No.

(1)- ESI FUND- LIABILITY OF EMPLOYER:

All employees to be insured

All employees employed in the factories which meet ESIC prescribed rules
(under Section 2) are insured for all the benefits offered by it.

Contribution
 The contribution is a determinable amount of money payable by
both the employer and the employee, as per the situation, to the
corporation.
 The rates, while usually prescribed by the government, are not set
in stone, and are subject to change. Rates defined by the
government are mostly set as the unit standard for the contribution
payable by the employer.
 In the case of the employee’s contribution, the wage period in
relation to the respective employee shall be held as a unit to
determine the compensation payable, and are normally due on the
last day of the wage period.
 Failure to pay contributions by the employer will make him liable to
pay an interest rate of 12%.

Principal employer to pay contribution in the first

instance
 The primary employer has to collectively pay the contribution, both
his own and that of his employees, regardless of whether they are
directly employed under him or are working through an immediate
employer.
 If a directly employed employee fails to pay his contributions, then
the employer can recover that contribution only by deducting the
wages of said employee.
 The employer bears all the transfer costs of the payment to the
Corporation.
Recovery of contribution from the immediate
employer
In the case of an employee who is indirectly employed under the principal
employer, via an immediate employer, the principal employer shall be
entitled to recover the payment made on behalf of an indirect employee,
from the immediate employer, as a debt payable to him.
The immediate employer also has to prepare a list of all the employees under
him and submit the same to the principal employer, before paying his dues.

General provisions as to payment of contribution

In case an employee’s wage falls below the prescribed wage range prescribed
by the Central Government, the employee shall not be liable for his
contribution and it shall not be payable.

Method of payment of contributions

The manner for payments which the Act provides regulations for, has been
elaborated in the following conditions:

 The nature and time of contribution being paid.

 Payment which involves the usage of stamps or other adhesives
fixed upon the books of accounts, or any other documents.
 The evidence of the contributions, which reaches the Corporation, is
to be dated.
 The different entries in the books of accounts along with the details
of the insured persons.
 The replacement of documents which have been lost, destroyed or
defaced.

Employers to furnish returns and maintain registers in

certain cases
According to the provisions given as per the ESI Act, the principal and
immediate employers are to submit all the investment profits, as well as any
and all details relating to their employees in any factory under their
jurisdiction. In case of failure to submit a return, that the corporation had
reasonable cause to believe, should have been submitted, the corporation
can require the employers to present all the details.

Social Security Officers and their functions

ESIC has the power to appoint persons as Social Security Officers. Their
functions are mostly to serve a role in inspecting the function of the
corporation.

 If required, he can acquire any information from any employer as he

sees fit.
 He can enter any corporation at any time and can get all the
accounts, books and other employment documents presented to him
without any due notice. This can include information like wages,
expenses, etc.
 He can inspect and look into any matter regarding the employers
and employees as and when required under the jurisdiction of the
court.
 He can make copies or take extracts from any register or account
back as per his discretion.

Determination of Contribution in certain cases

A Social Security offer is restricted from exercising his functions and
discharging his duties, if the accounting statements of the
factory/establishment are not submitted, or not maintained in accordance
with Section 44 of the ESI Act. As such, the Corporation may, with the
available information, determine the contribution(defined under Section 39)
amount payable to employees. However, this procedure will not take place
until after the person in charge has been given a reasonable opportunity to
be heard regarding the absence of such records.

Appellate Authority
In the scenario specified in Section 45A, once the employer in charge is
heard, and he is not satisfied with the verdict given by the corporation, he
may prefer an appeal to an appellate authority as may be provided by
regulation, within sixty days of the date of the verdict. He must also pay a
sum of 25% of his calculated contribution, in order to file the appeal. In case
he is successful, the corporation will also refund the contribution paid by him.

Recovery of contributions
Any and all contributions which are payable under the provisions of ESI Act,
can be recovered, termed as ‘arrears of land revenue’.

Issue of certificate to the Recovery Officer

In lieu of Section 45B, where the contribution is to be recovered, an
authorised officer of the corporation issues a certificate bearing his signature
and the amount to be recovered, to a Recovery Officer, who then proceeds to
recover the amount specified from the factory where the default took place.
He does this via:

 Attachment or sale of the property of the factory, or the employer,

as per the situation.
 The arrest of the employer and getting him detained in prison.
 Appointing a receiver for the management of the property acquired,
be it from the factory or the employer.

Recovery Officer to whom the certificate is to be forwarded

For the contribution certificate to be forwarded to the Recovery Officer, the
factory employer must be under the jurisdiction of the Officer in the following
ways:

 The location where the employer carries on his business and where
the factory is located.
 The location where the employer resides or he has any personal
property situated within the Officer’s jurisdiction.
 The inability to recover the amount solely through the sale of
property alone.

The inability to recover the amount solely through the sale of

property alone
The analysis of the recovery amount, as per the certificate issued to the
Recovery Officer, operates on his word only. The factory or any authority
related to it cannot question the Officer on the correctness of the mount, and
no objection shall be entertained. However, with a prior intimation, an
arithmetical mistake can be corrected by an authorised officer, along with
any orders about withdrawal or cancellation of a certificate.
Stay of proceedings under certificate and amendment or withdrawal
thereof
It is at the discretion of the Recovery Officer, within the boundaries of the
ESI Act, to halt legal proceedings if the time he has allocated for the
recovery of an amount, has expired.
The Recovery Officer is also entitled to receive constant updates about the
status of payment of any due amount.
If, as a result of an appeal, the amount due is decreased, then the Recovery
Officer temporarily halts the recovery of the now decreased amount.

Other modes of recovery

Some of the other modes of recovery are elaborated within Section 45G.
These are rarer modes of recovery, due to the primary modes of recovery
often being preferred:

 The defaulting employer may be required to pay a sum which was

deducted from the arrears after the sale of the property.
 There might not be any penalty issued but the defaulting employer
would be required to pay the entire outstanding amount directly to
the Director-General of the Corporation.
 Any joint shareholders who held money with the defaulting
employer might be forced to give up their shares to the Corporation
until they are equal to the defaulting employer’s shares, as
compensation.

Application of certain provisions of the Income-tax Act

The arrears of the amount of contributors, which are to be sold to cover the
remaining costs, can be affected by decisions from the Assessing Tax Officer
or Tax Recovery Officer. They can make changes which shall apply to all the
interests and damages.

• No.(2)Concept of Wages :
•
• Different Concepts of Wages Labour laws in India
include Industrial Dispute Act, 1947; Workmen Compensation Act,
1923; Payment of Bonus Act, 1965; the Payment of Wages
Act,1936; Minimum Wages Act, 1948; Equal Remuneration Act,
1976 etc. The labour laws are subject under Concurrent List in the
Constitution of India. Both Central And state government have the
 power to make laws upon this subject but some matters are confined
to the central government only. These laws have been made to
generate employment opportunities and also to protect and benefit the
workers, including the poor, deprived and underprivileged section of
society to establish a healthy work environment for higher output and
productivity. The focus of Government is on promoting welfare
activities and providing social security to the labourers in both
organized and unorganized sectors. So, these purposes can be
achieved by enacting labour laws which governs the rules and
regulations of service, wages, compensation, employment of workers.
Both Central And State Government have their separate Labour
Ministry which are governed by Central and State labour laws which
ensures the working of their subordinate bodies.

• A wage is monetary compensation (or remuneration, personnel expenses,

labor) paid by an employer to an employee in exchange for work done.
Payment may be calculated as a fixed amount for each task completed (a
task wage or piece rate), or at an hourly or daily rate (wage labour), or
based on an easily measured quantity of work done.
1. Wages are part of the expenses that are involved in running a
business.
Payment by wage contrasts with salaried work, in which the employer pays an
arranged amount at steady intervals (such as a week or month) regardless of
hours worked, with commission which conditions pay on individual
performance, and with compensation based on the performance of the
company as a whole. Waged employees may also receive tips or gratuity paid
directly by clients and employee benefits which are non-monetary forms of
compensation. Since wage labour is the predominant form of work, the term
"wage" sometimes refers to all forms (or all monetary forms) of employee
compensation

• Wages are also a means of providing income for employees and as a cost
of doing business to the employer. In a wider sense, wages mean any
economic premium paid by the employer under some contract to his
workers for the services delivered by them. In this way wages constitute of
financial support, family allowance, relief pay and other benefits. Whereas
in the narrow sense, wages are the price paid for the services of labour in
the process of production and it count only the wages proper or
performance wages.
• Origin of Wage
• Wage is a reward for the services rendered or remuneration for the work
done and it is as old as the society itself. In the primitive days, wages were
paid in kind, most common of them was grains and the food. But with the
advent of industrialization wages form a complex problem and in almost
 all industrialised countries it became a sensitive area of public policy. Very
soon the quantum of wages assumed a common cause of friction
between the employers and the wage-earners.

• Frequent disputes between employer and wage-earners resulted in strikes over the

demand for wage-increase. The determination of adequate wages that should be

justifiably payable to die workmen by the employer, was not merely an economic

problem but a multidimensional phenomena, necessarily involving relevant factors

like place of industry, prices of the product, living standards, basic needs of die wage-

earner and the governmental policy in a given society.

• Meaning and Definition of Wage

• According to Section 2(h) of the Minimum wages Act, 1948 the term wages means all

remuneration capable of being expressed in terms of money which would if the terms

of the contract of employment express or 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 attendance or

(b) any other amenity or any service excluded by general or special order of the

appropriate government;-

(ii) any contribution paid by the employer to any person fund or provident 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; or

(v) any gratuity payable on discharge;

• Wage Variation / Varieties

• Wages levels differ from one to another and relative difference in wage levels is

called wage variation or varieties. Hence, there are differences in wage rates. There

are various factors like political, behavioural, ethical, social and economic factors on

which wage levels depends .There are three types of variations or wage varieties in

wage rates.

Regional Variation: Regional Variation means different wage rates in difficult

regions for the same work in the same industry. This may be due to several factor

such as demand and supply of the workers, cost of living index, standard of living and

economic development.

• country which determine the different wage rates time to time. In inflationary

pressures the wage rates are high, whereas in slump period may be low.

Industrial Variation: When one industry may pay more or different wage rates to its

workers in the same region for similar work that is called Industrial Variation. Wages

may differ from industry to industry. Various factors such as nature of work, demand

and supply of skilled labour, place of industry in the national economy and working

conditions in the industry etc influence the wage rates.

• Three Types of Wages

• (1) Living Wages

Living wages are defined as that wages which are consistent to provide certain

facilities as well as some basic necessities to the employee. So, it means that wage

level which is satisfactory to provide for the basic necessities and such niceties that

are advised necessary for the betterment of the employee as well as his family in

accordance with his social status.

Thus, living ages has been defined as follows:

The living wage should enable the male earner to provide himself and his family not

merely the basic essentials of food, clothing and shelter but a measure of frugal

comfort including education for the children, protection against ill-health, requirement

of essential social needs and measures of insurance against old age.

