The Minimum Wages Act, 1948 is a crucial piece of labour legislation enacted for the welfare of workers across India. It ensures that every worker receives at least the minimum amount of wages prescribed by the government—irrespective of the type of work they do.
This Act acts as a shield against exploitation by ensuring that employers do not pay workers less than what is legally mandated. It upholds the right to a decent livelihood, allowing workers to meet basic needs and live with dignity.
Case- Bijay Cotton Mills Ltd. vs State of Ajmer- In this case, the constitutional validity of the Minimum Wages Act, 1948 was challenged.
Argument by petitioner- The petitioner argued that the Act violated Article 19(1)(g) of the Indian Constitution, which guarantees the freedom to practice any profession or carry on any occupation, trade, or business. They contended that employers who couldn’t afford to pay minimum wages for genuine economic reasons (not due to dishonesty) would be unfairly penalized.
Supreme Court’s Verdict- The Court upheld the validity of the Act. It emphasized:
“The inability of certain employers to pay minimum wages due to economic reasons cannot make the law unreasonable.“
The intention of the employer, whether good or bad, is irrelevant.
What matters is the greater public interest—to ensure that workers earn a living wage.
The Court reinforced that minimum wages are essential for maintaining the health and well-being of the labour force and, by extension, the welfare of the nation.
INTERPRETATION OF WORDS
Section 2 (a)- Adolescent- A person who has completed his fourteenth year of age but not has completed his eighteenth year.
Section 2(b)- Appropriate government- According to this act appropriate govt. means:
- Central Government- In relation to any schedule employment carried on by or under the authority of central government or a railway administration, or in relation to mine, oil field or major port, or any corporation established by central act.
- State Government- In relation to any other scheduled employment mentioned above.
Case- Regional Labour Commissioner, Bangalore and others vs T.K. Varkey and Co. and another [ 1991 (62) FLR 718]- In this case workers were employed in constructing railway staff quarters. Though paid minimum wages as per the State Government’s notification, the Labour Commissioner contended that they should be paid as per Central Government rates. The Court agreed – since the work was on railway property, the Central Government was the appropriate authority.
Section 2(bb)- Child- It means a person who has not completed fourteen year of age.
Section 2(d)- Cost of living index number- It basically means the index number which is declared by the competent authority which is applicable to employees in employment.
Section 2(e)- Employer- This section defines employer as, A person who employs directly or through other person,or on behalf of some other person or any other person one or more employees in the scheduled employment . It includes following:
- The factory manager as per factories act, 1948
- A government appointed authority or department head for government employment
- A supervisor or Chief executive officer for local authority employment
- Any person responsible to the owner of supervision and control of the employees.
Case- Robert Toppo vs State of Jharkhand and others [2003 (2) BLJR 1222]- In this case a school principal resisted paying minimum wages to labourers building a hall, claiming it was “shramdan” (voluntary service). The Court held that the Act does not exempt “shramdan” but minimum wages must be paid if labour is used.
Section 2(g)- Scheduled Employment- It means an employment specified in the schedule or any process or any branch of work forming part of such employment.
Case- Chatturam Darsanram vs Union of India [(1980) II LLJ 465 PAT]- In this case Employers challenged a wage revision for mica mine workers, arguing “mica mines” wasn’t listed in the Schedule (only “mica works” was). The Court agreed that since mica mines weren’t explicitly mentioned, Central Government had no authority to fix wages in that case.
Section 2(h)- Wage- It means all remuneration which is expressed in terms of money which an employee is entitled to receive under their employment contract. It also includes house rent. Wages does not include following things:
- The value of any house accommodation, supply of light, water, medical attendance or any other amenity or any service excluded by general or special order of the appropriate govt.
- Pension fund or provident fund
- Any travelling allowance or concession
- Any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment.
- Any gratuity payable on discharge.
