Employers can explain workers in developing countries like India with a high rate of employment because of their existing low bargaining power. In such a circumstance, the worker may receive wages that are much below the expected level and can result in the inability of the workers to meet his daily needs.

The legislature stepped into to control the excesses of the employers by enacting laws that will prohibit the payment of wages below the employee’s subsistence level. The minimum wages 1948 Act provides the employer with the conditions for the payment of wages to the worker. An employee from the employer must receive the wages must be as provided in this Act.


The employers viewed the validity of the Act as having violated their fundamental freedom as enshrined U/A 19(g) of the COI. However, the Supreme Court ruled that the 1948  Minimum Wages Act was in tandem with the constitution in accordance with the principles of state policy directives U/A 43 of the Constitution Of India.

The Minimum Wages Act 1948 is a legislative labour law that stipulates wages for both skilled and unskilled labourers. Living wages is a level of income for a worker that can ensure a basic living standard which includes good health, education, dignity and can cater for any emergency.
Fair wages is a level of wage that which is not only capable of maintaining certain employment but can be increased based on the employer’s capacity of payment. The Central Advisory Committee introduced the concept of Minimum Wages to provide the employee’s basic needs and other requirements like education, medical care and a level of comfort.

Objectives of this Act:

  • Basic physical needs and good health are important to be ensured.
  • To ensure a secure and adequate living wage for all labourers in the public’s interest.
  • To ensure that the employee has enough to provide for his family.
    Ensuring a decent life standard that pertains to the social comfort of the employee.

The requirements for the review and fixation of a Minimum Wage is U/S 5 of the Act. The appropriate Govt. shall work with the minimum wages Advisory Board while reviewing the wages. The review is limited to the employment that is the schedule. However, Section 27 of the Act empowers the appropriate Govt. To add any employment to the schedule.

Factors considered as irrelevant in fixation of minimum wages:

  • That an employer may have difficulties in business.
  • Financial abilities of the employer.
  • Losses the company has incurred that in the previous year.
  • The inability of the employer to import raw materials.
  • The regional industrial principles.

The consequences of non-payment and underpayment of the minimum wage are considered as a culpable offence. The penalty to an offender may be up to 5 years imprisonment with a fine of Rs. 10,000/- as provided in Section 22 of the Act.

The minimum wage has both benefit and disadvantages to the country. Minimum wage simulates the economic growth of a country by increasing consumption. While it may improve the quality of life of low-income workers, it still depends on the structure of the labour market. Studies show that a moderate increase in minimum wage does not affect employment; however, a high increase may cause unemployment in the country.

The gradual increase of minimum wage will ensure the stability of the economy as the unemployment rate and taxes will also increase gradually. This will not cause a huge unemployment rate and over inflation to occur in the country. Through balancing the minimum wage levels, it may help to stimulate economic growth and welfare of life.

By Yashika Aggarwal,
A B.Com.LLB, 4th Year student at Banasthali Vidyapith, Rajasthan

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