This article is written by Lahari Vennam of KL University, Andhra Pradesh, an intern under Legal Vidhiya
ABSTRACT
India’s labour laws include the Industrial Dispute Act of 1947, the Payment of Bonus Act of 1965, the Workmen Compensation Act of 1923, the Minimum Wages Act of 1948, and other important laws. Workplace regulations are covered by Indian law under the Concurrent List, which grants both the Central and state governments the authority to establish laws and set rules in this area. These rules have a big impact on things like defending workers’ rights and interests, giving them job chances, shielding them from exploitation, encouraging a good work environment, etc.[1]
The Committee on Fair Wages was founded by the Indian government shortly after India gained independence in 1948. In particular in areas where employees can be seen to be underpaid and lack union negotiation power, this committee developed a number of pay principles that are utilized to decide the wage structure across the nation. These ideas include the minimum wage, a liveable wage, and equitable remuneration. The idea of a minimum salary set by need was added later.
Keywords: Wages, Employees, Workers, Salary, Pay, Remuneration.
INTRODUCTION
India’s labour laws include the Workmen’s Compensation Act of 1923, Industrial Dispute Act of 1947, Payment of Bonus Act of 1965, Minimum Wages Act of 1948, and other important laws.
Since wage work is the most prevalent kind of employment, the term “wage” is frequently used to refer to all variations (or all monetary forms) of employee compensation.
Wage (also known as payment, personnel costs, or labour) refers to the sum of money that an employer pays an employee in exchange for their labour. Payments based on an easily measurable quantity of work completed, task wages or piece rates, hourly or daily rates (wage labour), or any combination of these are all conceivable payment options.
Wages are both a source of revenue for employees and a business expense for the organization. Wages, in general, refer to any kind of payment paid to an employee by their employer in return for the services that person provided. Benefits like family allowance, emergency pay, and financial aid are included in this category of payment. The cost of labour given during the manufacturing process, on the other hand, is what is known as compensation, and it only refers to acceptable or performance remuneration.[2]
Minimum Wage
A businessman is compelled to pay his employees the minimum salary regardless of his financial status. The minimum wage is the amount of money that must be made in order to sustain both the productivity of the employees and their ability to meet their basic needs. The minimum wage must achieve this by covering the price of amenities like education and healthcare.
The Minimum Pay Act of 1948 was enacted by the government in response to the committee’s recommendations and contained minimum wage laws. Although the phrase “minimum salary” is not defined by this Act, the Central Government and State Governments are granted the ability to regularly fix minimum pay.
The payment of the minimum wage is necessary wherever this Act is in force. Known as need-based minimum pay, the concept of establishing minimum wages dates back to 1957 and was created by the Indian Labour Conference.
Fair Wage
The ability of the industry to pay is connected to the idea of a fair wage.
The following is how the Committee defines a fair wage:
Over the minimum salary but below the living wage is considered a fair wage. The lowest limit of a fair income is obviously the minimum wage; the upper limit should be established by the capacity of the industry to pay.
Fair wages are payments made to workers for labour that is equally productive, hard, and demanding. A fair pay is one that is more than the federal minimum wage. It falls in between the living wage and the minimum wage. The potential of the industry to pay more in relation to the typical payment for the same work in other professions or crafts needing the same degree of expertise must thus serve as the upper limit of fair remuneration, which is undoubtedly the minimum salary. In essence, the state of an economy and its prospects for the future serve as the foundation for equitable compensation.[3]
Additionally, a fair wage depends on a number of variables, including minimum wages, an industry’s ability to pay workers, the level and distribution of the national income, labour. The ideas of a liveable wage, fair compensation, and minimal wages were developed by the Fair Wages Committee. As a result, in addition to covering the expenses of basic requirements like housing and food, the minimum wage must also do so for luxuries like healthcare, education, and other necessities. Given the amount of national income, the living wage is at the core of both a political objective and a long-term objective that will be attained over time. The idea of minimal remuneration may be defined in light of the choices made.
The three basic ideas in this sense are the living wage, fair pay, and minimum wage.
Thus, determining a fair salary is influenced by a number of variables. These include the industry’s capacity to pay, the going rate of pay, the size and distribution of the national income, and labour productivity. The majority of for-profit firms currently follow the principle of just compensation.
Living Wage
In addition to the minimum wage, the Committee on Fair Wages has proposed the idea of a living wage, which is described as follows.
A living wage is one that should enable the earner to take care of himself and his family, covering the basic expenses of food, clothing, and shelter as well as some frugal comforts like paying for his children’s education, shielding them from illness, meeting the needs of basic social needs, and offering a small amount of insurance against the more significant misfortunes, like old age.
In order for an employee to have access to certain services and get a living salary, their fundamental requirements must also be met. As a result, it refers to a pay grade that is high enough to cover both the necessities of life and the pleasures that are considered necessary for the advancement of the employee and his family in line with their social class.
