices of essential commodities, paying capacity, productivity, local conditions, items of the commodity basket, differences in exchange rates etc. The objective of this study lesson is to thoroughly acclimatize the students with the law relating to minimum wages.

The Minimum Wages Act, 1948, is an Act to provide for fixing minimum rates of wages in certain employments. The employment is those which are included in the schedule and are referred to as ‘Scheduled Employments’.

The Minimum Wages Act was passed in 1948 and it came into force on 15th March 1948. The National Commission on Labour has described the passing of the Act as a landmark in the history of labour legislation in the country.

The philosophy of the Minimum Wages Act and its significance in the context of conditions in India has been explained by the Supreme Court in Unichoyi v. State of Kerala (1), as follows:
“What the Minimum Wages Act purports to achieve is to prevent exploitation of labour and for that purpose empowers the appropriate Government to take steps to prescribe minimum rates of wages in the scheduled industries. In an underdeveloped country which faces the problem of unemployment on a very large scale, it is not unlikely that labour may offer to work even on starvation wages. The policy of the Act is to prevent the employment of such sweated labour in the interest of general public and so in prescribing the minimum rates, the capacity of the employer need not be considered. What is being prescribed is minimum wage rates which a welfare State assumes every employer must pay before he employs labour”.

According to its preamble the Minimum Wages Act, 1948, is an Act to provide for fixing minimum rates of wages in certain employments. The employment is those which are included in the schedule and are referred to as ‘Scheduled Employments’. The Act extends to whole of India.

THE CONSTITUTIONAL VALIDITY OF THE MINIMUM WAGES ACT, 1948

India introduced the Minimum Wages Act in 1948, giving both the Central government and State government jurisdiction in fixing wages. The act is legally non-binding but statutory. Payment of wages below the minimum wage rate amounts to forced labour. Wage Boards are set up to review the industry’s capacity to pay and fix minimum wages such that they at least cover a family of four’s requirements of calories, shelter, clothing, education, medical assistance, and entertainment. Under the law, wage rates in scheduled employments differ across states, sectors, skills, regions and occupations owing to the difference in costs of living, regional industries’ capacity to pay, consumption patterns, etc. Hence, there is no single uniform minimum wage rate across the country and the structure has become overly complex.

(A) The act is not unreasonable

It can scarcely be disputed that securing of living wages to labourers which ensure not only bare physical subsistence but also the maintenance of health and decency is conducive to the general interest of the public. This is one of the directive principles of the state policy embodied in Article 43 of the constitution.

Individual employers might find it difficult to carry on the business on the basis of minimum wages fixed under the Act but this must not be the entire premise and reason to strike down the law itself as unreasonable.

“ The restrictions, though they interfere to some extent with the freedom of trade or business guaranteed under Article 19(1)(g) of the constitution, are reasonable and, being imposed on the general interest of the general public, are protected by the terms of the clause (6) of the article 19.” This quote is a part of judgment in the case “ Golmohammad Tatyasaheb, a bidi factory by its proprietors Shamrao v. State of Bombay(2)

Another important judgment that favours and supports the constitutional Validity of the Minimum Wages Act, 1948 is, “ V. Unichonoy v. State of Kerala(2). This case raised the same questions which were raised in the case of Golmohammad Tatyasaheb v. State of Bombay(3)., which were, “that , can a state be prevented from making any law, in the interest of general public, where it creates restrictions and interferes to some extent with the freedom of trade or business guaranteed under Article 19(1)(g), of the Constitution of India, and it was held that “ Fixation of minimum wages is for preservation of public order, and if no minimum wage is fixed then it shall lead to arbitrariness by the employers and that shall lead to clashes of interest between employer and labour which shall cause friction in society”.

The article 14 of the Indian Constitution which relates to equality before the law, it must be noted that minimum wages are not fixed equally across the whole nation but they vary from occupation to occupation and industry to industry and from place to place.

The case of Uchinoy v. State of Kerala (1) further quotes the following, “As regards to the procedure for fixing of the minimum wages, the ‘appropriate government’ has undoubtedly been given very large powers, but it has to take into consideration, before fixing wages, the advice of the committee if one is appointed on the representations on proposals made by persons who are likely to be affected thereby. The various provisions constitute an adequate safeguard against any hasty or capricious decision by the ‘appropriate government’. In suitable cases, the ‘appropriate government’ has also been given the power of granting exemptions from the operations of the provisions of the Act. There is no provision undoubtedly, for a further review of the decision of the appropriate government, but that itself would not make the provisions of the act unreasonable”.

(B) The Act doesn’t violate Article 14 of the Indian Constitution.

“On a careful examination of the various Acts and the machinery set up by this Act, Section 3(3)(iv) neither contravene Article 19(1) of the constitution nor does it infringe the equal protection clause of the constitution. the Courts have also held that the constitution of the committees and the Advisory Board did not contravene the statutory provisions in that behalf prescribed by the legislature”,- this was held in the case of ‘Bhikusa Yamasa Kshatriya v. Sangamner Akola Bidi Kamgar Union“(4). Further, as decided in the case “C.B. Boarding & Lodging, Re(1970) II LLJ 403: AIR 1970: SC 2042: 38 FIR I(5) .” , it added to the above-mentioned case that, “… nor the reason that two different procedures are provided for collecting information.”

