Employer [Section 2(e)]

“Employer” means any person who employs, whether directly or through another person, or
whether on behalf of himself or any other person, one or more employees in any scheduled
employment in respect of which minimum rates of wages have been fixed under this Act, and
includes, except, in sub-section (3) of Section 26 –

(i) in a factory where there is carried on any scheduled employment in respect of which
minimum rates of wages have been fixed under this Act, any person named under clause (f) of
sub-section (1) of Section 7 of the Factories Act, 1948, as manager of the factory;

(ii) in any scheduled employment under the control of any Government in India in respect of
which minimum rates of wages have been fixed under this Act, the person or authority
appointed by such Government for the supervision and control of employees or where no
person of authority is so appointed, the Head of the Department;

(iii) in any scheduled employment under any local authority in respect of which minimum rates
of wages have been fixed under this Act the person appointed by such authority for the
supervision and control of employees or where no person is so appointed, the Chief Executive
Officer of the local authority;

(iv) in any other case where there is carried on any scheduled employment in respect of which
minimum rates of wages have been fixed under this Act, any person responsible to the owner of
the supervision and control of the employees or for the payment of wages.

The definitions of “employees” and “employer” are quite wide. Person who engages workers
through another like a contractor would also be an employer (1998 LLJ I Bom. 629). It was held
in Nathu Ram Shukla v. State of Madhya Pradesh A.I.R. 1960 M.P. 174 that if minimum
wages have not been fixed for any branch of work of any scheduled employment, the person
employing workers in such branch is not an employer with the meaning of the Act. Similarly, in
case of Loknath Nathu Lal v. State of Madhya Pradesh A.I.R. 1960 M.P. 181 an out-worker
who prepared goods at his residence, and then supplied them to his employer was held as
employee for the purpose of this Act.

Scheduled employment [Section 2(g)]

“Scheduled employment” means an employment specified in the Schedule or any process or

branch of work forming part of such employment. Note: The schedule is divided into two parts
namely, Part I and Part II. When originally enacted Part I of Schedule had 12 entries. Part II
relates to employment in agriculture. It was realised that it would be necessary to fix minimum
wages in many more employments to be identified in course of time. Accordingly, powers were
given to appropriate Government to add employments to the Schedule by following the
procedure laid down in Section 21 of the Act. As a result, the State Government and Central
Government have made several additions to the Schedule and it differs from State to State.

Wages [Section 2(h)]

“Wages” means all remunerations capable of being expressed in terms of money, which would,
if the terms of the contract of employment, express of implied, were fulfilled, be payable to a
person employed in respect of his employment or of work done in such employment and
includes house rent allowance but does not include: (i) the value of: (a) any house
accommodation, supply of light, water medical; (b) any other amenity or any service excluded
by general or social order of the appropriate Government; (ii) contribution by the employer to
any Pension Fund or Provides Fund or under any scheme of social insurance; (iii) any traveling
allowance or the value of any traveling concession; (iv) any sum paid to the person employed to
defray special expenses entailed on him by the nature of his employment; (v) any gratuity
payable on discharge.

FIXATION OF MINIMUM RATES OF WAGES [Section 3(1)(a)]

Section 3 lays down that the ‘appropriate Government’ shall fix the minimum rates of wages,
payable to employees in an employment specified in Part I and Part ii of the Schedule, and in an
employment added to either part by notification under Section 27. In case of the employments
specified in Part II of the Schedule, the minimum rates of wages may not be fixed for the entire
State. Parts of the State may be left out altogether. In the case of an employment specified in
Part I, the minimum rates of wages must be fixed for the entire State, no parts of the State being
omitted. The rates to be fixed need not be uniform. Different rates can be fixed for different
zones or localities: [Basti Ram v. State of A.P. A.I.R. 1969, (A.P.) 227].

Notwithstanding the provisions of Section 3(1)(a), the “appropriate Government” may not fix
minimum rates of wages in respect of any scheduled employment in which less than 1000
employees in the whole State are engaged. But when it comes to its knowledge after a finding
that this number has increased to 1,000 or more in such employment, it shall fix minimum wage
rate.

REVISION OF MINIMUM WAGES

According to Section 3(1)(b), the ‘appropriate Government’ may review at such intervals as it
may thing fit, such intervals not exceeding five years, and revise the minimum rate of wages, if
necessary. This means that minimum wages can be revised earlier than five years also.