• Article 43 of the Constitution of India states that the state shall endeavour to secure by

suitable legislation or economic organisation or in any other way to all workers,

agricultural, industrial or otherwise work, a living wage, conditions of work ensuring

decent standard of life and full enjoyment of leisure and social and cultural

opportunities. So, the government of India has adopted as one of the directives of the

principle of state policy to ensure living wages.

 Living wage is a wage sufficient to ensure the workman food, shelter, clothing, frugal

comfort, provision for evil days etc. as regard for the skill of an artisan, if he is one.

• Thus, Living wages does not mean to fulfill only for the basic necessities of life to

employee such as food ,shelter and clothing, but also it include for some comforts,

leisure and amenities estimated by current human standards such as health, education

of children, travelling, old age, recreation and social needs etc.

• (2) Minimum Wages:

• The term Minimum Wage has not been defined in the Minimum Wages Act, 1948.

The minimum wage is the lowest wage in the scale below which the efficiency of a

worker is likely to be inspired. The minimum wage includes not only the bare

physical necessities but also a modicum of comfort otherwise known as conventional

necessities. The Minimum wages must, therefore, provide not merely for the bare

subsistence of life but also for the preservation of the efficiency of the worker. For

this purpose, the minimum wage must also provide for the same measure of

education, medical requirements, and amenities.

• Therefore any employer who is unable to pay this minimum wage to workers has no

right to exist. Where a person provides labor or service to another for remuneration

which is less than the minimum wages, such labor is 'forced labour' within the

meaning of Article 23 of the Indian Constitution and thereby entitles the person to

invoke Article 32 or Article 226 of the Constitution of India.

 The Concept of fair wages was to be dynamic. There is no reason to assume that fair

wages fixed years ago should continue to be fair wages for al time, and any fixation of

minimum wages, should be taken not as minimum wages but as fair wages because it

is above the fair wages once fixed.

• (3) Fair wage.:

• Fair wage means which is something more than the minimum wages. It is a mean

between the minimum wage and the living wage. So, the lower limit of the fair wage

must surely be the minimum wage whereas the upper limit is the fair wage which is

capacity of the industry to pay further the comparisons definitely with the average

payment of same work in other occupations or trades which requires the same amount

of ability. Basically, it is economic position and its future prospects on which fair

wage depends.

Further, there are certain factors like minimum wages, capacity of the industry to pay,

level of national income and its distribution, productivity of labour, the place of the

industry in the economy of the country and prevailing wage rates in the same or

similar occupations in the same or neighbouring localities on which fair wage

depends. Fair wages mean the remuneration which is paid to the workers for the jobs

requiring equal efficiency, difficulty and pains.

• A wage is a kind of remuneration provided by an employer to his employees

No.(4) Laws related to wages in India

 (1) The Payment of Wages Act, 1936

Two common forms of employer malpractice during the early stages of

industrialisation were paying wages late and making unauthorised
deductions from wages. The Payment of Wages Act, 1936, was enacted to
put an end to such practices after the Royal Commission on Labour had
recommended it back in 1931.

The primary goal of this Act is to eliminate all types of malpractice by

specifying the time and manner in which wage payments are made, as
well as making sure that workers get their wages on a timely basis
without any unauthorised deductions. The Act gives the government the
authority to raise the ceiling in the future through a notification for
greater outreach and efficiency of enforcement.

(2) Minimum Wages Act, 1948

The Minimum Wages Act, passed in 1948, was enacted to secure the rights
of workers by establishing a minimum wage for some occupations. This Act
also adheres to the provisions of Article 43 of the Indian Constitution, which
provide for a living wage and decent working conditions.

The Act was primarily aimed at safeguarding the interests of workers in the
unorganised sector. The Act sets and reviews the minimum wage for workers
in scheduled employment. The Act requires that the central and state
governments set and review the minimum wage periodically, as well as
enforce the payment of such scheduled employment.

(3) Payment of Bonus Act, 1965

The Payment of Bonus Act, 1965, does not define the word ‘bonus’.
According to Webster’s International Dictionary, “a bonus is something given
in addition to what is ordinarily received by or strictly due to the recipient.”
The bonuses are made to narrow down the difference between actual wages
and the ideal of a living wage. The Payment of Bonus Act, 1965, is applicable
to every factory as defined in the Factories Act, 1948, and also to any other
establishment employing twenty or more people on any day during an
accounting year.

If an employee serves for his or her employer for a minimum of 30 working

days in any accounting year, that individual is entitled to a bonus from their
employer. A bonus must not be less than 8.33% of an employee’s annual
salary or wages or one hundred rupees, whichever is higher. The appropriate
government appoints inspectors for the enforcement of the Act. A
controversy regarding the payment of a bonus is considered an industrial
dispute under the Industrial Disputes Act of 1947.

(4) The Equal Remuneration Act, 1976

In the International Year of Women in 1975, India passed the Equal
Remuneration Ordinance to fulfil Article 39 of the Constitution, which
demands that men and women should be paid equally. Finally, the ordinance
was replaced by the Equal Remuneration Act in 1976. The Act makes it clear
that women employees could not be discriminated against in recruitment for
the same or similar work, as well as in respect of any condition of service
after such an employee is recruited. It also requires that there should be
equal pay for men and women employees who have been engaged in similar
or the same work without any exception. The Act applies to all public and
private establishments as well as employment, including domestic work.

(5) The Factories Act, 1948

Another law enacted to promote social change was the Factories Act, 1948.
The Act is unambiguous in that its labour regulations serve the interests and
welfare of workers, whereas it intends to guide labour discipline. The main
functions of the Act are to regulate working conditions in a factory, take
necessary steps towards the welfare of the worker, safety and health, control
long working hours, and provide proper means for efficient execution of the
Act.

The purpose of this Act is to safeguard workers working in factories against

industrial occupational hazards and provide them with healthy living and
working conditions. It incorporates broad guidelines on the health, safety,
and welfare of employees to provide a preferable work environment as well
as other benefits aimed at improving the quality of their lives.

In the case of Ravi Shankar Sharma v. The State of Rajasthan (1993), the
Rajasthan High Court stated that the Factories Act is social legislation which
addresses matters related to welfare, safety, and health for factory workers.
In a nutshell, the Act is designed to contribute to providing a better working
environment in industrial premises and protect workers from unscrupulous
commercial establishments greedy for profits.

(6) The Plantations Labour Act, 1951

The working conditions for plantation labourers are governed by
the Plantation Labour Act, 1951. It concerns plantations that produce
cinchona, rubber, tea and coffee. The Act provides for the registration of
plantations with a registering officer and is mainly focused on the problems
associated with welfare and health-related issues.
The Act provides for working hours, a weekly holiday, and paid leave. It
further allows the employment of qualified inspecting, medical, or other
personnel to ensure compliance with the various provisions of the Act.
According to the Act, employers are supposed to provide housing, child care,
health care, and welfare for their employees. To fulfil the provisions of the
Act, it gives power to the state government to notify regulations as well as
appoint various types of officials, such as registering officers, chief
inspectors, certifying surgeons, and commissioners. In addition, the Act
prohibits child labour on plantations.

(7)The Mines Act, 1952

The Mines Act, 1952, covers various measures related to health coupled with
the safety and welfare of mine workers. The term ‘mine’ encompasses an
excavation where a mining operation has been or is being conducted for the
purpose of finding minerals. This would include all borings, boreholes, oil
wells, accessory crude conditioning plants, shafts, opencast workings,
conveyors or aerial ropeways, planes, machinery works, railways, tramways,
slidings, workshops, power stations, and other locations that are near or in
the mining area.

The Act has various stipulations to be adhered to so as to ensure the safety

and medical demands for the working conditions of miners. Moreover, these
sections outline the minimum qualifications for all activities regulated by this
Act.

The Act provides provisions on working hours and restrictions that range
from a weekly day of rest to a compensatory day of rest, hours worked
during night shifts above and below ground, overtime pay, a limit on daily
hours of work, a prohibition on the presence of people under the age of 18,
and the employment of women.

It examines the workers to ensure a fair and healthy environment in the

mines. Under the Act, the Central Government has the power to appoint
Chief Inspectors and Inspectors, who are provided with a wide range of
powers and responsibilities to ensure effective implementation of the law.
The Act also has rules regarding the payment of overtime and night shifts.

(8)Motor Transport Workers Act, 1961

The Motor Transport Workers Act, 1961, was passed with the aim of
regulating the appropriate working conditions for motor transport workers.
The Act applies to any motor transport company that has five or more
employees engaged in operation of such a means of transportation.
Employers using motor transport must register the undertaking under this
Act.
The welfare and health facilities to be provided to all workers are uniforms,
canteens where 100 or more motor transport employees have been
employed, restrooms where workers are required to stop at night, and
medical and first-aid facilities.

The employers can lower the wages that are to be paid to

the workmen to make more profits and the workers are compelled to accept
those nominal wages due to their lack of stable employment and poverty.
Unlike a salaried employee who has long-term security, workmen are often
exploited by their employers. Therefore, every workplace must have a
minimum wage. A minimum wage is the minimum amount of remuneration
an employer is

No.(4) Minimum wages

The minimum wage is the lowest amount of remuneration that is required to
be paid by the employer to the employee for the performance of the work.
The minimum wage cannot be reduced through collective agreement or
individual agreement. The state determines the rate of the minimum wage,
taking into view the economic conditions and cost of living in the nation.

Purpose of minimum wages

Basic standard of living: Minimum wages ensure that a person lives a
decent life and fulfils his basic needs, including food, clothing, shelter, and
other basic amenities.

Prevents workplace harassment: The workers will be prevented from

paying low wages for their work. The state will constantly supervise to
ensure that all workplaces follow the principle of the minimum wage.

Eliminate poverty: The minimum wage will raise the amount of

remuneration for low-paying jobs. On some level, this can raise the living
standards of people living below the poverty line.

Increase the output: When the employees are satisfied with the amount of
remuneration, they are likely to increase their productivity in the workplace,
which will lead to an increase in total output and indirectly help the country’s
economy.

Boost to the economy of a country: With the increase in remuneration for

all people, the country’s average income increases, leading to economic
grow.
No.(5)-Payment of Wages Act,
1936
Historical background-

The Royal Commission on Labour was established in 1929 under the

chairmanship of John Henry Whitley. The commission was established to
investigate and evaluate the current working conditions in factories and other
production sites in pre-independent India. The Commission provided the data
collected from the provincial governments in British India. It was given the
responsibility to do extensive research on the physical and mental well-
being, productivity, access to health services, and living standards of the
workforce, as well as on the relationships between employers and
employees. Also, the Commission had to offer suggestions for the betterment
of the workers. The Government of India collected information from the
provincial governments.