(C) Notification fixing different rates of minimum wages for different localities is not discriminatory.

where the fixation of rates of wages and their revision was manifestly preceded by a detailed survey and enquiry and the rates were brought into force after a full consideration of the representations which were made by a section of the employers concerned, it would be difficult in the circumstances to hold that notification which fixed different rates of minimum wages for different localities was not based on intelligent differentia having a rational nexus with the object of the Act, and thereby violated article 14. when the Government issued notification improving the existing minimum wages as revised minimum wages disregarding the contrary report of the committee appointed under Section 5-1(a) ; such notification was bad under the law and was to be made inoperative.”.

As pointed out by one of the India’s Union Labour and Employment Minister Shri Mallikarjuna Kharge;, “The variation of minimum wages between the states is due to differences in socioeconomic and agro-climatic conditions, prices of essential commodities, paying capacity, productivity and local conditions influencing the wage rate. The regional disparity in minimum wages is also attributed to the fact that both the Central and the State Governments are the appropriate Governments to fix, revise and enforce minimum wages in Scheduled employments in their respective jurisdictions under the Act”.

Referring the case of “N.M.Wadia Charitable Hospital v. State of Maharashtra , 1993”(6), it was decided by the Court that – “ Fixing different minimum wages for different localities is permitted under the constitution and under labour laws, hence the question that any proviso of the Minimum Wages Act is in any way against the proviso of constitution is wrong.

(D) Sanctity of The Minimum Wage Act

Supreme Court in three separate rulings, has held that non-payment of minimum wages is tantamount to ‘forced labour’ prohibited under Article 23 of the Constitution. The Supreme Court holds that ‘forced labour’ may arise in several ways, including “compulsion arising from hunger and poverty, want and destitution”. In Sanjit Roy v. State of Rajasthan (1983) (7), the Supreme Court held that the Exemption Act in so far as it excluded the applicability of the Minimum Wages Act 1948 to the workmen employed in famine relief work is “clearly violative” of Article 23. Thus even public works ostensibly initiated by the government for the sole purpose of providing employment are subject to the Minimum Wage Act.

Drawing on the Supreme Court rulings, Andhra High Court set aside the Government of India (GoI) notification mandating that prevailing state minimum wage be paid. This has been underscored in the legal opinion provided by Additional Solicitor General, Ms. Indira Jaising, to the Central Employment Guarantee Council (CEGC) Working Group on Wages where she made it clear that using Section 6(1) to allow a payment of less than minimum wage in MGNREGA works will amount to forced labour. 15 eminent jurists and lawyers of India to have asked Government of India to immediately revoke its unconstitutional notification and ensure that minimum wages are paid to all workers in India.

In the view of the Directive Principles of State Policy as contained in the Article 43 of the Indian Constitution, it is beyond doubt that securing of living wages to labourers which ensures not only bare physical subsistence but also the maintenance of health and decency, it is conducive to the general interest of the public.

Salient features of minimum wages act 1948

Some of the salient features of minimum wages act 1948 are as follows:-

1. The Act applied to certain employments (listed in the Schedule). Both the governments (Central and State) have to declare minimum wages for their sphere. The appropriate government may add any employment to the list if there are 1000 workers are working in that state.
2. Minimum wage means all remuneration in cash includes HRA (declared minimum wage + special allowance).
3. Kinds of fixing of Minimum wages: (a) a minimum time rate, (b) a minimum piece rate, (c) a guaranteed time rate, (d) a time rate or a piece rate applicable to overtime rate.
4. Classes of fixing minimum rates of wages : (a) different scheduled employments; (b) different classes of work in the same scheduled employment; (c) adults, adolescents, children and apprentices; and (d) different localities (zone wise).
5. Norms to be considered for fixing minimum wage: Standard family of four members – three consumption units (2 adults + 2 children) for one earner. Minimum food requirement should be calculated on the basis of a net intake of calories. Clothing a total of 72 yards;
   The rent corresponding to the minimum area (one room) Other routine expenditure 20% of the total minimum wage. Social expenditure – further constitute 25% of the total minimum wage.
6. Period to revise minimum wages by the appropriate government is five years.
7. The appropriate Government shall declare special allowance after every six months (i.e. 1st April and 1st October of every year).
8. In case of not paying minimum wage, a claim can be made under section 20 before the labor authority who can make or order of payment of 10 times of difference amount.
9. Not paying Minimum wages is an offence punishable up to six months’ imprisonment or with fine up to Rs. 500 or with both.
10. Contracting out: Any contract or agreement whereby an employee either relinquishes or reduces his right to a minimum rate of wages or any privilege or concession accruing to him under this Act shall be null and void.
11. Regional Labour Commissioner (C) is the authority declared by Central Government to decide claims (less than minimum wages) made under section 20 of the Act. Assistant Commissioner of Labour is an authority in Gujarat.

Reference

1. Unichoyi v. State of Kerala (A.I.R. 1962 SC 12)
2. Shamrao v. State of Bombay, AIR 1962 Bom 97
3. Golmohammad Tatyasaheb v. State of Bombay, AIR 1962 Bom 97
4. Bhikusa Yamasa Kshatriya v. Sangamner Akola Bidi Kamgar Union”, AIR 1963 SC 306
5. C.B. Boarding & Lodging, Re (1970) II LLJ 403: AIR 1970: SC 2042: 38 FIR I.”
6. N.M.Wadia Charitable Hospital v. State of Maharashtra , 1993 IIILLJ 536 Bom
7. Sanjit Roy v. State of Rajasthan 1983 AIR 328, 1983 SCR (2) 271