Section 2(i)- Employee- It means any person who is employed for hire or reward to do any work, skilled or unskilled, manual or electrical in a scheduled employment in respect of which minimum wages is fixed. It also includes and an out-worker to whom any articles or materials are given out by another person to be made up, cleaned, washed, altered, ornamented, finished, repaired, adapted or otherwise processed for sale for the purposes of the trade or business of that other person where the process is to be carried out either in the home of the out-worker or in some other premises not being premises under the control and management of that other person; and also includes an employee declared to be an employee by the appropriate Government; but does not include any member of the Armed Forces.
Case- Kamani Metals and Alloys vs Their Workmen (AIR 1967 SC 1175)- In this case the supreme court defines the minimum wage, fair wage and living wage as follows:
“The first principle is that there is a minimum wage which, in any event, must be paid, irrespective of the tent of profits, the financial condition of the establishment or the availability of workmen on lower wages., This minimum wage is independent of the kind of industry and applies to all alike big or small. It sets the lowest limit below which wages cannot be allowed to sink in all humanity. The second principle is that wages must be fair, that is to say, sufficiently high to provide a standard family with food, shelter, clothing, medical care and education of children appropriate to the workman but not at a rate exceeding his wage earning capacity in the class of establishment to which he belongs. A fair wage is thus related to the earning capacity and the workload. It’ must, however, be realised that ‘fair wage’ is not ‘living wage’ by which is meant a wage which is sufficient to provide not only the essentials above-mentioned but a fair measure of frugal comfort with an ability to provide for old age and evil days. Fair wage lies between the minimum wage,which must be paid in any event, and the living wage, which is the goal.”
FIXATION OF MINIMUM RATE OF WAGES
Under the Minimum Wages Act, 1948, Section 3 empowers the appropriate government to determine and revise minimum wages to ensure fair compensation for workers. Important points related to section 3 are
Fixing Minimum Wages [Section 3(1)]
The appropriate government can fix the minimum wage rates for employments listed in:
Part I & Part II of the Schedule, or
Any employment added via Section 27
Important Provision- Wages can be fixed:
For any part of the State, or
For any class or classes of employees
Mandatory Review Cycle
The government must review and revise minimum wage rates from time to time, But not later than every 5 years. However, If no revision occurs within five years, the existing wage rates continue to apply until a revision is made.
Employment with Less than 1,000 Workers [Section 3(1A)]
If fewer than 1,000 people are employed in a scheduled employment: The appropriate government may choose not to fix minimum wages. But if that number increases beyond 1,000, The government can then fix the wage rates for that employment.
What Can the Government Fix? [Section 3(2)]
The government has the power to set:
🕓 Minimum Time Rate – Wages for time-based work
⚙️ Minimum Piece Rate – Wages for each unit of work done
⏱️ Remuneration for Piece Work Based on Time Wages – Ensures time-based minimum wage even for piecework
⌛ Minimum Overtime Rate – Compensation for extra working hours
Pending Legal Disputes or Wage Awards [Section 3(2A)]
If a legal dispute or wage award is ongoing, New minimum wage notifications won’t apply until:
The dispute is settled, or
The award expires
Also, if such a dispute or award affects all employees in that employment, then no new wage rates can be set during that period.
Flexible Wage Structures [Section 3(3)]
While fixing wages, the government can make variations based on:
1. Type of Employment:
Different scheduled employments
Different classes of work within the same employment
2. Type of Worker:
Adults, Adolescents, Children, Apprentices
3. Location:
Different localities
4. Wage Periods:
Hourly
Daily
Monthly
Or any larger period as prescribed
Case Law
Case- Mr. Hassan Jan vs State of Bihar[(1980) II LLJ 358 Pat]- In this case government fixed wages for a period of 1 year but the rule 21 of the Act says that Wage cannot exceed one month. It was held that wage fixation for 1 year is invalid
MINIMUM RATE OF WAGES
Under Section 4 of the Minimum Wages Act, 1948, the appropriate government has the authority to fix or revise the minimum rate of wages. The law allows three ways to structure the minimum wage:
🟢 Option 1- Basic Rate + Cost of Living Allowance
A wage that includes:
-
A basic wage, and
-
A special allowance (adjusted according to cost of living index)
📈 This ensures that wages keep up with inflation, protecting workers’ real income.
