India: 

Code on Wages, 2019 –

MINIMUM WAGES
Historical Background of the Minimum Wages Act, 1948
• The concept of the Minimum wages first evolved with reference to remuneration of workers in those industries where
the level of wages was substantially low as compared to the wages for similar types of labour in other industries.
• The initiative started with the resolution placed by Shri K.G.R Choudhary in 1920 for settings up Boards for
determination of minimum wages in each industry.
• In 1928, the International Labour Conference of I.L.O, at Geneva, adopted a draft Convention No. 26 on Minimum
Wages.
• The Royal Commission on Labour in India which is also known as Whitley Commission was appointed by the
Government of India in 1928. to study the conditions of workers in industries and the Commission submitted its report
in 1931 with its recommendations.
• At the Preparatory Asian Regional Labour Conference of I.L.O at New Delhi in 1947 and then 3 rd session of this
conference, it was approved that every effort should be made to improve wage standards in industries and occupations.
• Need of legislation for fixation of minimum wages in India received an impetus after world war II on account of necessity
of protecting the interest of workers
• On the recommendation of the Standing Labour Committee and Indian Labour Conference, a Labour Investigation
Committee was appointed in 1943 to investigate into the question of wages and other matters like housing, social
conditions and employment,.
• To Provide for Machinery for fixation and revision of minimum wages a draft bill was prepared and discussed at 7 th
session of International Labour Conference in Nov, 1945
• Later in 8th meeting of Standing Labour Committee recommended in 1946 to enact separate Legislation for the
unorganised sector including working hours, minimum wages and paid holidays.
Salient Features of the Minimum Wages Act, 1948
• The object of the Act is to provide for fixing minimum rates of wages in certain employments
• Act extends whole of India Include to State of Jammu and Kashmir
• The minimum rate of wages under the Act may consist of:
a) Basic rate of wages and the cost of living allowance
b) Basic rate of wages with or without cost of living allowance and the cash value of the concession
in respect of essential commodities
c) An all inclusive Rate
• The Act requires wages shall be paid in cash
• It also lays the cost of living allowance and the cash value of concessions shall be paid by the
competent Authority
• The Act empowers the appropriate Govt. to fix the number of hour of work per day, to provide weekly
holiday, and payment of overtime wages
• The Act also provides provisions of procedure of fixing and revising the minimum rates of Wages.
• The Act also provides for appointment of inspectors and other authorities to hear and decide the
claims arising out of payment of wages
• There are certain penalties for certain offences
• Rules can be made separately by the appropriate Government on minimum wages.
Code of Wages, 2019

Payment of Minimum Wages

The Minimum Wages Act, 1948 lists the employments where employers are required to pay minimum wages to
workers. The Act applies to the organised sector as well as certain workers in the unorganised sector such as
agricultural workers. The Center and States may add more employments to this list and mandate that minimum wages
be paid for those jobs as well. At present, there are more than 1700 employments notified by the Central and State
governments.

As per the Report of the National Commission on Labour, Ministry of Labour and Employment, the unorganised
sector comprises 92% of the total workforce in the country. A large proportion of these workers are currently not
covered by the Minimum Wages Act, 1948.

The Code proposes to do away with the concept of bringing specific jobs under the Act, and mandates that minimum
wages be paid for all types of employment – irrespective of whether they are in the organised or the unorganised
sector. The Code links minimum wage across the country to the skills of the employee and the place of employment.

Under the Code, the minimum wage has been universalised for all employees and consequently those who were
earlier out of the ambit of minimum wages will be covered under the protection of minimum wages as granted under
the Code.
The procedure for determination of minimum wages by the appropriate Government is in line with the
provisions of the Minimum Wages Act, 1948.

However, the Code introduces the concept of Floor Wage, which is to be determined by the Central
Government after taking into account the minimum living standards of workers in a manner to be
prescribed, which may be different for different geographical areas. The appropriate Government can,
under no circumstance, fix a minimum wage rate which is lower than the floor rate determined by the
Central Government.

However, if the existing minimum wages fixed by the appropriate Government is higher than the floor
wage, they cannot reduce the minimum wages. Further, the Code prescribes that the minimum rate of wages
is to be reviewed and revised by the appropriate Government in intervals not exceeding five years.

