India - Minimum Wages - 2011

14 May 2011

Minimum Wages Act 1948 as amended by A.O. of 1950, Acts 56 of 1950, 3 of 1951, 16 of 1951, 26 of 1954, 30 of 1957, 31 of 1961, 51 of 1970 and 61 of 1986; published by the Government of India on its Ministry of Labour and Employment website and accessed 5 May 2011

Minimum Wages (Central) Rules 1950, Vide Notification No.SRO776 Dated 14-10-1950 as published electronically by the Ministry of Labour and Employment, Government of India and accessed on 5 May 2011

Payment of Wages Act 1936, Act number 4 of 1936, as amended and published by the Ministry of Labour and Employment, Government of India, accessed 5 May 2011

Payment of Wages (Procedure) Rules 1937, as published by the Ministry of Labour and Employment, Government of India at http://labour.nic.in/act/welcome.html and accessed 5 May 2011

Payment of Wages (Amendment) Act 2005, Act number 41 of 2005 as published by the Ministry of Labour and Employment, Government of India at http://labour.nic.in/act/welcome.html and accessed 5 May 2011

Final Notification on The Minimum Wages (Central Advisory Board) Rules 2011 as published in the Gazette of India on 31 March 2011

Ministry of Labour Annual Report 2010-2011 - Chapter 5 - Wages as published by the Ministry of Labour at http://labour.nic.in/annrep/annrep.htm and accessed 11 May 2011

Variation of Minimum Wage Rates in States 2011, published by the Press Information Bureau, Government of India at http://labour.nic.in accessed 4 May 2011

Revision of Variable Dearness Allowance and thus increase in Minimum Wages in Mines and Government Establishments, No.M.92(01)/2011-C1, published 6 April 2011 at http://labour.nic.in/clc/MinWages/Chennai.pdf and accessed 6 May 2011

Rates of Minimum Wages for Scheduled Employments in the Central Sphere as on 1 April 2011, published by the Ministry of Labour and accessed 11 May 2011

Comparative Table of Number of Scheduled Employments in Central Sphere, States and Union Territories and Minimum Wage Rates as at 31 December 2009, published by the Labour Bureau at http://labourbureau.nic.in/Min_Wages_Table_2_Mar2011.pdf and accessed 12 May 2011

Comparative Minimum Wage Rates prevailing in Scheduled Employments in Central Sphere, States and Union Territories and as at 31 December 2009, published by the Labour Bureau at http://labourbureau.nic.in/Min_Wages_Table_2_Mar2011.pdf and accessed 12 May 2011

Employee means any person employed for hire or reward to do any work skilled or unskilled, manual or clerical, in any scheduled employment, in respect of which minimum rates of wages have been fixed. The definition includes an out-worker who receives work to be carried out either in their own home or on any premises other than those under the control of the employer. It includes persons employed by the government, but does not include any member of the Armed Forces of the Union.

Means any person who employs, whether directly or through any person, one or more employees in any scheduled employment in respect of which minimum rates of wages have been fixed under the Act, including:
(a) in factories where scheduled employment is being carried out - persons named as managers under s7(1)(f) of the Factories Act 1948; and
(b) in scheduled employment under Government control - the person or authority appointed by the Government for the supervision and control of employees, or the head of the department;
(c) in scheduled employment under any local authority - the person appointed by such authority for the supervision and control of employees, or the CEO of the authority;
(d) in any other case where scheduled employment is carried on - any person responsible to the owner for the supervision and control of the employees or for the payment of wages.

Wages means all remuneration capable of being expressed in terms of money, which would, if the terms of the contract of employment express or implied were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment. It does not include:
(a) the value of any house-accommodation, supply of light, water, medical attendance, or any other prescribed amenity or service;
(b) any pension or provident fund, or social insurance scheme, contributions paid by the employer;
(c) travelling allowances or concessions;
(d) reimbursement for special expenses incurred by the employee; or
(e) gratuity payable on discharge.

Minimum rate of wages may consist of:
(a) a basic rate of wages and a cost of living allowance; or
(b) a basic rate of wages, with or without the cost of living allowance, and the cash value of concessions in respect of the supply of essential commodities at concession rates, if authorised; 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.