🟢 Option 2- Basic Rate + Optional Add-ons
A wage that includes:
-
A basic wage,
-
Possibly a cost of living allowance, and
-
The cash value of concessions (e.g., subsidized food or essential goods)
🏪 This version adds flexibility while still providing essential support.
🟢 Option 3- All-Inclusive Rate- It is a single comprehensive rate that includes:
-
The basic wage,
-
Cost of living allowance, and
-
The cash value of concessions
🔄 No breakdown needed — it’s a flat all-in wage.
Case- Jaswant Rai Beri vs State of Punjab (AIR 1958 P&H 425)- In this case a issue rose before court that whether a mistake in citing the legal clause affects the validity of wage notification. but it was held that even if the wrong subsection (Section 4(1)(ii) vs 4(1)(iii)) is cited in the notification, the wage fixation remains valid because what matters is the substance of the fixation, not the label attached to it.
Irrelevant things while fixing minimum wages- The following things are irrelevant while fixing the minimum wages and minimum wage cant be argued on the following grounds:
- It is difficult for employer to carry on his business
- Financial capacity of employee.
- Company earning losses.
- Employer`s incapacity in importing raw materials
- Region- cum industry princples
PROCEDURE FOR FIXING MINIMUM RATE OF WAGES
Section 5 of the Minimum Wages Act, 1948 lays down the step-by-step procedure the appropriate government must follow to fix or revise minimum wages. It offers two methods:
- Method 1: Committee Approach- The government can appoint committees and sub-committees as needed to:
Hold inquiries, and
Advise on fixing or revising wages.
- Method 2: Notification/ Public consultation Approach- The government may:
Publish its proposals for the intended wage revision.
Give at least 2 months for public feedback.
Consider objections/suggestions before finalizing the wages.
Final Fixation of Wages:
Section 5(2) provides that after following either method, the government may fix or revise minimum wages. The new rates come into force after 3 months from the date of notification — giving employers and workers time to prepare.
Consultation with Advisory Board:
If the government uses Method 2 (Public Notification) to revise wages, it must consult the Advisory Board before finalizing the rates. The Advisory Board helps maintain fairness and balance in wage policy.
If the government uses Method 2 (Public Notification) to revise wages, it must consult the Advisory Board before finalizing the rates. The Advisory Board helps maintain fairness and balance in wage police
Case- Chandra Bhavan Boarding and Lodging vs State of Mysore (AIR 1970 SC 2042)- In this case constitutional validity of section 5(1) was challenged due to giving two procedures with no clear guidance and it was held that the provision is not arbitrary. The government’s discretion to choose either method is valid under the Constitution.
ADVISORY BOARD
Section 7 of the Minimum wages act, 1948 deals with advisory board. As per this section the Appropriate Government (i.e., State Government) must appoint an Advisory Board to:
- Coordinate the work of all committees and sub-committees appointed under Section 5.
- Advise the government on the fixation and revision of minimum wages
Central Advisory Board- Section 9 of the act deals with central advisory board. At the national level, the Central Government must constitute a Central Advisory Board to:
- Advise both Central and State Governments on matters related to minimum wage fixation/revision.
- Coordinate the functioning of State Advisory Boards.
Composition of Committee and Boards- Section 9 of the act standardizes the composition of committees, sub committees, and advisory boards:
| 🔍 Category | 📋 Details |
|---|---|
| 👥 Representatives of Employers & Employees | Nominated by the appropriate government in equal proportion. |
| 🧑 Independent Persons | Must not exceed one-third of total membership. |
| 👨⚖️ Chairman | Shall be an independent person, appointed by the appropriate government. |
📌 Self-governed Process: There’s no fixed procedure prescribed for the working of these boards/committees. They are free to determine their own procedures as needed.