The report by the Royal Commission on Labour (1929) covered a wide range
of problems faced by workers in various manufacturing facilities, including
textiles, leather goods, underground mining, steam engines, and silvicultural
factories, as well as employees engaged in public service departments. It
covered nearly all of the problems that employees experience, from low pay,
long working hours, and no leave considering bad health and well-being, no
accommodation, lack or absence of trade unions, the establishment of
workmen’s compensation fund, industrial disputes, etc.

The report is so thorough that almost all worker welfare legislation and
economic laws currently in existence, such as the Trade Union Act of 1926,
the Industrial Disputes Act of 1947, the Payment of Wages Act of 1936, and
the Minimum Wages Act of 1948, etc., can be linked directly in some capacity
to this document.

Findings and suggestions by the Royal Commission

on Labour (1929) which have been incorporated under
various acts
System of imposing penalties on workers
In many industries, factories and other places where workers were
employed, penalising was a pretty common practice. Mining facilities and
other industrial sites had far lower rates of fines imposed on workers. On the
other hand, plantation facilities hardly ever had a system of imposing
penalties on their workers. It was thought to be most common in textile
factories. Also, the Presidency of Bombay, before independence, being the
hub of such textile mills, had one of the largest arbitrary systems of
penalising workers.

While the average fine reduction from a worker’s total pay was about 1%, it
was more important to focus on specific cases than the average because they
were more relevant.

Arbitrary deductions by the employers

There were also deductions for numerous additional reasons, including
required perks or causes like medical care, skills training, interest on pay
advances, charitable contributions, employer-selected religious causes, and a
variety of other amenities. It was a harsh reality that the amount was
deducted from the wages of the workers. However, they never received any
benefit, directly or indirectly, from these deductions. The workers were
expected to pay for their own medical expenses, education, or other basic
necessities. In fact, the interest on the advances given to workers was
extremely high compared to the formal sector banking facilities at that time.
Moreover, the deduction of two days’ salary for one day of absence is Based
on these Commission recommendations, the Government of India re-
examined the issue, and in February 1933, the Payment of Wages Bill of
1933 was introduced in the Legislative Assembly and debated for the
purpose of gathering opinions, but it was unable to take the form of an Act
due to the dissolution of the legislative assembly.

Later on, the Payment of Wages Bill was reintroduced in the Legislative
Assembly on February 15, 1935, with standards that were similar to those of
the previous Bill from 1933 but completely modified for better protection of
labourers and prevention of loopholes. The Select Committee was given the
Bill for evaluation. On September 2, 1935, the Select Committee presented
its report.
Lastly, the Payment of Wages Bill of 1935, which incorporated the Select

No.(6)-Difference between the Payment of

Wages Act, 1936 and Minimum Wages Act,
1948
In general, people think that the Minimum Wages Act of 1948 is simply an
extension of the Payment of Wages Act, 1936. However, this is not true at
all. Both the Acts are entirely different. As per the Payment of Wages Act of
1936, workers must be able to get their wages on time, and it also specifies
the minimum wages that must be paid to them.

Basis Payment of Wages Act of 1936 Minimum Wages Act of 1948

The objective behind the The objective behind the introduction of this
introduction of this Act was to Act was to ensure that every worker receives
Objective of the
prevent delays in the payment of at least a minimum amount of money as
Act
wages that led to a debt trap for wages and to avoid the exploitation of the
the informal sector workers. informal sector workers.

Payment of Wages Act of 1936

Minimum Wages Act of 1948 is applicable
Application and applies uniformly to the whole
to the whole of India. However, its scope
scope of the Act territory of India, including the
varies depending on states and regions.
State of Jammu and Kashmir.

Payment of Wages Act of 1936

Definition of Minimum Wages Act of 1948 defines
defines “wages” under Section 2
Wages “wages” under Section 2 (h) of the Act.
(VI) of the Act.

The Act is designed to set up the minimum

The Act aims to control how
wage determining mechanism in industries
certain types of people who work
where there is no plan in place for the
in the industry are paid their
Purpose of the Act absolute management of wages. This
wages. Its goal is to guarantee the
mechanism is built by collective bargaining
regular payment of wages free
agreements or other means. It prevents the
from any unlawful deductions.
exploitation of workers.

Inclusion of The housing allowance is not a Wages include a housing rent allowance
housing allowance part of wages under the Payment under the Minimum Wages Act of 1948.
 of Wages Act of 1936.

Regardless of whether it is
referred to as a monetary incentive
or by another name, any The additional payments due under the
Additional
additional compensation due conditions of employment to the employee
remuneration
under the conditions of are not considered wages.
employment is not considered as
“wages.”

“Wages” encompasses
Compensation for extra hours, holidays, and
Scope of wages compensation for extra hours,
leave time is excluded.
holidays, and leave time.

Any compensation that is due

It excludes any compensation due in
Compensation by under a court’s orders, judgments,
accordance with a court’s decision,
the court or settlements is considered
settlement, or decree.
wages.

Wages also comprise any amount Wages under the Minimum Wages Act of
Other monetary
that is payable by the employer to 1948 does not comprise any amount that is
amounts payable
the employee related to his or her payable by the employer to the employee
regarding
termination of work under any related to his or her termination of work
employment
law, etc. under any law, etc.

Any amount that the employee is Any amount that the employee is eligible to
Scheme-related eligible to receive under a scheme receive under a scheme created in
monetary benefit created in accordance with law is accordance with a law is not included in the
included in wages. wages.

Wages’ as defined by the Payment of Wages

Act, 1936
The financial reimbursement or remuneration that a company gives to
workers in return for work completed is known as a wage. It is also referred
to as ‘personnel expenses’. The calculation of wages can be done either as a
fixed sum for each project executed or as an hourly, daily, or weekly price
based on a quantifiable number of tasks performed.

All financial compensation, ‘including’ the following, is considered to be

waged.
  The sum payable under the conditions of employment;
 Amount due in accordance with any judgement, settlement, or
award;
 Amount paid as overtime compensation or for time off during the
holidays, and
 Amount payable due to employment termination.
Wages have been defined under Section 2(iv) of the Payment of Wages Act,
1936. “Wages” refers to all remuneration (whether paid in the category of
wage entitlements or otherwise) represented in cash or qualified to be
presented in finances that would be due for payment to a worker in respect
of his occupation or work performed in such employment. Also, wages
include payments if the express or implied terms of employment are
satisfied, and include:

1. Any earnings resulting from a judgement, award, or agreement

reached between the parties;
2. Any extra payment required by the terms of employment,
regardless of whether it is referred to as a bonus or by another
name;
3. Any compensation to which the employee is entitled in relation to
overtime pay, holidays, or any other leave period;
4. Any amount due as a result of the worker’s termination of
employment under any law, agreement, or other documents that
permits payment of the amount, regardless of any deductions from
the wages, but does not establish a deadline for payment;
5. Any remuneration to which the employee has a right under any
system established by any law in effect at the time, with the
following exceptions:
 Any benefit (whether through a profit-sharing agreement or
elsewhere) that is not paid under a prize, settlement, or court ruling
and is not part of the payment due under the conditions of
employment;
 Any housing accommodations, access to electricity and water, basic
healthcare, or other perks, as well as any services not included in
the calculation of wages under a general or specific decree of the
State Government;
 Any employer contributions to pensions or provident funds, as well
as any interest that has accrued;
 Any travel reimbursement or travel concessions value;
 Whatever amount is paid to the employee to cover specific costs
that his work requires of him; or
  Any gratuity due upon dismissal from work under conditions other
than those mentioned in subclause (d).
Board of Trustees’ suggestions, was once more presented to the Legislative
Assembly before being enacted in 1936 and entering into force on March 21,
1937.

Wage payment and deduction from wages

The obligation of the employer to pay wages

In Section 3 of the Payment of Wages Act, it is stated who is accountable for
paying wages to the workers. Each and every worker that an employer
engages or employs for labour purposes is entitled to receive payment of all
wages due to them.

In other circumstances, if the employer identifies a person or, on the rare

chance, realises that there is a person qualified for the job or is authorised
for the same task, at that point, such a person is responsible for the payment
of wages.

These points must be noted concerning the obligation of the employer to pay
wages –

 Regardless of what is said in sub-section (1), the company is

competent to pay any wages that are required under the Act.
 Also, if the contractual employee or any person to whom the
employer designates to make the payment in favour of the workers
forgets to do so, then the employer is the one to be held
responsible.
 Each employer shall be held responsible for paying all necessary
wages and benefits to the individuals they employ.
 The manager of that production facility will be responsible for paying
the wages of the employees he employs as a result of the industrial
setting.
 The obligation to supervise will be conditioned on the payment of
remuneration to any staff they use or employ due to mechanical or
other grounds.
 Concerning the payment of wages to the workers in the railway line
department, an individual is appointed by the department for a
specific region, and such a person is under the obligation to pay
wages to the workers.
  A person appointed by a contractual worker who is directly under his
supervision will be held responsible for the payment of the
representatives’ wages on account of the contractual worker.
 In the event that he fails to pay wages to the representatives, the
people who hired the workers could be held liable for the payment
of their wages.

Fixing a specific period for the payment of wages

Each person responsible for the payment of wages under Section 3 will
establish the time frames for which those earnings are due. No pay term
shall be longer than one month. The Payment of Wages Act, 1936 clearly
indicates that wages can be paid to workers in the following way –

 Payment on a day-to-day basis.

 Payment on a week-by-week basis.
 Payment to be paid fortnightly.
 Payment on a monthly basis.
Also, the Act clearly mentions that under no circumstances shall the payment
of wages to the representatives by the manager go beyond the intervals of 1
month, i.e., 30 days.

Moreover, considering the then-prevalent situation where the workers were

paid wages –

 Annually,
 Bi-annually, or
 Quarterly
The Act mentioned that wages could not be paid following this system as it
leads to increased indebtedness of the workers.

Day on which wages shall be paid

According to Section 5(1) –

“(1) Every person employed upon or in:

1. Any railway, factory or industrial or other establishments upon or in

which the total number of employed persons is less than one
thousand, must receive his wages before the expiry of the seventh
day from the last day of the wage period for which the wages are
payable.
 2. Any other railway, factory or industrial or other establishments,
must receive his wages before the expiry of the tenth day from the
last day of the wage period for which the wages are payable.”
These points must be noted with regard to the payment of wages. The points
are as follows –

 When a worker’s engagement with an employer is terminated, the

employer is then responsible for ensuring that the terminated
worker receives their pay by the end of the second working day
following the date of termination.
 The company or the individual accountable for the payment of
wages must ensure that the wages are paid on a working day.
 The competent authorities may ask the person responsible for
making wage payments to recruit or appoint persons, but only to a
certain extent and according to the restrictions set out in the order.

Payment of wages in current cash, either coins or notes

The employer or person in charge of paying wages must pay the wages to
the workers in the currently prevalent currency, either coins, cash notes, or a
combination of both. Furthermore, the employer is also not allowed to make
a kind payment. Moreover, after receiving written authorisation from the
employee, the employer may pay the employee’s earnings via cheque or
bank transfer into his bank. The employer of each employee working in such
commercial or other facilities shall pay the employee’s wages only by issuing
a cheque or by depositing the money to his bank account, as specified by the
competent government by notification in the Official Gazette.