Minimum wages are set variously by the Central Government, the Provincial Government or at an enterprise level through collective bargaining, depending on the occupation. However, the whole system is intended to be underpinned by a National Floor Minimum Wage, which is a non-statutory (and non-binding) recommendation made by the Central Government on the basis of CPI increases.

Minimum wage rates for occupations that are largely non-unionized or have little bargaining power may be set in accordance with the Minimum Wages Act 1948, under which the appropriate Government may set wages either upon advice of a tripartite committee or following public consultation. For other occupations, decentralized collective bargaining sets the minimum wage.

The appropriate government may set minimum wage rates for unorganized (non-unionized) occupations with little bargaining power. Parts 1 and 2 of the Schedule to the Act set forth those occupations that have been identified as requiring statutory wage protection, and thus subject to minimum wage rates set by central or local government. Relevant governments may review scheduled occupations and, on 3 months’ notice, add any they consider need to have minimum wage rates set in accordance with the Minimum Wages Act.

Under the Minimum Wages Act, the appropriate Government may set the minimum wages rates either upon advice from tripartite committees or a period of public consultation. It shall fix the minimum wage rates of each scheduled employment by notification in the official Gazette, which shall come into effect 3 months from the date of issue unless otherwise specified.

For other occupations, decentralized collective bargaining sets the minimum wage.

In accordance with the Minimum Wages Act, the appropriate Government may establish minimum wage rates by notification being given in the Official Gazette of the appropriate Government’s proposals. This notification is followed by a two-month consultation period during which the objections and proposals raised by persons likely to be affected are considered by the appropriate Government.

As well as the public consultation process, the appropriate Government will appoint an Advisory Board to advise on the fixing and revising of minimum wage rates and must consult the Advisory Board before revising any minimum wage rates. The Central Government will appoint a Central Advisory Board for the purpose of advising both the Central and Provincial Governments on the same matter.

In accordance with the Minimum Wages Act, the appropriate Government may set minimum wage rates for scheduled employments by appointing a committee to hold enquiries and advise it this behalf, with such sub-committees for different localities as it may deem expedient to appoint to assist such committee. It will also appoint an Advisory Board to coordinate the work of the various committees and sub-committees and advise the appropriate Government generally on the fixing and revision of minimum wages. The appropriate Government must consult all relevant advisory committees before revising any minimum wage rate.

The appropriate Government may appoint as many advisory committees and sub-committees as it considers necessary to inquire into the conditions prevailing in any scheduled employment and to advise revising in respect of that employment. Advisory Boards and Committees are made up of an equal number of persons representing employers and employees in the relevant scheduled occupations, and no more than 1/3 independent persons. Rules pertaining to the constitution and procedure of the Advisory Boards and Committees are set out in Chapters II and III of the Minimum Wages Rules 1950.

Further, the Central Government shall appoint a Central Advisory Board to advise the Central and Provincial Governments in the matters of fixation and revision of minimum wage rates. The constitution and procedures of the Central Advisory Board are set out in the Minimum Wages (Central Advisory Board) Rules 2011.

Organized (unionized) occupations are not subject to the minimum wage rates set by government and wages for these occupations are set by collective agreement, (see section: Minimum wage is set by collective agreement).
Organized sectors, which are not covered by wage board determinations, set wage rates in collective agreements.
Sectors such as the banking, oil and tourism development and telephone industries, along with the central government have established wage rates via collective agreements.
Collective agreements extend only to parties to the agreement, employers and their successors, and all workmen in the establishment(s) to which the agreement refers.

The special allowance component of the minimum wage rate is to be adjusted to accord as nearly as practicable with the variation in the cost of living index number applicable to affected workers.

The special allowance component of the minimum wage is to be adjusted to accord as nearly as practicable with the variation in the cost of living index number applicable to affected workers.

The Minimum Wage Act applies throughout India, including the provinces of Jammu and Kashmir. The Schedule to the Act sets forth the occupations for which the appropriate Government may set minimum wage rates. However, the appropriate Government need only set minimum wage rates for scheduled employments in which there are more than 1000 employees engaged in the whole of the Province.