Payment of minimum wages is basis of the Code on Wages, 2019. No employer shall pay to any employee
wages less than the minimum rate of wages notified by the appropriate Government.
 .
• It is a new concept under the Code
. • To be fixed by Central Government after taking
into account minimum living standards of workers in
a manner to be prescribed,
Determination of floor wage
• Floor wage may be different for different
geographical areas
• Floor wage functions as a baseline for State-level
minimum wages

Appropriate Government can, under no

circumstance, fix a minimum wage rate which is
lower than the floor rate • If the existing minimum
Limitation
wages fixed by the appropriate Government is
higher than the floor wage, they cannot reduce the
minimum wages
For the purpose of fixation of minimum rate of wages under this section, the
appropriate Government –

(a) shall primarily take into account the skill of workers required for working under the
categories of unskilled, skilled, semi-skilled and highly-skilled or geographical area or
both; and
(b) may, in addition to such minimum rate of wages for certain category of workers, take
into account their arduousness of work like temperature or humidity normally
difficult to bear, hazardous occupations or processes or underground work as may be
prescribed by that Government; and
(c) the norms of such fixation of minimum rate of wages shall be such as may be
prescribed.
The minimum wages will vary from place to place depending upon skill required,
arduousness of the work assigned and the geographical location.
 Provisions of Minimum Wages

Applicable to all including organized and unorganised sector employees

No employer shall pay to any employee wages less than the minimum rate of wages notified by the
Appropriate Government

The appropriate Government shall fix a minimum rate of wages– (a) for time work; or (b) for piece work.

Where the employees are employed on piece work basis, the appropriate Government, shall fix a minimum
rate of wages for securing such employees a minimum rate of wages on a time work basis

In case of time work the rates may be fixed in accordance with by the hour, by the day or by the month.

Minimum wage will depend on factors like skills and difficulty of work, ordinarily be revised at an interval not
exceeding 5 years
Components of Minimum Wages (Section 7)

Any minimum rate of wages fixed or revised by the appropriate Government may consist of–
(a) a basic rate of wages and an 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 workers (hereinafter referred to as ‘cost of living
allowance’); or
(b) a basic rate of wages with or without the cost of living allowance, and the cash value of the
concessions in respect of supplies of essential commodities at concession rates, where so 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.
The cost of living allowance and the cash value of the concessions in respect of supplies of essential
commodities at concession rate shall be computed by such authority, as the appropriate Government may by
notification, appoint, at such intervals and in accordance with such directions as may be specified or given by
the appropriate Government from time to time.

Endeavour shall be made so that the cost of living allowance and the cash value of the concession in respect
of essential commodities at concession rate shall be computed once before 1st April and 1st October every
year to revise the dearness allowance payable to the employees on the minimum wages. Under the Minimum
Wages Act, 1948 the dearness allowance is declared on 1st January and 1st July of every year.
Components of Minimum Wages (Section 7)

A basic rate of wages

Cost of living allowance( variable dearness allowance)

Cash value of concessions

A combination of all three components

Procedure for fixing and revising minimum wages (Section 8)
The code has prescribed two methods for fixing or revising minimum wages:
1. Committee Method
2. Notification Method

Committee Method: The appropriate Government may appoint as many committees as it considers necessary to
hold enquiries and recommend in respect of such fixation or revision of minimum wages.
These committees shall comprise of:
1. Representatives of Employer.
2. Representatives of Employee which shall be equal in number of the members as of employer.
3. Independent persons, not exceeding 1/3rd of the total members of the Committee.
After considering the recommendation of the committee, the appropriate Government shall by notification fix, or as
the case may be, revise the minimum rates of wages and unless such notification otherwise provides, it shall come
into force on the expiry of three months from the date of its issue.
Notification Method: In this method, appropriate Government shall publish its proposal for the information of the
persons likely to be affected. The proposal shall have a date not less than two months from the date of the
notification on which the proposals shall be taken into consideration.
After considering, all representations received by it before the date specified in the notification, the appropriate
Government shall by notification fix, or as the case may be, revise the minimum rates of wages and unless such
notification otherwise provides, it shall come into force on the expiry of three months from the date of its issue.
Provided that where the appropriate Government proposes to revise the minimum rates of wages as per notification
method, it shall also consult concerned Advisory Board constituted under section 42 of the Code
Timeline for review or revision in minimum wages
The appropriate Government shall review or revise minimum rates of wages ordinarily at an interval not
exceeding five years.

