Minimum Wage

Minimum wage rates in India are fixed under the Minimum Wages Act, 1948. Since labour is a concurrent subject under the Indian Constitution, minimum wage rates are determined both by the Central Government and State Governments. It is declared at the national, state, sectoral and skill/occupational levels

While fixing or revising minimum rates of wages, different minimum rates of wages may be fixed for different scheduled employments; different classes of work in the same scheduled employment; adults, adolescents, children and apprentices; and different localities. The minimum wage rates may be fixed by hour, day, month or any such other larger wage period as may be prescribed.

It is prohibited by employers to pay workers less than the minimum wages. Minimum wages notified by the government are either time based (number of hours of work) or per piece.

Source: §3-5, 18-22, 27 & 28 of the Minimum Wages Act 1948

Fixation and Revision of Minimum Wages

Under the Minimum Wages Act, 1948, both Central and State government have dominion over fixing the wages. The State governments fix their own scheduled employments and further release the rates of Minimum Wage along with the VDA (Variable Dearness Allowance). Wage boards are set up to review and fix minimum wages at specified intervals. The wage rates in scheduled employments differ across states, sectors, skills, regions and occupations owing to a lot of differentiating factors. Hence, there is no single uniform minimum wage rate across the country and the revision cycle differs for each state.

Scope and Applicability

Minimum Wages Act was enforced to ensure the employers did not exploit employees with insufficient wages. The Act is applicable on all establishments, factories, place of business and industry types. Unscheduled industries are generally excluded, though a state can add a minimum wage for an occupation or specify it for a sector during a revision cycle.

Consequences of Non-Compliance

Under-payment and non-payment of Minimum Wage is deemed as an offense under the Central Act. The penalty may range from upto 5 years imprisonment and a fine of Rs. 10000/- (under Section 22 of the Act).