MANNER OF FIXATION/REVISION OF MINIMUM WAGES

According to Section 3(2), the ‘appropriate Government’ may fix minimum rate of wages for:

(a) time work, known as a Minimum Time Rate;

(b) piece work, known as a Minimum Piece Rate;

(c) a “Guaranteed Time Rate” for those employed in piece work for the purpose of securing to
such employees a minimum rate of wages on a time work basis; (This is intended to meet a
situation where operation of minimum piece rates fixed by the appropriate Government may
result in a worker earning less than the minimum wage), and

(d) a “Over Time Rate” i.e. minimum rate whether a time rate or a piece rate to apply in
substitution for the minimum rate which would otherwise be applicable in respect of overtime
work done by employee.

Section 3(3) provides that different minimum rates of wages may be fixed for – (i) different
scheduled employments; (ii) different classes of work in the same scheduled employments; (iii)
adults, adolescents, children and apprentices; (iv) different localities.

Further, minimum rates of wages may be fixed by any one or more of the following wage
periods, namely: (i) by the hour, (ii) by the day, (iii) by the month, or (iv) by such other large
wage periods as may be prescribed; and where such rates are fixed by the day or by the month,
the manner of calculating wages for month or for a day as the case may be, may be indicated.
However, where wage period has been fixed in accordance with the Payment of Wages Act,
1986 vide Section 4 thereof, minimum wages shall be fixed in accordance therewith [Section
3(3)].

MINIMUM RATE OF WAGES (Section 4)

According to Section 4 of the Act, any minimum rate of wages fixed or revised by the
appropriate Government under Section 3 may consist of – (i) a basic rate of wages and a
special allowance at a rate to be adjusted, at such intervals and in such manner as the
appropriate Government may direct to accord as nearly as practicable with the variation in the
cost of living index number applicable to such worker (hereinafter referred to as the cost of living
allowance); or (ii) a basic rate of wages or without the cost of living allowance and the cash
value of the concession in respect of supplies of essential commodities at concessional rates
where so authorized; or (iii) an all inclusive rate allowing for the basic rate, the cost of living
allowance and the cash value of the concessions, if any.

The cost of living allowance and the cash value of the concessions in respect of supplies
essential commodities at concessional rates shall be computed by the competent authority at
such intervals and in accordance with such directions specified or given by the appropriate
Government.

PROCEDURE FOR FIXING AND REVISING MINIMUM WAGES (Section 5)

In fixing minimum rates of wages in respect of any scheduled employment for the first time or in
revising minimum rates of wages, the appropriate Government can follow either of the two
methods described below.

First Method [Section 5(1)(a)]

This method is known as the ‘Committee Method’. The appropriate Government may appoint as
many committees and sub-committees as it considers necessary to hold enquiries and advise it
in respect of such fixation or revision as the case may be. After considering the advice of the
committee or committees, the appropriate Government shall, by notification in the Official
Gazette fix or revise the minimum rates of wages. The wage rates shall come into force from
such date as may be specified in the notification. If no date is specified, wage rates shall come
into force on the expiry of three months from the date of the issue of the notification.

Note: It was held in Edward Mills Co. v. State of Ajmer (1955) A.I.R. SC, that Committee
appointed under Section 5 is only an advisory body and that Government is not bound to accept
its recommendations.

As regards composition of the Committee, Section 9 of the Act lays down that it shall consist of
persons to be nominated by the appropriate Government representing employers and employee
in the scheduled employment, who shall be equal in number and independent persons not
exceeding 1/3rd of its total number of members. One of such independent persons shall be
appointed as the Chairman of the Committee by the appropriate Government.

Second Method [Section 5(1)(b)]

The method is known as the ‘Notification Method’. When fixing minimum wages under Section
5(1)(b), the appropriate Government shall by notification, in the Official Gazette publish its
proposals for the information of persons likely to be affected thereby and specify a date not less
than 2 months from the date of notification, on which the proposals will be taken into
consideration. The representations received will be considered by the appropriate Government.
It will also consult the Advisory Board constituted under Section 7 and thereafter fix or revise the
minimum rates of wages by notification in the Official Gazette. The new wage rates shall come
into force from such date as may be specified in the notification. However, if no date is
specified, the notification shall come into force on expiry of three months from the date of its
issue. Minimum wage rates can be revised with retrospective effect. [1996 II LLJ 267 Kar.].