Payroll deductions that are permitted under the Act

Manufacturing or production firms should deduct money in accordance with
this Act as simply as possible at the time that employees are paid their
wages. The employer would no longer be permitted to deduct what he deems
fit. Deductions relating to all payments made by an employee to his
employer must be stated beforehand.

The following are not included in the definition of a deduction:

 Restriction of the employee’s raise

 Cancellation of the employee’s promotion
 Stopping the incentive for poor productivity by using the worker
 Demotion of the employee by the employer
  Termination of the employee
The aforementioned actions taken by the organisation must have a good and
appropriate justification before initiation.

Amounts that can be deducted under this Act

Fines
Employers should impose a fine on employees only with prior approval from
the state government or other authorised institutions. Before imposing a fine
on the employee, the employer must go by the rules listed below.

 In the workplace, a notice listing all fines imposed on employees

should be posted. This notice should also list any actions that the
representative should not take.
 The worker shouldn’t be forced to pay a fine before explaining his
actions and providing justification for them.
 The total amount of the fines shouldn’t be more than 3% of his
salary.
 Any person under the age of fifteen should not be required to pay a
fine.
 In order to punish the worker for his acts or omissions, a fine should
be imposed only once on his wages.
 The mechanism for shareholdings or reimbursements from the
representatives should not be used to collect penalties.
 Within 60 days of the date the penalty was imposed, it must be
deducted or recovered.
 On the day that the worker or employee commits the act of
exclusion, a fine should be imposed.
 All fines collected from workers should be added to the general
reserve and used to assist the workers.
 A record of all penalties and payments made must be kept by the
individual in charge of the payment of wages to the workers under
Section 3 of the Payment of Wages Act of 1936.
 All funds received in relation to penalties imposed must be used
strictly for the goals determined by the competent authorities. Such
goals should be in the long-term interests of the workforce at the
production line or mines.
  After 90 days have passed since the day the fines were imposed, no
fines imposed on an employee or worker may be recovered from
them.

Deductions due to exclusion from duties

The worker’s absence from work for either a single day or for any other
duration of time may result in deductions from wages by the employer.

The worker’s absence from work for either a single day or for any other
duration of time may result in deductions from wages by the employer.

The amount deducted for the absence during working hours must not be
greater than a total that has a comparable connection to the pay. This pay is
due in reference to the payment period as this absence does to that wage
period.

For instance, if a worker’s monthly salary is INR 15,000 and he misses one
month of work due to another obligation, the penalty for failure to fulfil an
obligation should not exceed INR 15,000.

Employees who show up for work and refuse to participate in the business
operation without a valid excuse will be seen as being absent from their
duties.

The employer may withdraw eight days’ worth of wages from the pay of the
workers if at least ten persons collectively fail to report for duty without
being given a cause and without prior notice.

Amount deducted for losses or damages

A register is to be maintained by the person responsible for the payment of
the wages in such a framework as might be recommended. Also, it will
contain all such observations and all confirmations thereof.

According to Section 10(2) of the Payment of Wages Act, 1936, the employer
should give the worker an opportunity to provide justification and reason for
the damage that took place. The deductions made by the employer from the
wages of the worker should not exceed the value or measure of the damage
done by the worker.

Amount deducted for services provided

If a worker does not consider or admit the house-convenience service or
administrative structure provided by the employer, in this case, only the
employer is authorised to deduct the cost from the employee or worker’s
pay.

The amount of the deduction should not be greater than the estimated value
of the house-convenience services or administrative structure.

Recovering advances from deductions

If an advance was given to employees by the employer prior to the start of
business, the company should be able to recover or recuperate that advance
from the worker’s primary payment of wages or salary. On the other hand,
the employer shouldn’t be allowed to recoup or recover the loans made for
the employee’s travel expenses.

Deductions in relation to the recovery of the advances

Resolutions for the recovery of loans granted for home construction or other
objectives will be based on any rules established by the State Government
that control the amount of flexibility with which such loans may be permitted
and the rate of interest payable afterwards.

Payments to cooperative organisations and insurance systems – subject to

deductions.

The conditions that the State Government may impose will determine the
justification for pension contributions to cooperative organisations,
deductions for payments to insurance coverage maintained by the Indian
Postal Service, or for worker recognition deductions made for compensation
of any premium on their additional security strategic plan to the Life
Insurance Corporation.

Keeping registrations and records updated (Section 13A)

Every employer is required to maintain the registers and information
necessary to provide information on the individuals they employ, the work
they do for them, the pay they get, the deduction taken from that pay, the
receipts they provide, and other details in the format that may be advised.

Every registration and record must be maintained and protected for a

duration of three years following the date of the last addition made to them.
It means that both the employer and the employee need to have a three-
year history of transactions.
(7)-Authorities under the Payment of Wages Act of
1936
Authority for the purposes of this Act may be chosen by the state
government. Any authority will be regarded as a public servant for the
purposes of Section 14 of the Indian Penal Code, which was passed in 1860.

Inspector
A monitor may be chosen by the state government to oversee the
implementation of this legislation. Each inspector will be treated as a
member of the general public or a public worker for the purposes of Section
14 of the Indian Penal Code, 1860.

Rights of the Inspector

The Inspector under this law has the following authority:

Inspectors have the authority to conduct investigations and evaluate whether

employers are appropriately adhering to the rules mentioned in this Act or
not.

For the purposes of carrying out the purposes of this Act, the Inspector may,
with the assistance, if any, he deems necessary, may enter, investigate, and
examine any property of any railway, production system, industrial, or other
establishments.

An inspector is capable of overseeing the payment of wages. It includes the

payments to those working on any foundation, whether it be a factory,
machinery, other establishments, or a railway. It includes taking possession
of or making copies of any registers, records, or sections thereof that he
deems important in relation to a violation of the Act.

The resources that the Inspector will make available

For each registration, inspection, observation, evaluation, or request made in
accordance with this Act, each employer shall fund the reasonable costs of an
inspector.

Requirement of a hearing for the claim

There shall be an authority mentioned below appointed by the competent
authority to hear and decide on all matters arising from observations
regarding the payments or postponement in payment of the salaries and
benefits of people who are employed and compensated, along with all
concerns incidental to such claims.

1. Any Commissioner of Workmen’s Compensation; or

2. Someone working for the Central Government in the following
capacities:
 Labour Commissioner for the region; or

 with at least two years of experience as an Assistant Labour

Commissioner; or
 Any state government representative who, for the past two years,
has not occupied the position of the Assistant Labour Commissioner;
 A supervisory official of any Labour Court or Industrial Tribunal
established under the Industrial Disputes Act, 1947 (14 of 1947), or
under any equivalent law governing the investigation and resolution
of industrial conflicts in existence in the State; or
 Any other representative or official with expertise as a Judge of a
Civil Court or a Judicial Magistrate, with authority to hear and decide
for any predetermined jurisdiction all cases arising out of findings on
the salaries and benefits or postponement in the instalment of the
wages of people employed or paid there, along with all concerns
inadvertent to such cases.
 If the appropriate Government deems it necessary to do so, it may
choose more than one specialist for any area that has been
identified, and it may grant special or general proposals to facilitate
the conveyance of those experts or the part of the work that is
required of them under the Payment of Wages Act.

Only one application for claims from the unpaid group

The portion of this Act makes reference to the aforementioned title. If many
employees have not had their wages paid, there is no requirement for
multiple applications. According to this Act, all such employees may submit a
single application to the specialist for the payment of their wages.

Appeal
Section 17 of this Act mentions the right to appeal. The parties who are
dissatisfied may file an appeal with the district court under the following
circumstances:
  In the unlikely event that the above organisations reject the
applicant’s request.
 The authorities compel the employer to pay more than or equal to
INR 300.
 In the unlikely event that the total exceeds INR 25, the employer
will retain it for the single unpaid employee. If several unpaid
workers are present, they will each receive INR 50.

Power of the authorities designated by Section 15

In accordance with Section 15 of the Payment of Wages Act of 1936, the
authorities have the following powers –

 Taking evidence, putting it into practice, requiring witnesses to

appear, and mandating the production of reports.
 Provisional attachment of the employer’s or another party’s assets
that are involved in the wage-payment process
“Where whenever after an application has been made under sub-section (2)
of Section 15 the authority or where whenever after an intrigue or appeal
has been filed under Section 17 by an employed individual or any legitimate
professional or any authority of an enlisted worker’s organisation approved
recorded as a hard copy to follow up for his sake or any Inspector under this
Act or some other individual allowed by the power to make an application
under sub-section (2) of Section 15.”

The court, at times, has referred to this Section and is satisfied that the
company or another person responsible for paying wages under Section 3 is
likely going to avoid paying any sum that may be arranged to be
compensated under Section 15 or Section 17 by the officials or the court, as
the case may be, with the sole exception of circumstances where the
institution or court has made the decision that the components of the
contractual arrangements be destroyed by the temporary suspension.

After giving the employer or any other party an opportunity to be heard, it is

feasible to make arrangements for the connection of a significant amount of
the employer’s or another party’s liability for the payment of wages as
determined by the authority or court to be sufficient to cover the potential
payment under the heading. Any application for connection under subsection
(1) will be subject to the provisions of the Code of Civil Procedure (1908) (5
of 1908) dealing with connection before judgement under that Code.

Penalties for violations of the Payment of Wages Act

Reasons for imposing punishment
 Wages not being paid on time,
 Unjustified deductions,
 Excessive justification for the incompletion of the obligations,
 Excessive justification for injury or business collapse,
 Reasoning in excess for the settling of a house out of generosity or
administrative power.

Penalties include a fine that won’t be less than INR 1,000 but could reach
INR 7,500
 In the unlikely event that the wage period is longer than one
month;
 The failure to pay salaries on a business day;
 No current currency, money notes, or both are used to pay wages;
 Inability to maintain a record of employee penalties collected;
 Inappropriate use of the fine that was collected from the employees;
 If the employee doesn’t display the edited compositions of the
notification of this Act and the rules made

Punishable with a fine of up to INR 3,000

 Anyone who prevents an Inspector from fulfilling his duty under this
Act;
 Anyone who strongly refuses to disclose any registers or other
records at the request of an inspector
 Whoever refuses or willfully neglects to pay the reasonable
expenses of an Inspector for conducting any entries, reviews,
evaluations, supervisions, or requests permitted by or according to
this Act.