The definition of a liveable wage is as follows: In addition to the essentials of food, clothing, and shelter, a living wage should enable a male earner to provide for himself and his family with some degree of frugal comfort, such as the children’s education, protection from illness, the satisfaction of basic social needs, and measures of insurance against old age. A living wage is a compensation that takes into consideration the worker’s unique talents and is sufficient to pay for housing, food, clothes, and other requirements.
Therefore, in addition to covering an employee’s fundamental necessities for food, shelter, and clothes, a living wage also covers various comforts, leisure, and luxuries that are evaluated by modern human standards, such as health, children’s education, travel, old age, recreation, and social needs.
Beyond the minimum wage, the concept of a liveable wage exists. The national revenue and the financial capacity of the industrial sector are taken into consideration when determining such a remuneration. The Committee also emphasized that a liveable wage could not be paid due to the national income. It requires three acts to put it into practice. All working class salaries were to be established and stabilized in the initial phase. Fair pay was to be established in the neighbourhood and industry during the second phase. The working class was anticipated to get a living wage in the last phase.
Specifically, All India Reserve Bank Employee Association v. Reserve Bank of India[4] Hidayatullah J. said, “In the same strain.” Though it has been said that a living wage is “our political aim,” in practice, it has eluded our efforts like an ever-diminishing horizon and will do so for some time to come. Despite the fact that some businesses pay higher wages than average, our system of total remuneration has, at best, fallen short of what is deemed fair.
A fair pay is the average of the minimum wage and the living wage. Union of India v. Express Newspaper Ltd.[5] ‘Fair pay’ was described by Das Gupta J. as “a salary sufficient to meet the usual requirements of the ordinary employee seen as a human being in a civilized society, which may generally be said to correspond to the need based minimum.
Mahatma Phule Agricultural University Vs Nasik Zilla Sheth Kamgar union and others[6]. The Supreme Court declared that the status of permanence cannot be granted where there are no posts. The state government’s failure to give the required money is not justifiable. The state administration cannot renege on its duty to provide quality instruction in schools and universities due to a lack of resources. The administration must decide how much to charge and how to get the necessary funds.
Minimum Salary
This kind of pay aims to cover workers’ most basic needs, such as food, housing, and healthcare, so they can maintain a respectable level of living. A fair wage: Any payment paid to employees that is higher than the minimum wage is considered a fair wage.
The need-based minimum wage, although just falling below the lowest limits of fair pay, represents a rate that is greater than the minimum currently being paid in a number of industries. It follows that the capacity to pay must be taken into consideration when determining the need-based minimum.[7]
The term “Minimum Wage” is not specified in the Minimum Wages Act of 1948. The lowest pay grade below which a worker’s productivity is most likely to deteriorate is minimum wage. The minimal needs of comfort, often known as traditional necessities, are also covered by the minimum wage, along with the bare necessary for one’s physical well-being. Therefore, in addition to only covering the worker’s basic necessities, the minimum wage must ensure that their productivity is maintained.
This supports the need that employers pay a minimum wage that includes a matching portion for benefits, amenities, and medical needs.
Any company that pays its employees less than this minimum wage is therefore breaking the law.
Fair pay ideas were intended to be adaptable. Any minimum wage setting that is higher than previously established fair rates should be recognized as fair wages rather than minimum wages. There is no reason to believe that fair wages established years ago would remain fair pay eternally.
Changes in payroll processing
As stated in the Union Budget for 2021, the new pay law for India for 2022 is already in force. The much anticipated four labour regulations on wage, social security, industrial relations, and occupational safety, health, and working conditions are once again making headlines after more than a year and a prolonged delay past the scheduled April 2022 roll out deadline. The New Wage Code is an endeavour by the Indian government to simplify the several wage-related legislations.
These new changes will have a direct influence on the pay structure and tax liabilities of the private working class as well as the wages, provident funds, and gratuities of central government officials.
The lack of a national minimum wage in India.
Under the Code on Pay Act of 2019, employees in all sectors of the economy are entitled to the minimum wage established by their respective state governments. Constitutional law grants both the federal and state governments control over matters pertaining to labor and its welfare, resulting in multi-jurisdictional regulation.
Prior to this change, workers from a small number of industries (representing 40% of all workers) were the only ones who qualified for minimum pay. However, since the pay law was enacted in 2019, nothing has been done to advance the implementation of a national minimum wage for Indian workers.
Due to its extreme polarization and detrimental effects on companies, the government has not given the implementation of a minimum wage plan first priority.[8]
In actuality, the Code on Wages Act supersedes four labor laws: the Equal Remuneration Act of 1976, the Payment of Bonus Act of 1965, the Payment of Wages Act of 1936, and the Minimum Wages Act of 1948.
Employers are not allowed to pay their employees less than the required minimum wage under the new wage legislation. The national and state governments must also examine and change the minimum wage at least once every five years.
Workplace reforms implemented since 2014
The use of IT-enabled systems for inspection has been made essential for openness and accountability.