Case- State of Rajasthan vs Hariram Nathwani(AIR 1976 SC 277)- In this case it was held that even if there’s an irregularity in the composition of the Advisory Board, its recommendations and the government’s final decision remain valid.
Case- Jaswant rai Beri vs State of Punjab- In this case it was held that aLabour Commissioner can be considered an independent person under the Act and can be appointed as Chairman of the board.
WAGES IN KIND
Wages in Cash- Section 11(1) provides that minimum wages payable under this act shall be paid in cash.
Wages in Kind- Section 11(2) provides that where it is custom to pay wages in kind either wholly or partly, then appropriate government may authorize payment of wages wholly or partly in Kind
Supply of essential commodities- Section 11(3) provides that if appropriate govt. is of opinion that provision should be made for supply of essential commodities at concessional rates then it may be authorized
Estimation- Section 11(4) provides that the cash value of wages in kind and of concession in respect of supplies of essential commodities at concession rates authorized under sub-sections (2) and (3) shall be estimated in the prescribed manner.
PAYMENT OF MINIMUM RATE OF WAGES
Section 12 provide that where a notification is issued under section 5 , then the employer shall pay his employees wage which is not less than the minimum rate of wage which is fixed by such a notification.
FIXATION OF HOURS
Power of Appropriate Government under Section 13:
Fix the number of working hours in a normal day
Mandate one rest day every seven days
Ensure payment for that rest day
Provide for extra pay if a worker works on the rest day (not less than the overtime rate)
Applicability of section 13- Section 13 is not universal and is applicable only in the following situations:
Worker engaged in urgent or emergency work
Worker is involvdd in preparatory or complementary tasks outside normal hours
Worker us under intermittent employment
Worker doing technical work that must be completed within the shift
Worker doing work that depends on natural forces (e.g., tidal work, agriculture, etc.
Overtime Wages
Section 14 of the minimum wage act, 1948 provides that when a worker exceeds the normal working day (set under Section 13), the employer must pay overtime. Overtime payment must be at the rate fixed under the Act or under any other law by the Appropriate Government whichever is higher!
Case- Municipal Council, Hatta vs Bhagat Singh (AIR 1998 SC 1201)- In this case the Supreme Court clarified that overtime under Section 14 is payable only when:
The minimum wage is fixed under the Act, and
The employee works beyond normal hours.
Worker working less than working days
Section 15 of the act provides that this section protects workers when they are willing to work, but are given less than a full day’s work. As per this section worker who works less than the normal hours must still be paid full wages.
Exception of Section 15:
If the worker himself is unwilling to work the full day
Or in specific, prescribed circumstances (like worker absenteeism or misconduct)
INSPECTOR
Section 19 provides that the appropriate government by notification may appoint inspector under this act.
The powers of inspector are:
- He may enter at all reasonable hours, at any premises or places where persons are employed under scheduled employment for the purpose of examining the register, record of wages or notices required to be kept or exhibited under this act.
- He may examine any person whom he find in premises or employee to whom work is given
- He may require any person given outwork and any outwork to give information related to his name or address etc.
- He may seize or take copies of register , record of wages or notice of portions as he may consider relevant.
- Any other powers as prescribed.
Other points-:
- Every inspector shall be deemed to be a public servant within the meaning of Indian Penal Code.
- Any person who is required to produce any document or thing or to give information by an inspector under sub section (2) is legally bound to do within meaning of section 175 and 176.
CLAIMS
Section 20(1) provides that an appropriate government may appoint an authority to hear and decide for any specified area the following claims:
- Any claim for payment of less than minimum wages
- Any claim for payment of remuneration for days of rest.
- Any claim for payment of remuneration for work done on such days under clause (b) and (c) or section 13(1)
- Any claim of wages at the overtime rate.