Punishable with a fine that will not be less than INR 3,750 but might reach
INR 20,500
 Whoever does the same offence more than once.
 Detention for a period that will not be less than one month but
might extend to six months, as well as a fine that will not be less
than INR 3,750 but could increase to INR 20,500.
  The process employed in the trial of the offences under the Payment
of Wages Act of 1936.
 No court will consider a claim against a person for an offence under
subsection (1) of Section 20. However, if the claim regarding the
circumstances constructing the offence has been made under
section 15 of the Act and has been fully or partially accepted, and
the authority involved pursuant to the last Section of the
investigatory court has conceded that such a claim has been made,
thereby authorising the formation of the perceived injustice, in that
case, the following circumstances may be considered –
1. a genuine mistake or meaningful disagreement regarding the
amount owed to the employee; the occurrence of an emergency,
the appearance of exceptional circumstances such that the person
responsible for making short-term payments was unable to do as
such, even with the use of reasonable perseverance and diligence,
or the inability of the employee to request or accept payment.
2. No court lobby, with the exception of an objection raised by or with
the approval of an Inspector under this Act, takes notice of the
rejection of Sections 4 or 6 or of any requirement made
under Section 26, accordingly.
3. The amount of any payments already made against the person
charged in any proceedings conducted in accordance with Section
15 will be taken into consideration by the Court when imposing any
penalties for an offence under subsection (1) of Section 20.

Bar of suits
No court will hear any cases involving the recovery of salaries or other
deductions from benefits if the complete amount of the promised benefits
has not been received. It involves –

 Structures that are the focus of intrigue under Section 17 or a

request under Section 15 that has been presented by the aggrieved
party and is currently before the power chosen under that Section;
or
 has influenced the offended party’s understanding of a Section 15
course’s subject; or
 has been declared not to be payable to the offending party in any
proceeding under Section 15; or
 could have been recouped by filing a claim under Section 15.

Waiving the privilege

  Any arrangement or settlement, whether established before or after
the passing of this Act, whereby a person employed waives a
privilege granted by this Act will be void and unenforceable to the
extent that it suggests depriving him of that right.
 Posting of the Act’s summary via notification.
 The person responsible for paying wages to workers in a
manufacturing facility shall require a notification to be displayed in
such a manufacturing facility.
 The notification shall contain such summaries of this Act and of the
guidelines promulgated thereunder in English as well as in the
language of the majority of the workers in the manufacturing unit,
as may be suggested.

Decentralisation of the specific powers under the Act

Any authority that the appropriate government may exercise under this Act
will, in relation to such matters and pursuant to such requirements,
presuming any, as may be mentioned in the course, be further enforceable,
the appropriate government may direct by notice in the Official Gazette.
Such matters related to the decentralisation of power are mentioned below –

 If the Central Government is the appropriate government, by any

official or authority subject to the Central Government, by the State
Government, or by any authority or body inferior to the State
Government, as may be specified in the notification.
 If the appropriate government is a state government, by the official
or authority subject to the state government, that may be specified
in the notification.

Payment of unpaid wages in the event of death of the worker

employed
 Payment made by the employer to the person the employee
appointed prior to his death at the time of entering into a
contractual obligation.
 The business will be freed from its obligation to pay any salaries
that the employer has with the designated authority.
 If no such nomination has been provided or if payments cannot be
sent to the person so chosen for whatever reason, the funds should
be retained with the position that has been authorised to retain
them. This position will maintain the funds in the manner that may
be advised.
Power to make rules
Rules issued under subsection (2) of Section 15 of the Payment of Wages Act
of 1936 may, expressly and without favour to the minimisation of the
preceding power:

 Mandate the maintenance of the records, registrations, returns, and

notifications necessary for the Act’s validity and suggest their
organisational design;
 Mandate the posting of a notice indicating the rates of compensation
payable to employees employed on such premises in a prominent
location on the property where work is conducted;
 Make room for routine checks of the scales, measurements, and
weighing equipment used by employers to determine the pay of
those in their employment;
 Suggest a method for changing the dates on which compensation
will be provided;
 Make recommendations on the position that can be favoured under
subsection (1) of Section 8 and deductions with respect to which
fines may be required;
 Provide a technique for the establishment of the deduction
under Section 10 and the imposition of penalties under Section 8;
 Suggest the terms under which the proviso to Section 9‘s sub-
section (2) for deductions may be used;
 Suggest the authority with the necessary resources to back up the
justifications for using fine returns;
 Impose limits on the number of advances that may be made and the
percentages by which they may be recovered with regard to Section
12‘s clause (b);
 Determine the range of expenditures that could be allowed in
operations under this Act;
 Determine the sum of court fees payable for any actions brought
under this Act; and
 Specify the amended works that must be included in the Section
25 notification.
When establishing any regulation under this Section, the State Government
may stipulate that violating the rule shall result in a fine of up to INR 200.

All recommendations made pursuant to this Section shall be based on the

State of the preceding publication, and the date to be ascertained pursuant
to clause (3) of Section 23 of the General Clauses Act, 1897, shall not be less
than one-fourth of a year after the date on which the document of the
suggested fundamentals was made available.

No.(8)-Case laws on the Payment of Wages

Act

Align Components Private Limited and another v.

Union of India and others. (2020)
On April 30, 2020, the Aurangabad bench of the Bombay High Court issued a
landmark decision in the case of Align Components Pvt. Ltd. and another v.
Union of India and others – (2020), which was filed alongside a number of
other petitions. The decision stated that workers’ wages do not have to be
paid if they choose not to report to work in regions where the lockdown has
been removed.

Parties to the Case

Petitioner Align Components Private Limited and another

Respondent The Union of India and others

Representatives of
Mr. T. K. Prabhakaran
Petitioner

Representative for Mr. S.B. Deshpande (Assistant Solicitor General) and Mr. D.R. Kale
Respondent (Government Pleader)

2-Judge Bench consisting of Justices S. V. Gangapurwala and R. G.

Judges
Avachat.

Facts of the case

In this case, the petitioner has called into question the MHA Order, a
notification/order that the Government of India, Ministry of Home Affairs,
issued on March 29, 2020. The order instructed employers to compensate full
wages to the employees during the lockdown. This notification was made in
accordance with Section 10(2)(l) of the Disaster Management Act of 2005.
The businesses were compelled to scale back or cease their manufacturing
operations as a result of the lockdown restrictions issued by the Ministry of
Home Affairs in India.

Arguments put forth by the petitioners and respondents

The petitioners said that the employees would be ready to take on any work
that was offered to them and that they would be fairly prepared to do it.
Although the petitioners requested a complete exemption from paying
wages, they also said that they would be willing to pay 50% of the gross
earnings or the minimum rates of wages set by the Minimum Wages Act,
whichever is greater. The legal representatives for the respondents – the
Union of India and other parties – asked for more time to get information.

Judgement as given by the Bombay High Court

Considering the facts and circumstances of the case, the High Court of
Bombay held that –

“I am of the opinion that since the Hon’ble Apex Court is dealing with a
related cause of action, I would not be inclined to interfere with the
impugned order and would expect the petitioners to pay the gross monthly
wages to the employees, save and except for conveyance allowance and food
allowance, if being paid on a month-to-month basis in the cases of those
workers who are not required to report for duties.”

“It is made clear that workers will be expected to report for duty according to
shift schedules, subject to the employer providing adequate protection
against coronavirus infections since the State of Maharashtra recently
partially lifted the lockdown in some industrial areas in the State of
Maharashtra. If these employees choose to stay away from work, the
management is free to deduct their salary as a result, as long as it follows
the legal process for doing so. Even in places where there may not have been
a lockdown, this would still be applicable.”

Moreover, the High Court of Bombay observed the following –

1. The Bombay High Court noted the order of the Supreme Court
issued on April 27, 2020, in a series of cases involving Ficus Pax
Private Ltd. v. Union of India and others (2020), where the
Supreme Court ordered the petitions to be stated in two weeks, and
no interim relief was granted to the businesses or employers who
had likewise asked for a stay of the MHA Order requiring them to
pay proper wages.
 2. The Court further observed that the Kerala High Court had decided
to stay a decision by Kerala’s Finance Department that allowed for
the payment of 50% of salaries right away and deferred payment of
the remaining 50%.
3. The Hon’ble Judge observed that petitioners would be required to
pay full wages because the Supreme Court is dealing with a related
cause of action. Therefore, the Bombay High Court was unwilling to
interfere with the MHA order case in the Apex Court.
4. A leave of absence was provided to add a workers’ representative or
union or to inform the employees’ representative to submit an
intervention request.
5. The case was expected to be heard on May 18, 2020, or the next
day the Honourable Court performs court proceedings, whichever
comes first. However, the decision is still pending.
Although the Court did make two important exceptions to the general norm,
they are as follows:

1. If paid on a month-to-month basis, the meal allowance and

transportation allowance for employees who are not expected to
report for duty do not need to be paid; and
2. Employees are expected to report for work according to their work
routines in the locations where the lockdown has been removed,
provided they are adequately protected from coronavirus infections.
If these employees choose to voluntarily miss work, the
management is free to withhold their pay.
Additionally, the Court, elaborating on the exception, stated that –

“It is made clear that workers will be obliged to appear for duty according to
shift schedules under the condition that the employer provides proper
protection against coronavirus infections. Recently, the State of Maharashtra
partially lifted the lockdown in some industrial districts. If these employees
choose to stay away from work, the management is free to deduct their
salary as a result, as long as it follows the legal process for doing so. Even in
places where there may not have been a lockdown, this would still be
applicable.”

Ludhiana Hands Tools Association v. Union of India

(2020)
The issue, in this case, revolves around clause (iii) of the Ministry of Home
Affairs order in 2020 concerning worker migration and the COVID-19
lockdown.
Parties to the case
Petitioner Ludhiana Hands Tools Association

Respondent Union of India

Representatives of Mr. Jamshed P. Cama (Senior Advocate), Mr. Jawahar Raja (Advocate), Mr.
Petitioner Krishan Kumar, (Advocate on record).

Representative for Mr. Tushar Mehta (Solicitor General), Mr. Pukhrambam Ramesh Kumar
Respondent (Advocate on record).

3-Judge Bench consisting of Hon’ble Mr. Justice L. Nageswara Rao, Hon’ble

Judges
Mr. Justice Sanjay Kishan Kaul, and Hon’ble Mr. Justice B.R. Gavai.

Facts of the case

In the case of Ludhiana Hands Tools Association v. Union of India (2020), a
Public Interest Litigation (PIL) was filed before the Apex Court under Article
32 of the Indian Constitution, asserting that the order is outside the purview
of the government under the Disaster Management Act as this Act facilitates
the Commission to combat natural and man-made disasters and is not
formed for the objective of addressing the employers’ failure to pay wages
during the lockdown. Due to this, the statute under which it was passed does
not apply to this order. Aside from being arbitrary and in violation of Articles
14, Article 19(1)(g) as well as Section 300A of the Indian
Constitution, Section 10(2)(i) of the Disaster Management Act of 2005, which
has been read in the manner described above, must be scrapped.

Judgment as given by the Bench

Although it has ordered that no deterrent measures be taken against the
petitioners, the Supreme Court has indeed given the temporary remedy in
this case.

The same arguments were put out in the other case, Twin City Industrial
Employers Association v. Union of India (2020); however, the Supreme
Court refrained from interfering with the Ministry’s ruling preventing small-
size businesses from having to pay their workers any wages.

