Minimum Wages Act – Complete Guide to Salary Rules, Rates & Compliance

Key Takeaways
 

1. The Minimum Wages Act sets a legal wage floor, ensuring workers receive fair pay, inflation protection, and humane working conditions across industries.
    
2. Recent High Court rulings clarify wage calculation rules and liability, preventing the misuse of definitions and the improper prosecution of directors.
    
3. The law evolved from survival wages to need-based, rights-driven wages, culminating in the Code on Wages, 2019 and a national wage floor.
    

Bonus Point: If a wage dispute is already pending or an award is in force, newly fixed minimum wages won’t apply until the case ends or the award period is over.

 The Minimum Wages Act ensures workers are paid a legally fixed minimum amount for their work. Think of it as a safety net, do you know your wages cannot legally fall below this limit, no matter the employer or industry?

The Minimum Wages Act, 1948, is a law that fixes the lowest wage an employer can legally pay. It works like a price floor in a market. Just as goods cannot be sold below a minimum price, labour cannot be paid below minimum wages.

A factory worker earning ₹200 per day in a scheduled industry is legally underpaid if the notified minimum wage is ₹350. Under the Act, the employer must raise wages to ₹350 and can face penalties for continued non-compliance.

Highlights of the Minimum Wages Act

Recent High Court rulings have clarified important legal boundaries under the Minimum Wages Act, helping employers and employees better understand wage calculations, liability, and correct legal procedures.
 

1. Minimum Wages Act Definition Can’t Be Used to Calculate Bonus: Delhi High Court

The Delhi High Court has clarified that the definition of “wages” under the Minimum Wages Act, 1948, cannot be used to calculate bonus under the Payment of Bonus Act, 1965. Justice Chandra Dhari Singh gave this ruling in the case Group 4 Securities Guarding Ltd vs Secretary, Labour, GNCTD.

The court explained that both laws have different purposes and clearly defined meanings of wages. Bonus must be calculated only as per the Payment of Bonus Act, not by importing definitions from other laws. Using the wrong definition would lead to incorrect bonus calculations and legal confusion. This judgment brings clarity for employers and employees alike.

2. Company Must Be Accused First Under Minimum Wages Act: Karnataka High Court

The Karnataka High Court has ruled that a company must be made an accused for offences under the Minimum Wages Act, 1948. Justice S. Vishwajith Shetty held that directors or officers cannot be prosecuted on their own for vicarious liability if the company itself is not named in the case.

The court explained that the law treats the company as the primary offender. Only when the company is properly accused can persons acting on its behalf, such as directors or managers, be held responsible. Prosecuting individuals without including the company is legally invalid. This judgment protects individuals from improper criminal action and ensures correct legal procedure.

History of the Minimum Wages Act in India

India’s minimum wage framework evolved gradually to protect workers from exploitation and ensure a decent standard of living. From the 1920s onward, wages evolved from survival-level pay to need-based wages covering health, education, housing, and inflation. Over time, courts, labour conferences, and committees strengthened the concept through calorie norms, family needs, and Variable Dearness Allowance (VDA). This journey finally led to the Code on Wages, 2019, which unified wage laws and introduced a national wage floor for greater uniformity.

The table below mentions the key milestones that shaped India’s minimum wage framework, showing how the law gradually evolved to ensure fair, need-based, and inflation-protected wages for workers.
 

These developments reflect India’s steady shift from basic subsistence wages to a more uniform, rights-based wage system under the Code on Wages, 2019.

Features & Importance of the Minimum Wages Act

The Minimum Wages Act plays a crucial role in protecting workers from exploitation by ensuring fair pay, inflation protection, and humane working conditions across different industries.

1. Fixing Minimum Wages for Scheduled Employment

Scenario: In the town of Sitapur, workers at Sharma Stone Crushing Units are being paid only ₹100 per day, which is not enough to meet basic needs.
Application: The government includes stone crushing under scheduled employment and fixes a minimum wage of ₹350 per day.
Outcome: Mr Sharma must now pay every worker at least ₹350 daily, ensuring a basic and lawful income.

2. Variable Dearness Allowance (VDA) to Handle Inflation

Scenario: In Neo-Delhi, prices of food and fuel rise sharply, making the existing minimum wage of ₹400 inadequate.
Application: The Act allows wages to be revised using Variable Dearness Allowance (VDA) to match inflation.
Outcome: The minimum wage is increased to ₹450 so workers can maintain their purchasing power.

3. Working Hours and Weekly Rest Protection

Scenario: Global Garments Factory forces employees to work 12 hours every day without weekly breaks.
Application: The Act empowers the government to fix normal working hours and guarantee weekly rest days.
Outcome: The factory must limit work to 8 hours a day and provide a weekly holiday.

These features ensure workers receive a fair income, protection against rising costs, and reasonable working hours, making the Minimum Wages Act a key pillar of labour welfare in India.

Conclusion

The Minimum Wages Act remains a cornerstone of India’s labour protection framework. By fixing wage floors, adjusting inflation pay, and regulating working conditions, it safeguards workers from exploitation. Recent court rulings and the Code on Wages, 2019, have further strengthened clarity, fairness, and uniformity in wage enforcement.

FAQ

Q: Can an employer pay less than the minimum wage if workers agree?
No, paying below the notified minimum wage is illegal, even with worker consent.

Q: What is the minimum wage in India?

India has a national floor wage (around ₹178 per day earlier), but actual minimum wages vary by state, sector, and skill level, causing widespread confusion.

Q: What is the current minimum wage law in India, and did COVID-19 change it?

Minimum wages are fixed under the Minimum Wages Act based on skill, industry, and location, published by state labour departments and usually revised every six months.

Q: Why don’t hourly wages and strong minimum wage protections work well in India like in the US?

India has minimum wage laws, but weak enforcement, low wage levels, slow courts, and costly litigation make worker protections difficult to enforce in practice.

Q: Are part-time employees covered under the Minimum Wages Act in India?

Yes, part-time workers are entitled to minimum wages on an hourly or proportionate basis, and pay below the notified minimum wage is illegal, regardless of job label.