• On February 16, 2017, the Payment of Wages Act made it possible to pay employees’ wages via check or by crediting their bank accounts.
• The Maternity Benefit Amendment Act of 2017 raised the length of paid maternity leave from 12 to 26 weeks, and it went into effect on April 1, 2017.
Goals of the Minimum Wage Act
The relevance of the Minimum Wages Act of 1948 is described as follows:
- Establishing the minimum wages that must be paid to employees and reviewing such amounts every five years.
- To ensure that all workers get a living wage in the public interest.
- To establish the workers’ daily work schedules.
- To prevent employers from mistreating their workers.
- To ensure that the workers may maintain an acceptable standard of living.
- To provide the staff’s fundamental physical demands and to maintain their health and degree of comfort.
- To impose penalties on firms that fail to pay employees the legal minimum wage.
- To specify the inspectors’ responsibilities and authority for the purposes of this Act.
- To stop any employer from improperly violating an employee’s rights.
- Create the necessary channels for employees to appeal against an employer who hasn’t paid their daily wage.
- Granting permission for the federal and state governments to create rules and regulations in order to implement this Act.[9]
Origin
Wages, or payments made as compensation for labour, go back to the dawn of civilisation. In the past, wages were paid in kind, with food and grains being the most prevalent. But as industry grew, wages became a complicated problem and, in virtually all industrialized nations, a divisive matter of public policy. The amount of salary quickly became a frequent source of conflict between wage employees and employers.
The desire for pay raises led to strikes as a result of continuing conflicts between the employer and wage workers. The determination of adequate wages that should be justifiably paid to employees by the employer was a challenging issue that required consideration of relevant factors like the location of the industry, the cost of the good, living conditions, the basic needs of the wage earner, and the governmental policy in the society in question.
Payment by wage contrasts with salary, where the employer makes regular payments of a fixed sum without taking into account the number of hours worked (such as once per week or once per month), commission, where pay is based on individual performance, and compensation based on the overall success of the company. Another type of compensation that wage workers may get is employee perks, which are non-cash types of payment like tips or gratuities offered by customers.
A living wage, respectable working conditions, full access to leisure time, and social and cultural opportunities are all rights guaranteed by Article 43 of the Indian Constitution to all workers engaged in agricultural, industrial, or other types of work. As a result, the Indian government has made it a direction of state policy to ensure living wages.
Not a Violation of the Constitution’s (Article 14)[10]
Article 14 of the Constitution guarantees everyone equal protection under the law, and the Act does not infringe on that provision. Various socioeconomic issues, such as the cost of living, the price of commodities, the ability to pay employees, and productivity, are to blame for the disparity in the minimum salaries of workers in different states, according to India’s Union Labor and Employment Minister Shri Mallikarjuna Kharage. The wages paid to employees in a given state are influenced by each of these variables.
In the case of N.M. Wadia Charitable Hospital v. State of Maharashtra, the Bombay High Court ruled that it is legal under both the country’s labour laws and the Constitution to set different minimum wage rates for various localities, and that doing so is neither discriminatory nor unconstitutional.
CONCLUSION
To protect the rights and interests of employees who are engaged in one of the specified scheduled classes of labour, the Minimum Wages Act of 1948 was developed. The Act aims to give workers moral job alternatives and pay that is sufficient to sustain a respectable quality of living. The Act’s features, such as defining the length of a typical workday and requiring compensation reviews every five years, show how it protects workers from unfair exploitation. The Act also creates advisory committees and boards that employees may approach to request remedy when their employers underpay or underpay them for services provided. The Act gives the inspectors the authority to oversee the employee’s wellbeing as well.
This Act is vital in ensuring that people working in a scheduled category of employment have access to basic necessities and are paid enough to support their basic needs as well as the Directive Principles of State Policy outlined in Article 43 of the Indian Constitution.
[1] https://blog.ipleaders.in/minimum-wages-act-1948-2/ last seen on 07/08/2023.
[2] https://old.amu.ac.in/emp/studym/99998470.pdf last seen on 08/08/2023.
[3] https://timesofindia.indiatimes.com/readersblog/lawpedia/concept-of-minimum-wages-fair-wage-and-living-wage-and-need-based-minimum-wages-51504/ last seen on 09/08/2023
[4] All India Reserve Bank Employees vs Reserve Bank Of India 1966 AIR 305, 1966 SCR (1) 25.
[5] Express Newspapers Pvt. Ltd. & Ors vs Union Of India & ORS1986 AIR 872, 1985 SCR (3) 382.
[6] Mahatma Phule Agricultural University and others v/s Nasik Zilla Sheth Kamgar Union 1997.
[7] https://blog.ipleaders.in/minimum-wages-act-1948-2/ last seen on 10/08/2023.
[8] https://www.ilo.org/wcmsp5/groups/public/—asia/—ro-bangkok/—sro-new_delhi/documents/publication/wcms_638305.pdf last seen on 12-08-2023.
[10] Art. 14, the Constitution of India.
