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Minimum Wage in India - Frequently Asked Questions

Is there separate minimum wage legislation in India?

Yes, there is separate minimum wage legislation in India. Minimum Wages Act, 1948 is an Act to provide for fixing minimum rates of wages in certain employments and it extends to the whole of India.

Do one or more minimum wage/s, exists in India?

There exists more than one minimum wages in India. As per Section 2 of the Act and Section27, 28 it is mentioned that State as well as Centre has the power to form Minimum Wage rates.

At what level are minimum wages determined?

In India, minimum wages are declared at national, regional, sectoral and occupational or skill level. As per Section 3 of the Act minimum rates of wages may be fixed at national & state level. Also, Section 3 (3) of the Act specifies that minimum rates of wages may be fixed for different skills and occupations.

On what basis is/are minimum wage/s declared?

Minimum wages in India is declared on daily, hourly, and monthly basis. As per section 3 (b) of the Act defines that Minimum Wages are as per the piece rate, hour rate, and monthly rate as well.

In case of daily/weekly/monthly minimum wage, are number of working hours considered while fixing minimum wages?

As per Section3 (14) (b) of the Act there has not been any specific time period. But may be in accordance to the period fixed under section 4 of the Payment of Wages Act, 1936 (4 of 1936).

Who all are involved in setting minimum wages?

As per Section 8 of the Act there is a Central as well as Regional Advisory Board formed which has participation from governmental bodies, employer representatives and trade unions representatives of employees.

How are upratings (adjustments) of minimum wage/s decided upon?

As per Section 9 of the Act uprating are based on decision jointly made by the Government, employer and trade union representatives.

Which are the components of minimum wages in India?

Minimum wages in India has both fixed and variable component. Section 4 mentions that minimum wages may be inclusive of basic pay and with special allowance on which it is based.

How frequently is the fixed component of minimum wages updated?

Fixed component of minimum wages are updated in more than 2 years. Section 3 of the Act mentions that the period for revision of fixed component of minimum wages can be anywhere within 5 years of its fixation.

How frequently is the variable component of minimum wage updated?

variable component of minimum wages are updated at irregular time lags. Section 4 of the Act mentions that the special allowance rate should be adjusted at such intervals and in such manner as the appropriate government may direct.

What are the yardsticks on which minimum wage revisions are based?

Section 4 of the Act mentions that Minimum wages are based on basic wages and cost of living index. The yardsticks on which minimum wage is revised are: (a) Three consumption units per earner, (b) Minimum food requirement of 2700 calories per average Indian adult, ( c ) Cloth requirement of 72 yards per annum per family, (d) Rent corresponding to the minimum area provided under the Government's Industrial Housing Scheme (e) Fuel, lighting and other miscellaneous items of expenditure to constitute 20 % of the total Minimum Wages (f) Children education, medical requirement, minimum recreation including festivals/ceremonies and provision for old age, marriage etc. should further constitute 25% of the total Minimum Wage.

What is the national poverty line? (In national currency)

The national poverty line is Rs. 356.30 in rural areas and Rs. 538.60 in urban areas, per capita per month as updated by all-India poverty lines 2004-05.

How often is poverty line updated?

This scheme is included under Five Year plan as per the Planning Commission of India. Hence, poverty line is updated in every 5 years.

When was poverty line last updated?

Poverty line was last updated in the year 2004-2005.

What is the percentage of minimum wage relative to the current poverty line?

The percentage of minimum wage relative to the current poverty line is 581.65% (10026/447100). National Floor level of minimum wage (Rs 100 per person per day) has been used to calculate this figure. In order to derive monthly minimum wage, Minimum Wage rate is multiplied by 26 (number of work days in a month). National poverty line is calculated by taking an average of the rural and urban poverty line (Rs 447 per person per month).

How is minimum wages compliance regulated?

As per section 19 of Minimum Wages Act, 1948 the appropriate government may by notification in the Official Gazette appoint such persons as it thinks fit to be Inspector for the purposes of this Act and define the local limits within which they shall exercise their functions.

Which legal sanctions can be applied if compliance is lacking?

In case of non compliance, fines, imprisonment and payment of arrears can be applied as per law. Section 22 of the Act mentions that if any one contravenes the rules formed under the Act he may be punished to pay fine, imprisonment which may extend to period of six months or payment of arrears by the employer to the employee.

Are employer and/or trade union representatives involved in compliance procedures?

Information pertaining to this is not specified in the Minimum Wage Act.

To whom/where can individuals complain, if they think they are earning less than minimum wages?

In case individuals earn less than specified minimum wages, they can complain to Labour Inspectorate coordinates or Trade Union Coordinates. As per section 19 of Minimum Wages Act, 1948, government may appoint such person as it thinks fit to be Inspectors for the purposes of this Act. As per section 20 (2) of Minimum Wages Act, 1948 it mention that employee can make complain in writing by himself or through any legal practitioner or any official of a registered trade union authorised to act on his behalf or any Inspector or any person acting with the permission of the authority.