The Minimum Wages Act, 1948 lists the minimum wages to be paid but sadly, a large proportion of these workers are currently not covered by the Act but with the introduction of the Code on Wages, the concept of bringing only specific jobs under the Act has been done away with and makes it mandatory that minimum wages shall be paid for all types of employment irrespective of whether they are in the organized or the unorganized sector.
Floor Wage:
The code introduces the concept of Floor Wage which is to be determined by the Central Government. This floor wage is determined after taking into account the minimum living standards of workers in a prescribed manner, which may be different for different geographical areas. Once the floor wage is fixed, the appropriate Government cannot fix a minimum wage rate that is lower than the floor rate determined. If the existing minimum wages already fixed by the appropriate Government are higher than the floor wage, they cannot reduce it. The Floor wage fixed shall function as a baseline for State-level minimum wages.
Payment of minimum rate of wages
No employer shall pay to any employee wages less than the minimum rate of wages notified by the appropriate Government.
Fixation of Minimum Wages
The appropriate Government shall fix the minimum rate of wages –
(a) for time work; or
(b) for piece work.
Where the employees are employed on a piece work basis, the appropriate Government shall fix a minimum rate of wages for securing such employees a minimum rate of wages on a time work basis.
In case of time work the rates may be fixed in accordance with any one or more of the following wage period:
By the hour, or
By the day, or
By the month
For the purpose of fixation of the minimum rate of wages under this section, the appropriate Government – (a) shall primarily take into account the skill of workers required for working under the categories of unskilled, skilled, semi-skilled and highly-skilled or geographical area or both; and
(b) may, in addition to such minimum rate of wages for a certain category of workers, take into account their arduousness of work like temperature or humidity normally difficult to bear, hazardous occupations or processes or underground work as may be prescribed by that Government; and
(c) the norms of such fixation of the minimum rate of wages shall be such as may be prescribed. The minimum wages will vary from place to place depending upon the skill required, arduousness of the work assigned and the geographical location.
Components of Minimum Wages
- Any minimum rate of wages fixed or revised by the appropriate Government under section 8 may consist of––
- (a) a basic rate of wages and an allowance at a rate to be adjusted, at such intervals and in such manner as the appropriate Government may direct, to accord as nearly as practicable with the variation in the cost of living index number applicable to such workers (hereinafter referred to as "cost of living allowance"); or
- (b) a basic rate of wage with or without the cost of living allowance, and the cash value of the concessions in respect of supplies of essential commodities at concession rates, where so authorized; or
- (c) an all-inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of the concessions, if any
- The cost of living allowance and the cash value of the concessions in respect of supplies of essential commodities at concession rate shall be computed by such authority, as the appropriate Government may by notification, appoint, at such intervals and in accordance with such directions as may be specified or given by the appropriate Government from time to time.
Procedure for fixing and revising minimum wages
The code prescribes that the Appropriate Government shall revise the wages every five years. Two methods for fixing or revising minimum wages has been provided by the code:
- Committee Method
- Notification Method
Composition of Committee:
Every committee appointed by the appropriate Government shall consist of persons–– (a) representing employers; (b) representing employees which shall be equal in the number of the members specified in clause (a); and (c) independent persons, not exceeding one-third of the total members of the committee.
Power of Central Government to fix floor wage
- The Central Government shall fix floor wage taking into account minimum living standards of a worker in such manner as may be prescribed: Provided that different floor wage may be fixed for different geographical areas.
- The minimum rates of wages fixed by the appropriate Government under section 6 shall not be less than the floor wage and if the minimum rates of wages fixed by the appropriate Government earlier is more than the floor wage, then, the appropriate Government shall not reduce such minimum rates of wages fixed by it earlier.
- The Central Government may, before fixing the floor wage shall obtain the advice of the Central Advisory Board and consult State Governments.
Wages of an employee who works for less than the normal working day
If an employee whose minimum rate of wages has been fixed under this Code by the day, works on any day on which he was employed for a period of less than the requisite number of hours constituting a normal working day (normally 9 hours per day), he shall be entitled to receive wages in respect of work done on that day, as if he had worked for a full normal working day. Provided that he shall not be entitled to receive wages for a full normal working day.
But he shall not be paid wages for a full normal working day if his failure to work is caused by his unwillingness to work and not by the omission of the employer to provide him with work.
Wages for two or more classes of work
The employer shall pay to such employee in respect of the time respectively occupied in each class of work where an employee does two or more classes of work.
Minimum time rate wages for piece work
Where a person is employed on piece work for which a minimum piece rate has not been fixed but minimum time rate has been fixed the employer shall pay to such person wages at not less than the minimum time rate.
Fixing hours of work for a normal working day
The appropriate Government may
- fix the number of hours of work which shall constitute a normal working day inclusive of one or more specified intervals
- provide for a day of rest in every period of seven days
- provide for payment for work on a day of rest at a rate not less than the overtime rate.
Wages for overtime work
If an employee works on any day in excess of the number of hours constituting a normal working day, the employer shall pay him for every hour or for part of an hour so worked in excess at the overtime rate which shall not be less than twice the normal rate of wages
Conclusion
It is very important to keep up with the updates made by the Government on this subject, failing to comply with the same may attract a huge penalty and in some cases, it may lead to imprisonment also.