Disabled persons - The appropriate government may exclude disabled employees from certain provisions of the Minimum Wages Act, 1948. Such an exclusion would be subject to such conditions as that government thinks fit.

Family members - The Act does not apply to wages payable by an employer to a member of his or her family who is living with and dependent on him or her. A member of the employer’s family includes their spouse, child, parent, brother or sister.

Minimum wage rates can be established for any scheduled sector.

Minimum wage rates can be established for any scheduled occupation.

Minimum wage rates can be established for any scheduled occupation.

Minimum wage rates can be established for any scheduled sector.

Central government or State governments may establish minimum wage rates. Presently 35 regional governments have set minimum wage rates for scheduled occupation sectors. These regional minimum wage rates should not be less than the minimum floor level wage set by the Minister of Labour, which is currently Rs. 100 per day.

Specific minimum wages rates may be established for apprentices.

Specific minimum wage rates may be established for:
(a) adolescents - persons who have completed their 14th year of age, but not completed their 18th year of age; and
(b) children - persons who have not completed their 14th year of age.

Specific minimum wages rates may be established for piece-rate workers.

The current National Floor Level Minimum Wage recommendation is Rs. 100/- per day. Data suggests that the minimum wage rates may be lower in some regions.

Regional and occupational minimum wages are updated at various times. However, the last increase to the National Floor Level Minimum Wage took effect on 1 November 2009 and the Government last published applicable minimum wage rates in March 2011 (for States) and April 2011 (for Central Sphere).

If it is the generally accepted practice in a sector that wages should be paid in kind, the relevant government may authorize the continuation of that practice by notification in the Official Gazette. Otherwise, minimum wages payable under this Act shall be paid in cash.

Minimum wage rates may be fixed by the hour, provided that where any wage periods have been fixed under s4 of the Payment of Wages Act 1936, minimum wages shall be fixed accordingly.

Minimum wage rates may be fixed by the day, provided that where any wage periods have been fixed under s4 of the Payment of Wages Act 1936, minimum wages shall be fixed accordingly.

Minimum wage rates may be fixed by the hour, by the day or by any larger wage period as may be prescribed, provided that where any wage periods have been fixed under s4 of the Payment of Wages Act 1936, minimum wages shall be fixed accordingly.

Minimum wage rates may be fixed by the hour, by the day or by any larger wage period as may be prescribed, provided that where any wage periods have been fixed under s4 of the Payment of Wages Act 1936, minimum wages shall be fixed accordingly.

Minimum wage rates may be fixed by the hour, by the day or by any larger wage period as may be prescribed, provided that where any wage periods have been fixed under s4 of the Payment of Wages Act 1936, minimum wages shall be fixed accordingly.

Minimum wage rates may be set by the hour, the day, the month or any larger wage-period as may be prescribed.

The appropriate Government is to review the minimum rate at intervals that it thinks fit, such intervals not exceeding five years, and revise the minimum rate if necessary.

The Payment of Wages Act 1936 sets out the procedure for recovering unpaid wages. The inspectorate powers and penalties are prescribed by the Minimum Wage Act 1948.

The appropriate government may appoint inspectors in order to enforce the provisions of the Minimum Wages Act.

Labour inspectors may enter any premises or place where employees or out-workers are employed or work for the purpose of examining any register, record of wages or notices required by the Act, examine any person found in such premises or place and who he has reason to believe is an employee or out-worker, require persons to provide information, copy records and exercise any other prescribed powers.

Claims relating to unpaid wages may be brought by workers, his or her legal or union representative or inspectors. The rules pertaining to such claims are set out in the Minimum Wages (Central) Rules 1950.

An employer who pays an employee less than the minimum wage is liable either for a prison term not exceeding 6 months, a fine not exceeding 500 rupees or both.

An employer who fails to maintain a register or record required by §18 of the Minimum Wages Act 1948 is liable for a fine of up to 500 rupees.

If it is established that an employee has been paid less than the minimum wage, that person should be paid the difference between the minimum wage and the amount actually paid and compensation at a level not exceeding ten times the excess amount.