Minimum Wages in India

The Indian Constitution defines ‘Minimum Wage’ as the income level necessary for both skilled and unskilled workers to maintain a satisfactory standard of living and experience comfort. The minimum wage aims to achieve sustainable continuous growth while ensuring the minimum required level of employment. Its primary objective is to prevent labor exploitation.

Minimum Wage in India varies by state. State governments have updated insights into the cost of living, expenditures, working conditions, and living standards in scheduled employment.
Businesses are currently experiencing anxiety and confusion due to the continuous extensions, often finding it difficult to comprehend the status of State-level Minimum Wage notifications. Therefore, we have compiled the current state of the rules as reported by the States and Union Territories, with a commitment to keeping it updated as changes occur.

SCOPE AND APPLICABILITY

The Minimum Wages Act, 1948 applies to the whole of India, Its purpose is to prevent establishments from exploiting their employees with insufficient wages. The Act covers all establishments, factories, places of business, and various industrial types. While states may add a minimum wage for a profession or designate one for a sector during a review cycle, unscheduled industries are typically exempt.

Central and State Governments of India notify minimum wages that employers must pay for Scheduled Employments. The rates introduced by the Minimum Wages Act, 1948, are to be paid by employers, managers, or contractors of any establishment, factory, mine, or industrial undertaking. Wage rates are revised by the Central or State governments according to worker levels, such as highly skilled, semi-skilled, unskilled, and skilled.

COMPONENTS OF MINIMUM WAGE CALCULATION

• Basic Wage
• Variable Dearness Allowance (VDA)
• House Rent Allowance (HRA)

FACTORS EXAMINED WHILE CALCULATING INDIA’S MINIMUM WAGES

Different states in India have different rules for minimum wages. Factors considered in fixing the minimum wage include:

• State Income level
• Employers’ Paying capacity
• Prices of essential commodities
• Productivity
• Local conditions

PENALTIES OF NON-COMPLIANCE

Section 22 of The Minimum Wages Act, 1948, describes the Penalties for Consequences of Non-Compliance for certain offences such as under-payment and non-payment of Minimum Wage. The punishment can include imprisonment up to six months or a fine of up to Rs. 500/- or both. Additionally, a worker paid less than the minimum wage can file a claim for recovery of the unpaid amount before an authority appointed by the government. The authority can order the employer to pay the unpaid amount, compensation, and interest. The worker can also file a complaint before a court within six months from the payment date of less than minimum wage.

MINIMUM WAGES FOR STATES ACROSS INDIA

In the labor laws of India, The Minimum Wages Act of 1948 is a crucial piece of legislation. It ensures a minimum wage for all the work that employees undertake. Since labor law falls under the Concurrent List, both the Central Government and the State Governments are the appropriate authorities under the Minimum Wages Act. Consequently, both governments can establish and revise minimum wages according to the needs of the employees covered by the Act. Additionally, State Governments may amend the Act and rules to apply them within their respective states.

Businesses operating in India must comply with the Minimum Wages Act to foster satisfaction among their staff. Calculating appropriate remuneration is essential because non-compliance can lead to legal consequences that organizations should strive to avoid. Employers should ensure that the minimum wages they pay meet the standards set by the Indian government, as failure to do so could harm their reputation.

The Minimum Wages Act of 1948 will be repealed and replaced by the Code on Wages of 2019, which was established by Parliament to consolidate all wage-related legislation into a single code. However, the Code has not yet come into effect. Please click on this link for more information on the New Labor Law Codes.