Following persons can be appointed as authority to hear and decide claims:
- Any commissioner for Workmen`s compensation or
- Any officer from central government exercising function as a labour commissioner for any region or
- Any officer of the State government not below the rank of a labour commissioner or
- Any other officer with experience as judge of civil court or as stipendary magistrate.
Finality of decision- Every decision by authority shall be final.
Following persons can apply for claims:
- The employee or
- Any legal practitioner authorized in writing or
- Any official of registered trade union authorized in writing or
- Any Inspector or
- Any person acting with the permission of authority
Time Period for application- The application of claim should be made within 6 months from the date in which the minimum wage is payable. The application can be accepted later on if there is sufficient cause for that.
Case- Special Officer Thanjavur Central Cooperative Bank Employees Cooperative Thrift and Credit Society Ltd. vs Deputy Commissioner of Labour and others [2003 (96) FLR 1180]- In this case it was held that if the employees show sufficient cause for delay in making the application, then they can make application for claims even after the time period of 6 months.
Procedure for deciding claim given under Section 20(3) are as follows:
When the application for claim is entertained, the authority shall hear the applicant and the employer or give them opportunity of being heard after inquiry which they consider necessary, and direct-
- In case where an employee is paid less than the minimum wage, the law mandates that the employer must pay the difference between the minimum wage and the amount actually paid. The employer is also liable to give compensation determined by authority. But the amount of compensation should not be more than 10 percent of amount of underpayment.
- In cases other than mentioned in point (i), the employer must pay the due amount to the employee with the compensation( not exceeding 10 rupees) as determined by the authority. The compensation can also be given in the cases where the excess or amount due is paid by employer before adjudication of application of claim.
Case- Priya Darsan Agarbatti vs State of MP & others [(1995) II LLJ 1084 MP]- In this case it was held that section 20(3)(i) of the Minimum Wages Act enables the Labour Court to direct payment to the employees of the amount by which the minimum wages payable to him exceed the amount actually paid together with the payment of such compensation as the authority may think fit, not exceeding ten times the amount of such excess.
Penalty- Section 20(4) provides that if it is satisfied by the authority that the application filed is wither malicious or vexatious, it may direct that a penalty which may not exceed 50 rupees must be paid to the employer by person presenting the application.
Recovery of Amount- The amount directed to be paid by authority may be recovered as:
- If authority is a magistrate, then it can be recovered by the authority as it was imposed by magistrate.
- If authority is not a magistrate, then authority can apply to the magistrate, who will then recover the amount as if it were a fine imposed by that magistrate.
Section 20(7) provides that every authority appointed under this section has following powers of Civil court under Civil Procedure code.
- Taking evidence
- Enforcing attendance of witness
- Compelling production of documents.
PENALTY
Section 22 – When Employers Pay Less Than the Minimum Wage
If an employer does any of the following:
💸 Pays less than the minimum wage fixed for a particular class of work, OR
❌ Pays less than what is due under any provision of this Act, OR
📜 Violates any rule or order made under Section 13 (related to working hours, rest days, or overtime),
Then they are liable for:
| 🔴 Penalty | 🔐 Details |
|---|---|
| 🕐 Imprisonment | Up to 6 months |
| 💰 Fine | Up to ₹500 |
| ⚖️ Both | Yes, possible! |
Section 22A – General Offences
If an employer violates any provision of the Minimum Wages Act, or any rule or order made under it — and it doesn’t fall specifically under any other section — then this section applies.
Punishment:
| 🚫 Offence | 🔧 Penalty |
|---|---|
| Any general contravention of the Act | Fine up to ₹500 |
COGNIZANCE OF OFFENCE
Section 22B – No Prosecution Without Sanction
To prevent misuse of the law and ensure genuine complaints, Section 22B lays down strict conditions for when a court can take cognizance (i.e., begin legal proceedings) against an employer.
