The Minimum Wages Act, 1948 is a key labour law in India that ensures workers are paid a fair minimum wage to prevent exploitation and support a decent standard of living. This law sets a baseline wage for workers in various industries, protecting their rights and promoting economic fairness.

In this blog, we dive into the Minimum Wages Act, covering its definition, scope, key provisions, amendments, history, and significance. Written in clear, simple language, this guide is perfect for employees, employers, or anyone curious about the law.

What is the Minimum Wages Act, 1948? Key Features

The Minimum Wages Act, 1948, is a law that requires employers to pay workers a minimum wage set by the government for specific types of work, known as scheduled employment. It aims to:

• Protect workers from unfair pay and exploitation.

• Ensure a basic income for a decent living standard.

• Reduce income inequality and poverty.

• Promote economic stability and fair labour practices.

The Act applies to workers in industries like factories, shops, agriculture, and construction, categorizing them as skilled, semi-skilled, or unskilled to set appropriate wage rates. It covers the entire country but allows Central and State Governments to set wages based on local needs.

Key Provisions of the Minimum Wages Act, 1948

The Act has 27 sections that outline how wages are fixed, paid, and enforced. Below are the key provisions explained simply:

Section 1: Scope and Application

• The Act applies across India, covering scheduled employments listed in the Schedule (Parts I and II).

Section 2: Definitions

• Employee: Any worker employed for wages, including outworkers, but not apprentices.

• Employer: The person responsible for paying wages.

• Wages: Cash payments for work, including house rent allowance, but excluding amenities like housing or medical care.

Section 3: Fixing Minimum Wages

• The appropriate government must:

  • Fix minimum wages for scheduled employment.

  • Review and revise wages at least every 5 years.

• Wages can vary by:

  • Type of work (e.g., skilled, semi-skilled, unskilled).

  • Region or locality.

  • Age group (adults, adolescents, children, apprentices).

• Wage types include:

  • Time Rate: Fixed pay per hour, day, or month.

  • Piece Rate: Pay based on work output.

  • Guaranteed Time Rate: Assured pay regardless of output.

  • Overtime Rate: Extra pay for extra hours.

Section 4: Components of Minimum Wages

• Minimum wages may include:

  • Basic Wage + Cost of Living Allowance (adjusted for inflation).

  • Basic wage + cash value of subsidized goods (e.g., food or clothing).

  • An all-inclusive rate covering all components.

Section 5: Procedure for Fixing or Revising Wages

• The government can fix or revise wages by:

  • Appointing committees or sub-committees to study wage needs.

  • Publishing proposals in the Official Gazette for public feedback (within 2 months).

• This ensures transparency and stakeholder input.

Section 7: Advisory Boards

• Each government sets up an Advisory Board to advise on wage fixation and revisions.

• The Central Advisory Board (Section 8) includes equal employer and employee representatives, plus independent members, to coordinate nationally.

Section 9: Composition of Committees

• Committees include employer and employee representatives (in equal numbers) and independent members to ensure fairness.

Section 11: Payment of Wages

• Wages must be paid in cash, but payment in kind (e.g., food or goods) is allowed with government approval.

Section 12: Mandatory Payment of Minimum Wages

• Employers must pay at least the minimum wage to all eligible workers within the prescribed time.

Section 13: Fixing Working Hours

• The government can set:

  • Normal working hours per day, including rest intervals.

  • A weekly rest day (every 7 days) with pay at least at the overtime rate.

Section 14: Overtime Wages

• Workers exceeding normal hours must receive overtime wages at least twice the normal rate.

Section 15: Wages for Incomplete Work

• If a worker is given less work than a normal day’s hours (not due to their refusal), they are still entitled to the full minimum wage.

Section 18: Record-Keeping

• Employers must maintain registers with:

  • Employee details.

  • Work performed.

  • Wages paid.

  • Receipts from workers.

Section 19: Inspectors’ Powers

• Government-appointed inspectors can:

  • Enter workplaces to check records.

  • Interview workers.

  • Seize documents for evidence.

  • Enforce compliance.

• Inspectors are public servants under the Indian Penal Code, 1860.

Section 20: Claims for Unpaid Wages

• Workers can file claims for non-payment or underpayment of wages with an Authority appointed by the government, such as:

  • Labour Commissioners.

  • Workmen’s Compensation Commissioners.

  • Judicial officers or magistrates.

• The Authority:

  • Hears both sides (employer and employee).

  • Can order payment of unpaid wages plus compensation up to 10 times the underpaid amount.

  • May waive compensation if the employer proves a genuine error (e.g., clerical mistake).

• Claims must be filed within 6 months (extendable in some cases).

Section 21: Single Application for Multiple Workers

• A group of workers or a trade union can file a single claim on behalf of multiple employees.

Section 22: Penalties for Non-Compliance

• Employers who:

  • Pay less than the minimum wage.

  • Violate working hours or overtime rules.

• Face:

  • Up to 6 months’ imprisonment, Rs. 500 fine, or both.

• Workers filing false claims may face Rs. 50 penalty.

Section 23: Exemption from Liability

• An employer can avoid penalties if they:

  • Prove the violation was caused by another person without their knowledge.

  • File a complaint against the actual offender.

  • Show they exercised due diligence.

Section 26: Exemptions

• The government can exempt certain employment from the Act’s provisions if justified (e.g., for public interest).

Section 27: Rule-Making Power

• Governments can make rules to implement the Act, such as the Minimum Wages Rules, 1950, which detail procedures for wage fixation and enforcement.

Types of Wages Under the Minimum Wages Act

The Act recognizes:

• Minimum Wages: The baseline pay set by the government for scheduled employments.

• Overtime Wages: Extra pay for work beyond normal hours (at least double the normal rate).