In both cases, the Apex Court issued inconsistent rulings; nonetheless, in the
first, the Payment of Wages Act’s provisions are being violated because the
workers’ payments are not being paid on time.
Moreover, in this case, the Apex Court also made reference to a landmark
judgement of Anant Ram v. District Magistrate of Jodhpur (1956). In this
case, it was held that in order to be eligible for a payment deduction on the
ground of absence from work, such absence should be voluntary. Therefore,
no deduction must be made under Section 7(2) when an employee is absent
from work during the time between being fired and being reinstated because
such an absence cannot be characterised as voluntary.

No.(9)-Analysis of the Payment of Wages Act,

1936 with regard to the prevalent situation
If one is to comprehend the Payment of Wages’ applicability in the modern
day, it is crucial to understand the numerous revisions that have been
periodically added to this Act in order to modify it to meet the needs of the
modern workforce. This law was created many years ago, so it might not be
applicable in its fullest meaning to the current generation. However, this is
not true. Through the creation of the Payment of Wages (Amendment) Bill,
2017, major revisions to the Payment of Wages Act of 1936 were made. The
Minister of Labour and Employment – Mr. Bandaru Dattatreya, presented this
Bill in the Lok Sabha on February 3, 2017.

Section 6 of the Payment of Wages Act of 1936 enables the employer to pay
compensation solely in coins or currency. However, the proviso said that if
the employer so chooses, they may pay the salaries via check or by
depositing the amount in the employees’ bank accounts—but only after
getting the necessary consent from them.

Compared to the era when the 1936 legislation took effect, technology has
advanced and evolved in the present era. Nowadays, a lot of workers have
their own bank accounts.

Hence, the new Act makes several substantial improvements, but the most
important one is that companies no longer need to obtain written consent
before paying employees’ salaries by check or bank account.

Regardless of their financial situation, the government has pushed every

individual to get a bank account. Most employees and labourers, about 80%,
have a bank account. As a result, the ability to transfer wages through a
cheque or bank account is now convenient for both companies and
employees. In doing so, employers will encounter fewer complaints from
workers about inadequate and tardy wage payments.

The government has made it clear that only checks or electronic transfers
may be used to pay compensation to the manufacturing and other entities
listed under the legislation. Thus, the goal of the digital economy will be
furthered. A lot of state governments, including those in Punjab, Andhra
Pradesh, Haryana, Kerala, etc., have already enacted the aforementioned
revisions to their laws.

Through these changes made to the Payment of Wages Act of 1936, the
Central Government has formally adopted the crucial policy of elevating
electronic transactions in prominence. Adopting such a system will be
beneficial in the modern period as it will undoubtedly streamline the process
of paying wages while also making it easier to keep track of those payment
records.

Moreover, through a notification, the central government raised the salary

level in 2017 from 18,000 to 24,000 in order to make the Act more
applicable. This limit was raised in order to expand the number of employees
the Act will apply to. In today’s typical and lower-middle-class families, the
earning member makes at least 20,000 rupees per month or more.

As a result, raising this barrier will broaden the reach of the current Act. The
Payment of Wages Act’s revised “salary threshold” and its potential effects
on pari materia laws (pari materia is a doctrine in statutory construction
which states that the statutes on the same topic or subject must be
interpreted collectively) in our nation will need to be examined in the future.
The need for it increases in light of Parliament’s consideration of passing the
Labour Code on Wages, which would unify all existing laws, including the
Payment of Wages Act of 1936, the Minimum Wages Act of 1948, the Equal
Remuneration Act of 1976, and the Payment of Bonus Act of 1965.

Therefore, the new Labour Code, which is basically a compilation of the

labour laws in the country, would have a significant impact not just on the
payment of wages but on the overall conditions of the workers.

Recommendations concerning the Payment of

Wages Act

Recommendations concerning the deduction from the

wages of the workers
 In order to keep salary deductions to a minimum, all necessary
steps should be followed. When considered necessary, efforts should
be made to protect the workers and their families’ ability to pay for
their basic necessities.
  Deductions from wages for the recovery of loss occurred or damage
to the employer’s products, goods, or installations are permitted
only when loss or damage has occurred for which the employee in
question is indisputably held accountable.
 Such fines and penalties should be reasonable and should not be in
excess of the actual value of the damage or expense.
 The employee in question should have a fair chance to explain why
such a deduction shouldn’t be made before the decision is taken to
make one such deduction from the wages of the concerned worker.
 The proper actions must be taken to restrict deductions from wages
for toolkits, raw materials, or machinery supplied by the employer.
Also, there is a need to look at situations where such fines and
penalties are:
1. An accepted custom of the trading activities or profession
concerned;
2. Provided for by a collective bargaining agreement or arbitral
proceedings award, or in compliance with applicable law; or
3. They are authorised in another way through a process that is
accepted by national laws or regulations.

The frequency of payment of wages

 The optimum periods for wage payments should ensure that wages
are paid. These periods shall include –
1. If a worker’s wages are determined on an hourly, daily, or weekly
basis, they must be paid at least twice every month for periods of
no more than sixteen days.
2. Payment of wages not less than once a month in the case of
employees whose pay is fixed on a yearly or monthly basis.
 Wages paid to employees may be determined on a case-by-case
basis. These instances include-
1. In the event of employees whose compensation is based on
production or manual labour, the optimum periods for payment of
wages must, to the extent practicable, be set so as to guarantee
that wage payments are made not less frequently than twice every
month at intervals not exceeding sixteen days.
2. Appropriate steps should be taken to ensure the following in the
event of workers hired to complete a task that will take longer than
a fortnight to complete and for whose periods for the payment of
wages are not expressly established by a collective agreement or
arbitration award –
 1. Those payments are made on the account not less often than twice
a month at intervals not exceeding sixteen days, in proportion to
the amount of work completed, and
2. That final settlement will be made within a fortnight of the
completion of the task.

Notification of pay conditions to employees

 The specifics of the salary conditions that should be made known to
the workers should, if necessary, include information about—
1. The amounts of wages that are due, how they are calculated, and
how frequently they are paid;
2. The location of payment;
3. The restrictions on when deductions may be imposed.

Statements of wages and payroll records

In all instances where it is relevant, labourers should be notified, along with
each payment of wages, of the following information regarding the payment
time frame in question, particularly as it may be subject to alteration.

 The gross amount of earnings received;

 Any deductions that may have been made, together with the
justification for them and their total cost; and
 The net amount of wages owed.
In suitable circumstances, businesses should be mandated to keep records
that show, with regard to each employee employed, the information
mentioned in the preceding paragraph.

Association of Employees in Workplace

Administration Stores
Proper actions should be taken to promote arrangements for the association

of leaders of the affected workers and, more specifically, representatives of

worker welfare commissions or related organisations where such bodies

emerge, in the general management of worker stores or related sites

founded in association with an undertaking for the sale of goods or

facilitation of services to the workers thereof.

No(10)-The Code on Wages, 2019

The Code on Wages, 2019 was passed by both Houses of Parliament and
received the assent of the President on August 8th, 2019. The Code aims to
regulate wages in all types of jobs that take part in any sector, trade
business, or manufacture, including salary and bonuses. The Code
consolidates the following laws pertaining to wages:

 Minimum Wage Act, 1948

 Payment of Wages Act, 1936
 Payment of Bonus Act, 1965
 Equal Remuneration Act, 1976
Two significant definitional changes came about as a result of the
codification. The Code broadened the horizons by eliminating the difference
between organised and unorganised employment, whereas the Minimum
Wage Act of 1948 applied only to the ‘schedule of employment’ covered
under the Wages Law. Therefore, the concepts of employee and employer
have been made all-encompassing to include both the formal as well as
informal sectors.

Secondly, the Code made application of both the Minimum Wage Act of 1948
and the Payment of Wages Act of 1936 to all establishments and employees,
unless expressly exempted, rather than just those whose income had to be
below a fixed limit.

Important provisions of the Labour Codes

Some of the important provisions of the Code are as follows:

Application of the Code

One of the main features of the Code is to universalise its application. Earlier,
the payment of the minimum wage was limited to the workers specified in
the scheduled employment. However, with the introduction of this Code,
minimum wages are now expanded to include employees of both organised
and unorganised sectors. This wider application of the Code provides security
to over 50 crore workers working in these sectors.

Gender Discrimination
The Code prohibits discrimination based on gender in matters related to
wages and the recruitment of employees for the same or similar work. The
Code defines the term “same work or work of similar nature” in Section 2(v)
as work for which the skill, effort, experience, and responsibility required are
the same and are carried out under similar working conditions. The Code
places an obligation on the employer to ensure equal pay for the same or
similar work and prohibits reducing wages based on gender. This provision
seeks to increase the involvement of women in the labour market, which can
empower them socially and financially.

Minimum wage
The process of determining the minimum wage under the Code has been
made more efficient and rationalised. The central and relevant state
governments have to review and revise the minimum wage every five years.
This places an obligation on employers to comply with the revised minimum
wage standards.

Fixation of minimum wages

Section 8 provides for the fixation of minimum wages; it states that, subject
to Section 9, the appropriate government is responsible for determining
minimum wages based on the recommendations of the advisory board.

Further, Section 6(6) provides that the determination of the minimum wage
will be categorised based on skill levels, which include unskilled, semi-skilled,
and skilled. It also states that there shall be no distinction based on
scheduled employment; this means that the minimum wages established will
be uniformly applicable to all levels of employment, regardless of the nature
of the industry.

Floor wage
Floor wage generally refers to the minimum wage that employers are legally
required to pay their workers. It serves as a baseline or floor, ensuring that
workers receive a certain level of compensation for their labour. Section 9
states that the central government is responsible for determining the floor
wage. While determining the floor wage, the central government has to take
into account the living standards of the workers, and it also empowers the
central government to set different floor wages for different areas. Before
finalising the floor wage, the central government may seek advice from the
central advisory board, in consultation with the relevant state governments.

Overtime wages
Section 14 provides for overtime wages; either the central or state
governments have the authority to determine the standard number of hours
constituting a regular working day. If the employees work beyond the set
hours of the working day, they shall be entitled to receive overtime wages.
Further, the provision provides that the prescribed overtime wage shall be at
least twice the normal rate of wages, which ensures fair compensation for
additional hours worked.

Payment of wages
Section 15 provides for various methods for payment of wages, such as
coins, currency notes, cheques, credit to the bank account, or by electronic
mode. Further, Section 16 states that the employers shall fix the wage period
for the employees, either daily, weekly, fortnightly, or monthly.

Deductions
Deductions that may be made from the wages are provided under Section
18. According to this section, no deductions from the wages of the employee
are permitted except those which are expressly authorised under the Act.

For the purpose of this section, if an employee has made any payment to the
employer or his agent, it shall be deemed to be a deduction from wages.
However, any loss of wages to an employee that occurs due to the
withholding of an increment or promotion, including stoppage of an
increment, reduction to a lower post, or suspension, shall not be deemed to
be a deduction if the employer’s actions satisfy the requirements as notified
by the appropriate government.