Government appoint Committees to hold enquires

Committee Method
• Recommend in respect of such fixation or revision of minimum wages

Government shall publish its proposal for the information of the persons likely
to be affected
Notification Method
• The proposal shall have a date not less than two months from the date of the
notification on which the proposals shall be taken into consideration

After considering, the appropriate government shall by notification fix, or as the

Government case may be, revise the minimum rates of wages; and
Approval • Unless such notification otherwise provides, it shall come into force on the
expiry of three months from the date of its issue
Power of Central Government to fix floor wage (Section 9)

One standout reform relating to introducing the concept of a ‘floor wage’, notified by the Central
Government, varying across geographical areas. This floor wage functions as a baseline for State-level
minimum wages. The Code provides for review/revision of minimum wages at intervals not exceeding
five years.
The Central Government shall fix floor wage taking into account minimum living standards of a
worker in such manner as may be prescribed.
Provided that different floor wage may be fixed for different geographical areas.
The minimum rates of wages fixed by the appropriate Government shall not be less than the floor
wage.
However, if the minimum rates of wages fixed by the appropriate Government earlier is more than the
floor wage, then, the appropriate Government shall not reduce such minimum rates of wages fixed by
it earlier.
The Central Government may, before fixing the floor wage obtain the advice of the Central Advisory
Board constituted under sub-section (1) of section 42 and consult State Governments in such manner
as may be prescribed.
Wages of an employee who works for less than normal working day (Section 10)

If an employee whose minimum rate of wages has been fixed under this
Code by the day, works on any day on which he was employed for a
period of less than the requisite number of hours constituting a normal
working day (normally 9 hours per day), he shall, be entitled to receive
wages in respect of work done on that day, as if he had worked for a full
normal working day.
Provided that he shall not be entitled to receive wages for a full normal
working day,—
(i) in any case where his failure to work is caused by his unwillingness to
work and not by the omission of the employer to provide him with
work; and
(ii) in such other cases and circumstances, as may be prescribed.
Wages for two or more classes of work (Section 11)
Where an employee does two or more classes of work to each of which a
different minimum rate of wages is applicable, the employer shall pay to
such employee in respect of the time respectively occupied in each such
class of work, wages at not less than the minimum rate in force in respect of
each such class.
Minimum time rate wages for piece work (Section 12)
Where a person is employed on piece work for which minimum time rate
and not a minimum piece rate has been fixed under this Code, the employer
shall pay to such person wages at not less than the minimum time rate.
Fixing hours of work for normal working day (Section 13)

Where the minimum rates of wages have been fixed under this Code, the appropriate
Government may —
(a)fix the number of hours of work which shall constitute a normal working day
inclusive of one or more specified intervals
(b)provide for a day of rest in every period of seven days which shall be allowed to all
employees or to any specified class of employees and for the payment of
remuneration in respect of such days of rest; [in many establishment ‘Sunday’ is day
of rest, but employer may fix any other rest day for any employee or class of
employee]
The aforesaid provisions shall, in relation to the following classes of
employees apply, only to such extent and subject to such conditions as may
be prescribed, namely:—
(a) employees engaged in any emergency which could not have been foreseen or
prevented;
(b) employees engaged in work of the nature of preparatory or complementary work
which must necessarily be carried on outside the limits laid down for the general
working in the employment concerned;
(c) employees whose employment is essentially intermittent; [employment of an
employee is essentially intermittent when it is declared to be so by the appropriate
Government on the ground that the daily hours of duty of the employee, or if there
be no daily hours of duty as such for the employee, the hours of duty normally
include periods of inaction during which the employee may be on duty but is not
called upon to display either physical activity or sustained attention]
(d) employees engaged in any work which for technical reasons has to be completed
before the duty is over; and
(e) employees engaged in a work which could not be carried on except at times
dependent on the irregular action of natural forces.
Wages for overtime work (Section 14)

Where an employee whose minimum rate of wages has been fixed under
this Code by the hour, by the day or by such a longer wage-period as may
be prescribed, works on any day in excess of the number of hours
constituting a normal working day, the employer shall pay him for every
hour or for part of an hour so worked in excess, at the overtime rate which
shall not be less than twice the normal rate of wages.
 HIGHLIGHTS
• Applicable to all including organized and unorganised sector employees.
• No employer shall pay to any employee wages less than the minimum rate of
wages notified by the appropriate Government.
• The minimum rate of wages on time work basis may be fixed on hourly, daily or
monthly basis.
• The Central Government will fix ‘floor wages’ for different geographical area
considering the minimum living standards of a worker.
• Minimum wage rates fixed by the Central/State Government shall not be less than
the floor wage and if the existing minimum wage rates fixed by the Central/State
Government are more than the floor wage, they cannot reduce such minimum
wage rates.
• For fixing the floor wage, the Central Government may obtain the advice of the
Central Advisory Board and consult with the State Government.
• The minimum wages will be revised and reviewed by the Central / State
Government considering factors like skills and difficulty of work, ordinarily at an
interval not exceeding 5 years.