For offences under Section 22(a) (underpayment or wage violations):
A claim application under Section 20 must have been made and partly or fully granted.
There must be a sanction (approval) from the appropriate government or its authorized officer.
For offences under Section 22(b) (breach of working hours/rest day rules):
A complaint must be sanctioned by an Inspector.
Time limits to file a complaint:
| 🧾 Type of Offence | 🕒 Time Limit |
|---|---|
| Section 22(a) or 22(b) | Within 1 month from the date of sanction |
| Section 22A (general offences) | Within 6 months from the date of offence |
Section 22C – Offences by Companies
Employers operating through companies can’t escape liability — companies and their officers can both be held responsible!
Section 22C(1): Who’s liable?
Every person who was in charge of the company’s operations at the time of the offence.
The company itself.
Exception: If the person proves the following condition then they cannot be held liable:
The offence was committed without their knowledge, or
They exercised due diligence to prevent it.
Section 22C(2): Personal Accountability
If the offence was:
Done with consent,
Negligently allowed, or
Done with connivance by any director, manager, secretary, or officer,
➡️ Such persons will also be guilty and can be punished.
Case- Haricharan Singh Dugal v. State of Bihar [(1989) 66 COMPCAS 449 (Pat)]- It was held that directors of a company can be prosecuted for a violation under the Act. It is not necessary to prove each person’s specific role at the initial complaint stage.
Section 22D – Payment of Undisbursed Wages
What happens if an employer owes wages to a worker, but the worker:
Has passed away, or
Is missing or untraceable?
In such cases, the authority prescribed by the government will deal with the undisbursed amount in a manner set by rules — ensuring the money is safely handled and ultimately reaches the rightful recipient
Exemption of Employer
Section 23 exempts the employer from liability in certain cases
It provides that if an employer is charged with an offence under a particular Act, they can request that the actual offender (another person) be brought before the court. If the offence is proven, and the employer can show that:
- He took due diligence for execution of act.
- The offence was committed without their knowledge, consent, or involvement.
Then the court can convict the other person, and the employer will not be held responsible or punished.
Bar of suit
Section 24 provides that no court shall entertain the suit for recovery of wages in the following cases:
Wages are part of an application under Section 20
A favourable decision is already given under Section 20
It is decided under Section 20 that nothing is due
The claim is such that it could have been made under Section 20
Case- Pabbojan Tea Company Ltd. vs Deputy Commissioner, Lakhimpur (AIR 1968 SC 271)- In this case it was held that this bar applies only when the workers are covered by a government notification under the Minimum Wages Act.
Contracting Out
Section 25 deals with the principle of contracting out. This principle provides that Any contract which is made either before commencement of act or after commencement shall be null and void if such a contract relinquishes or reduces:
- Right to minimum rate of wages or
- Any privilege or concession accruing under this act.
Exemptions and Exceptions
Minimum Wages Act, 1948 is designed to ensure fair wages for all, Section 26 gives some flexibility to the government to make exceptions in following situations:
1. Disabled Employees
The appropriate government may choose to exempt the provisions of this Act in relation to wages payable to employees with disabilities—but only if it considers it fit and justified.
✅ This means the government has the discretion to either apply or waive minimum wage rules in special cases involving disabled persons.
2. Special Situations & Local Exceptions
The government may also exempt any class of employees, or even entire localities, from the application of this Act due to special circumstances. These could be economic, administrative, or employment-specific situations where strict enforcement may not be feasible.
📌 This is a rare exception and not the norm—it’s used only when truly necessary.
3. Family Members of the Employer
If the people working are family members of the employer, living with and dependent on them, then the provisions of this Act do not apply.
Explanation: Who Counts as “Family”?
According to the Act, the term “family” includes:
Spouse
Child
Parent
Brother
Sister
References:
- Minimum Wages Act, 1948- Bare Act
- Labour and Industrial Laws by S.N. Misra
- Taxmann`s labour law