Grounds for deductions

The employer shall make deductions from the wages of an employee in
accordance with the provisions of the Code, and they shall be made only for
the following purposes:
 1. fines imposed on the employee;
2. deductions for employees’ absence from duty;
3. deductions for the damage to or loss of goods particularly entrusted
to the employee for custody that is directly attributable to the
employee’s neglect or default;
4. deductions for house accommodations supplied by the employer, by
the appropriate government, or by any housing board;
5. deductions for amenities and services supplied by the employer as
authorised by the appropriate government or any officer;
6. deductions for recovery of advances, loans, and interest;
7. deductions for recovery of loans granted for house-building or for
any other purposes that are approved by the appropriate
government;
8. deductions of income tax or any other statutory levy levied by the
central government or state government which is payable by the
employee;
9. deductions for subscription to and repayment of advances from any
social security funds or schemes;
10. deductions for payment to co-operative society;
11. deductions made with the written authorisation of the employee
for the membership of trade union fees., etc.
Further, the section states that these deductions shall not exceed 50% of the
total wage of the employee. If the total deductions authorised exceed 50% of
the wages, the excess may be recovered in such manner as may be
prescribed.

Payment of the bonus

Eligibility for a bonus has been provided under Section 26. Any employee
who is drawing monthly wages not exceeding an amount predetermined by
the appropriate government and has worked for a minimum of 30 days is
eligible for the annual minimum bonus. This bonus is calculated at the rate of
8.33% of the wages earned by the employee or Rs 100, whichever is higher.
Further, this provision is valid irrespective of whether the employer had any
allocable surplus in the previous accounting year.

Allocable surplus refers to the available surplus after certain allocations and
deductions have been made as per the provisions of the Act. This surplus is
the basis for determining the amount of bonus that can be distributed among
eligible employees.

If the wages of the employee exceed such an amount as determined by the

appropriate government, the bonus payable to such an employee shall be
calculated as if such an amount is equal to the employee’s wage as specified
by the appropriate government or the minimum wage fixed by the
appropriate government, whichever is higher.

Further, if the allocable surplus for the given accounting year exceeds the
minimum bonus required for employees, the employer is under obligation to
pay every employee a bonus for that accounting year. The bonus shall be
calculated proportionally based on the wages earned by the employee during
the accounting year, subject to a maximum limit of twenty percent of such
wages.

Disqualifications for bonuses

Section 29 provides for disqualifications for bonuses; it states that an
employee will be disqualified from receiving a bonus under this Code if they
are dismissed from service for the following reasons:

 Fraud.
 Riotous or violent behaviour while on the premises of the
establishment.
 Theft, misappropriation, or sabotage of any property of the
establishment.
 Conviction for sexual harassment.
In these specified situations, the employee is ineligible to receive a bonus.

Advisory boards
Section 42 provides for the constitution of the central and state advisory
boards. Accordingly, the central government shall establish the central
advisory board, which shall consist of members appointed by the central
government. The board includes an equal number of representatives from
both the employers and the employees, independent persons not exceeding
one-third of the total members, and five representatives who are nominated
by the state governments.

Further, the section also provides that one-third of the members appointed
to the board shall be women, and the chairperson appointed by the central
government shall be from the category of independent persons.

It is also provided that the Central Advisory Board shall advise the Central
Government on various issues, such as minimum wages, employment
opportunities for women, employment for women in specific establishments,
and other matters under this Code. The Central Government may issue
directions to state governments based on the advice of the Board.
The section also states that the state government shall constitute a state
advisory board to advise on matters relating to minimum wages,
employment opportunities for women, and other matters. The board shall
consist of committees and subcommittees which include an equal number of
representatives from both employers and employees, independent persons
not exceeding one-third of the total members.

It also states that one-third of the members appointed to the board shall be
women, and the chairperson shall be appointed by the state government.
Both the Central and State Advisory Boards shall regulate their procedures,
including committees, and their terms of office shall be as prescribed by
relevant regulations.

Offences and penalties

Section 54 provides for the penalties for offences, and employers can be held
liable under the following circumstances:

 If an employer pays an employee an amount less than what is due

under the Code, he shall be punished with a fine that may extend up
to fifty thousand rupees. If the employer within 5 years has
committed the second or subsequent offence, he shall be punishable
with imprisonment for up to 3 months, a fine of up to Rs. 1,00,000,
or both.
 If any employer contravenes any other provision of this Code or any
rule or order made under it, they shall be punished with a fine,
which may extend to 20,000 rupees. If the employer within 5 years
has committed the second or subsequent offence, he shall be
punishable with imprisonment for up to one month, a fine of up to
Rs. 40000, or both

The Payment of Wages Act makes an effort to unify the definition of “wages,”
which is a step toward providing more clarity. However, there is room for
misinterpretation given how the terms “employee” and “worker” are used
within the Act and how their separate definitions are arranged.

It’s no longer a problem, though. It is anticipated that the newly passed

Labour Code, which will be put into effect soon nationwide, will close any
gaps left by the country’s prior labour laws. By describing observers as
facilitators rather than just inspectors, the Code also seeks to alter the
impression of the “Inspector Raj” in relation to the government’s work
guidelines.

There have been significant changes made to the offences and penalties
under the new Code. The reformative measures make a strong case for their
necessity and proportionality, with the intention of assisting rather than
impeding corporate leadership.

The Code encourages creativity in decisions about topics like wage payment
methods and assessment procedures that are intended to help it achieve its
administrative digitalisation goals.

Hence, it will be exciting to see how the new labour code (which is inspired
by the previous labour laws such as the Minimum Wages Act, Payment of
Wage Act, Factories Act, etc.) will improve the prevalent situation of
labourers across the country.

Does the Payment of Wages Act apply to contract

employees?
If the work that they are doing is otherwise included under the Payment of
Wages Act, then the Act’s provisions are properly applicable to the contract
workers that are hired by any factory or facility.

What are the steps and guidelines for deducting fines

from pay in accordance with the Payment of Wages
Act?
If a penalty is to be levied on a worker, it should only be imposed for actions
or inactions that are included in the schedule that has been authorised by the
respective authority. Fines shouldn’t be more than 3% of the monthly wages.

This can only be applied to employees who are at least 15 years old, must be
retrieved within 90 days of the date of the action or omission, and be
imposed following a proper show cause procedure.

Employers are required to keep the following records in the appropriate

formats.

 A wage register;
  A fines register;
 Register of Loss or Damage Deductions
 A list of advancements.

What is the employer’s duty with regard to paying

wages to the employees under the Payment of Wages
Act, 1936?
Every employer is liable for paying all salaries owed to his employees under
the Payment of Wages Act of 1936, and in the case of those employees:

A worker designated by the contractor who is immediately under his

supervision in the case of a contract; an individual selected by the employer
who is in charge of enforcing the Act’s provisions.

What punishments can be meted out to employers who

break any of the provisions of the Payment of Wages
Act?
For violating Sections 5, 7, 8, 9, 10, 11, 12, and 13 of the Payment of Wages
Act, 1936, which address timely wage payment, reimbursement of wages in
modern coins and bills, penalties, and reductions for damages or losses or
the repayment of loans or advances. In such a circumstance, a fine of at
least Rs. 1000 and up to Rs. 5000 may be imposed. If convicted again, the
fine must be at least 5000 rupees and might be as high as 10,000.

For failing to keep records, wilfully refusing to provide information without a

valid justification, omitting to respond to a request for information, or
willfully providing a false response to a request for information under this
Act, the maximum fine for such offences is Rs. 5000, with a minimum fine of
Rs. 1000. For a second or subsequent offence, the fine must be at least 5000
rupees and might be as high as 10,000 rupees.

A fine of at least Rs. 1000, extendable up to Rs. 5000, must be paid for
knowingly interfering with an inspector’s fulfilment of his responsibilities and
for refusing to submit any register or other papers. If convicted again, the
fine must be at least 5000 rupees and might be as high as 10,000.
Failure to pay wages to any worker may result in a minimum one-month
sentence that may be increased to six months in prison and a minimum fine
of Rs. 2000 which may be increased to Rs. 15,000 in fines. Each additional

No.(11)- APPROVAL, LICENSING AND REGISTRATION OF

FACTORIES:

Section 6 and 7 of the Factories Act, 1948 delves into the provisional
aspect concerning the approval, licensing and registration of the
factories. Sec.6 provides that the State Government may make rules
requiring for the purposes of the Act previous permission in writing
of the State Government or the Chief Inspector to be obtained for the
site on which the factory is to be situated and for the construction of
any factory, the submission of plans and specifications and
registration and licensing of factories as has been rightly pointed out
in the case of Indian Railway Construction Co. vs Lal Mohd. and ors.
[1]

APPLICATION FOR REGISTRATION:

To initiate the registration process, the occupier or owner of the

factory needs to obtain the prescribed application form which are
usually available on the official website of the State’s Labour
Department or can be obtained in person from the local Factory
Inspectorate. Following this the form contents is required to be duly
filled properly. The application form typically includes sections where
you need to provide various details about the factory and its
operations. Following is a simple brief regarding the required
information:

a. Name and Address of the Factory: This includes the full legal
name of the factory and its complete address, including details
like street address, city or district, and pin code.
b. Name and Address of the Occupier: The occupier refers to the
person or entity responsible for the overall management and
operation of the factory. Their complete name and contact
 address should be enclosed with no ambiguity to any of the
details.
c. Nature of Manufacturing Process: The type of manufacturing or
industrial process that is to be carried out in the factory is
required to be described well. This would help the authorities to
understand the nature of the work and the potential risks
involved.
d. Number of Workers Employed: Specification of the correct
number total workers currently employed in the factory is
important. Further, it should also be ensured that this count
complies with the threshold for registration based on the use of
power.
e. Details of Machinery and Equipment: All the machinery and
equipment that are to be used in the manufacturing process are
also required to be properly enclosed. The information such as
the number, type, and capacity of machines are required to be
included.
f. Factory Layout and Plans: Some states may require one to
submit a layout plan of the factory, showing the arrangement of
various sections, machinery, and safety measures and hence it
should be prepared well to submit. This plan should be
prepared by a qualified engineer or architect in compliance with
concerned laws and regulations.
g. Ownership and Legal Status: Mentioning of the fact that
whether the factory is owned by an individual, partnership,
company, or any other legal entity is crucial. Hence, complete
details relating to the legal status of the factory should be
provided.
The application form is required to be accompanied with certain
necessary documents, which may include:

 Proof of ownership or occupancy of the factory premises.

 Any approvals or permissions required by local authorities.
 Documents related to the safety measures and facilities
provided for workers, as required by the Factories Act.
Further, the application form must as well be accompanied along with
registration fee as specified by the state authorities. Once the
application form is completed and all required documents are
attached, the application is submitted. This can usually be done in
person or by mail, as per the state’s guideline. After submission, the
Factory Inspector may schedule an inspection to verify compliance
with safety and health standards. If the inspection is successful and all
requirements are met, then a factory license is issued, allowing the
factory to operate within the specified conditions.