• Cost of Living Allowance: An adjustable component to account for inflation.

• Wages in Kind: Non-cash payments (e.g., food or housing) allowed with government permission.

Exclusions from wages:

• Value of amenities (e.g., housing, medical care, water).

• Pension or provident fund contributions.

• Travel allowances.

• Gratuity or special expense payments.

Comparison with the Code on Wages, 2019

The Code on Wages, 2019, aims to replace the Minimum Wages Act, 1948, along with three other labour laws. Key differences:

• Universal Floor Wage: The Code introduces a national floor wage set by the Central Government, which states cannot undercut.

• Broader Coverage: Applies to all establishments, not just scheduled employments.

• Simplified Wage Definition: Combines basic pay, dearness allowance, and retention payments, excluding bonuses and gratuity.

• Penalties: Higher fines (up to Rs. 50,000) and imprisonment (up to 3 months) for violations.

• Advisory Boards: Includes worker representatives from unorganized sectors.

The Code is not fully implemented as of May 12, 2025, so the 1948 Act remains in force. It aims to streamline wage laws but may face challenges in addressing India “‘s diverse workforce.

Objectives of the Minimum Wages Act, 1948

The Act’s main goals are to:

• Set and periodically revise minimum wages for scheduled employment.

• Prevent worker exploitation by ensuring fair pay.

• Regulate working hours and overtime payments.

• Establish enforcement mechanisms like inspectors and claims authorities.

• Empower governments to make rules for effective implementation.

It aims to create a balance between workers’ needs and employers’ capabilities while promoting social and economic justice.

Who is covered under the Minimum Wages Act?

The Act applies to:

• Workers in scheduled employment listed in the Act’s Schedule (e.g., agriculture, construction, factories, shops).

• All workers, regardless of the number of employees in an establishment, unless specified otherwise.

• Employees in both public and private sectors, including casual, temporary, and contract workers.

Some exceptions to the act are as follows:

• Under Section 3(1A), the government may not fix minimum wages for scheduled employment in a state if fewer than 1,000 workers are employed in that industry, but this is optional.

The appropriate government (Central or State) decides wages based on the type of employment:

• Central Government: For railways, mines, ports, and central public sector units.

• State Government: For other industries like agriculture, construction, and local businesses.

How Are Minimum Wages Fixed and Revised?

The government fixes wages based on:

• Cost of living (e.g., food, housing, clothing).

• Skill level (skilled, semi-skilled, unskilled).

• Region (urban vs. rural).

• Industry type (e.g., agriculture vs. manufacturing).

Revision Process:

• Wages must be revised every 5 years or sooner if needed.

• The government consults Advisory Boards or committees and may publish proposals for public input.

For example, in Bandhua Mukti Morcha v. Union of India (1984), the Supreme Court emphasized that minimum wages must ensure a decent standard of living, covering essentials like food, education, and healthcare.

Enforcement and Compliance

The Act ensures compliance through:

• Inspectors: They monitor workplaces and ensure employers follow wage rules.

• Claims Authorities: They resolve disputes over unpaid or underpaid wages.

• Penalties: Fines and imprisonment deter violations.

• Record-Keeping: Employers must maintain transparent wage records.

Non-compliance can lead to legal action, as seen in cases like People’s Union for Democratic Rights v. Union of India (1982), where the Supreme Court ruled that paying less than the minimum wage violates workers’ fundamental rights.

Why Was the Minimum Wages Act Introduced?

Before the Act, workers in India, especially during British colonial rule, faced exploitation with low wages and poor working conditions. The Industrial Revolution in the 19th century made this worse, as factory owners paid minimal wages to maximize profits. The Act was introduced to address these issues and ensure fair pay.

Historical Milestones

• 1928: The International Labour Conference discussed minimum wage standards, sparking global interest.

• 1931: The Royal Commission on Labour in India highlighted the need for a structured wage system.

• 1943–1944: The Standing Labour Committee meetings proposed a wage-fixing mechanism.

• 1946: The Minimum Wages Bill was introduced in the Indian legislature.

• 1948: The Minimum Wages Act was enacted post-independence to protect workers.

The Act was influenced by the Indian Constitution’s Directive Principles (Article 43), which emphasize fair wages and decent working conditions.

Amendments and Updates

The Minimum Wages Act, 1948, has not seen major amendments since its enactment, but key updates include:

• Variable Dearness Allowance (VDA): Introduced to adjust wages for inflation, linked to the Consumer Price Index.

• Periodic Revisions: States regularly update wage rates for different employments (e.g., Delhi revises wages twice yearly).

• Minimum Wages Rules, 1950: Provide procedural guidelines for enforcement and wage fixation.

Challenges and Criticisms

Despite its importance, the Act faces issues:

• Low Wage Rates: In some states, minimum wages are below living wage standards, as noted in Ascertainment of Living Standards v. Union of India (2007).

• Non-Compliance: Small businesses and unorganized sectors often evade wage rules.

• Complex Wage Structures: Variations across states and industries create confusion.

• Enforcement Gaps: Limited inspectors and resources hinder monitoring.

Conclusion: Why the Minimum Wages Act Matters

The Minimum Wages Act, 1948, is a cornerstone of India’s labour laws, ensuring workers receive fair pay and protection from exploitation. By setting minimum wages, regulating working hours, and enforcing compliance, it promotes economic fairness and reduces poverty. While challenges like low wage rates and enforcement gaps persist, the Act remains vital for workers’ rights.

As the Code on Wages, 2019, looms, the Act’s legacy of safeguarding workers will continue to shape India’s labour landscape. Employees should check their state’s minimum wage rates on government websites like labour.gov.in, and employers must maintain proper records to avoid penalties. For more details, consult a labour law expert or visit official resources.