VALIDITY OF FACTORY LICENSE:

The validity of the issued factory license may be in effect from 1 year
to utmost of 5 years depending on the enacted rule regarding it by the
respective state. Hence, the validity is subject to variation depending
on the state in which the factory is set up. However, renewal of license
before the expiration of the validity of license is essential for the
continued functioning of the factory or manufacturing operations.

NOTICE TO CHIEF INSPECTOR:

It is to be noted that a notice in writing to the Chief Inspector at least

fifteen days before one intends to occupy or utilize any space as a
factory needs to be furnished. Within a period of thirty days, the
occupant of any establishment that becomes subject to the Act for the
very first time must submit a notice in writing to the chief inspector
and such notice must include the information stated in Sec.7(1).

EMPOLYING OF NEW MANAGER:

The Sec.7 as well delineates that within seven days of the newly
recruited manager assuming the control of the factory, the factory’s
administration is required to appropriately inform the principal
auditor about such recruitment. Further, when no person has been
assigned as the manager or when the assigned manager fails to
oversee the factory then any individual functioning as the manager,
or in the event of no such individual functioning as the manager, the
one who occupies the functioning of factory, will be considered to act
as the manager of factory for the reason of this legislation.

In the case of Mohd. Ismail Khizer Hussain & Co. vs The State Of
Madras And Anr[2], it has been held that ‘where a factory had been in
existence and no previous permission for the site or the construction
of the factory was required, this section does not enable the
appropriate authority to demand that the owner of the factory should
obtain the approval of the appropriate authority for the site of the
plans of the factory buildings.’

RENEWAL OF LICENSE:

The renewal of a factory license under the Factories Act, 1948 is a

necessary process to ensure continued compliance with the law. It’s
essential for factory owners to be proactive in renewing their factory
license to ensure compliance with the Factories Act and to avoid any
legal complications. The renewal application should be submitted
before the current license expires to avoid any disruptions in factory
operations. However, the specific requirements and processes for
renewal may vary from state to state.

To renew obtain the prescribed renewal application form is required

to be obtained. The renewal application form usually requires
updating information about the factory’s status and operations. While
the specific requirements may vary by state, here are some common
elements you might need to provide:

 Current status of the factory, including any changes in

ownership or management.
 Updated details on the manufacturing process and machinery
used.
 Current number of workers employed.
 Any modifications or improvements made to the factory’s
layout, safety measures, or facilities.
  A declaration of continued compliance with the Factories Act
and relevant state regulations.
Further, the applicant may require the following necessary
documents:

 Proof of payment of the renewal fee, which varies by state.

 Updated factory layout plans, if any changes have been made.
 Any documents or certificates related to safety measures and
facilities.
 Photo-copy of the Original Factory License.
Upon receipt of the application, the relevant officer reviews it for
accuracy. Following a thorough examination of the application, if the
documents are deemed accurate, it proceeds to the approval stage
under the jurisdiction of the competent authority. In cases where
corrections are necessary, the applicant is promptly notified and
requested to resubmit the revised application within a specified
timeframe. Upon receiving the corrected documents from the
applicant, the application is filed for further evaluation by the
Competent Authority. Following approval, the renewed license,
which bears the signature of the Competent Authority, is dispatched
to the applicant via postal mail, accompanied by a formal covering
letter.

Failure to renew the factory license on time can result in penalties,

including fines and legal action. It can also lead to the suspension of
factory operations until the renewal is completed.

RESPONSIBILITIES OF THE OWNER OF FACTORY:

Sec.7A of the 1948 Act delineates the overarching responsibilities of

the occupier in ensuring the well-being of workers in the factory.
These duties encompass various aspects, which include:

 Maintaining safe plant and work systems.

 Ensuring safety in the handling, storage, and transport of
materials.
  Providing necessary information, training, and supervision for
worker safety.
 Keeping the workplace safe and accessible.
 Creating a safe and conducive work environment for workers’
well-being.
In most cases, the owner must formulate and periodically update a
written statement outlining their policies and procedures for worker
health and safety. This statement should be communicated to all
workers as prescribed by law, unless stated otherwise.

RESPONSIBILITIES WITH REGARDS TO ARTICLES AND

SUBSTANCES USED:

Sec.7B set forth the responsibilities of individuals or entities in

Subsection (1) who are involved in designing, manufacturing,
importing, or supplying articles for use in factories. Their duties
encompass:

a. requires that these articles must be designed and constructed to

ensure the safety and health of workers when used correctly.
1. mandates the performance of necessary tests and
examinations to uphold the safety standards mentioned in
Clause (a).
2. necessitates the provision of comprehensive information
regarding the article’s usage within a factory, its intended
purpose, and the conditions required to maintain safety
and worker health.
In situations where articles are designed or manufactured outside
India, importer are obliged to ensure that they meet the same or
higher safety standards as those adopted in India.

 Subsection (2) permits individuals involved in designing or

manufacturing such articles to conduct research aiming to
identify and, to the extent reasonable, mitigate health or safety
risks associated with the article’s design or use.
  Subsection (3) clarifies that these obligations do not require the
repetition of testing, examination, or research already carried
out by others, as long as it’s reasonable to rely on the results.
 Subsection (4) specifies that these responsibilities apply
exclusively to actions within the scope of one’s business
activities and control.
 Subsection (5) provides relief to suppliers if articles are supplied
based on a written undertaking by the user, depending on the
terms of the undertaking.
 Subsection (6) stipulates that an article is not considered to be
used correctly if it’s used without taking into account any
provided information or guidance on its usage from the entity
responsible for its design, manufacturing, import, or supply.

The Factories Act has played a very crucial role in improving working
conditions and over-all well-being of the factory workers in India. It
continues to play a very significant role in contributing towards
making the country’s labour laws more complacent and effective. The
approval, licensing, and registration of factories, as governed by
labour laws like the Factories Act, 1948, are indispensable for ensuring
worker safety and workplace compliance. These processes establish a
legal framework for safe operations and accountability among factory
owners. While complexities exist, they are vital for fostering secure
and healthy working conditions. Diligent enforcement and adaptation
to changing labour practices and technology are essential for their
ongoing effectiveness. These mechanisms contribute to social and
economic development by creating productive and secure work
environments, balancing industrial progress with the protection of
workers’ rights in an ever-evolving industrial landscape.
day carries a punishment of up to Rs. 100.
No.(12)-Labour and welfare-Health, Safety and
Welfare of Workers:
The word ‘labour welfare’ refers to the services offered to employees within
as well as outside the factory, such as canteens, restrooms, recreation areas,
housing, and any other amenities that support employee well-being. States
that take welfare measures care about the overall well-being and productivity
of their workforce. Early on in the industrialization process, social
programmes for manufacturing workers did not receive enough priority. In
the past, industrial labour conditions in India were terrible. Due to a growth
in industrial activity in the latter part of the twenty-first century, several
attempts were made to improve the working conditions of the workforce
through the recommendations of the Royal Commission.

After gaining knowledge about the deficiencies and limitations of the previous
Act, the Factories Act of 1948 was amended. The definition of ‘factory’ was
expanded to encompass any industrial facility employing 10 or more people
that uses power or any industrial establishment employing more than 20
people that uses no power, which was a significant development.

Other significant amendments included-

 Raising the minimum age of children who can work from 12 to 14

years old.
 Reducing the number of hours a child can work from five to four and
a half.
 Preventing the kids from working between the hours of 7 p.m. and 6
a.m.
 The health, safety, and well-being of all types of employees are
given particular attention.

Welfare measures
The three main components of welfare measures are occupational health
care, appropriate working hours, and appropriate remuneration. It speaks of
a person’s complete health, including their physical, mental, moral, and
emotional states. The goal of welfare measures is to integrate the socio-
psychological demands of the workforce, the particular technological
requirements, the organisational structure and procedures, and the current
socio-cultural environment. It fosters a culture of work dedication in
enterprises and society at large, ensuring increased employee happiness and
productivity.
Washing facilities (Section 42)
 All factories should supply and maintain enough
appropriate washing facilities for the use of the employees.
 For male and female employees, separate, well-screened facilities
must be provided; these facilities also need to be easily accessible
and maintained clean.
 The standards for appropriate and suitable facilities for washing
must be set by the state government.

Facilities for storing and drying clothing (Section 43)

 The state government has a specific authority. It specifies that the
state government has the authority to give instructions to the
manufacturers regarding where to store the worker’s clothing.
 They can also provide them with instructions on how to dry the
workers’ clothes. It refers to the circumstance in which workers are
not dressed for work.

Facilities for sitting (Section 44)

 All factories should provide and maintain seating arrangements in
appropriate areas for all workers who are required to work in a
standing position in order to take advantage of any chances for rest
that may arise throughout the course of the job.
 According to the chief inspector, workers in any factory involved in a
certain manufacturing process or working in a specific room are able
to perform their work effectively while seated.

First aid appliance (Section 45)

 All factories must have first aid kits, appliances, or cupboards
stocked with the required supplies during all working hours, and
they must be easily accessible for all manufacturing employees to
access. Accordingly, there must be more first aid boxes or
cupboards than the usual ratio of one for every 150 industrial
employees, which must be fewer than that.
 The first aid box or cupboard should only include the recommended
supplies.
 Throughout the factory’s operating hours, each first aid box or
cupboard should be kept under the supervision of a specific person
who is accountable for it on a separate basis and must be readily
available at all times during the working hours of the factory.
Canteen (Section 46)
 A canteen must be provided and kept up by the occupier for the
benefit of the workers in any specified factory where more than 250
people are usually employed, according to rules that the state
government may set.
 Food must be served, and prices must be established for it.

Shelters, restrooms and lunch rooms (Section 47)

 Every factory with more than 150 employees must have appropriate
and suitable restrooms or shelters and a lunchroom with drinking
water where employees can eat food they have brought with them
and that is kept for their use. If a lunchroom is available, employees
should stop eating in the work area.
 The shelters or restrooms need to be well-lighted, ventilated, kept
clean, cool, and in good condition.
 The state government sets the standards.

Creches (Section 48)

 Every factory with more than 30 female employees must have
a suitable room for the use of children under the age of six of such
women.
 Such rooms must be well furnished, well-lighted, and ventilated,
and they must be kept clean and hygienic. They must also be under
the care of women who have received training in child and infant
care.
 In addition, facilities for washing and changing clothes can be made
available for the care of the children of female workers.
 Any factory may be forced to provide free milk, refreshments, or
both to such children.
 Small children can be fed by their mothers in any industry at
necessary intervals.

Health
Sections 11-20 of Chapter III of the Act deal with the Health of the Factories
Act, 1948.

Cleanliness (Section 11)

Every factory needs to be kept clean and clear of any effluvia from drains,
latrines, or other annoyances. In particular:

 Dirt must be cleaned daily from floors, benches, staircases, and

passages by sweeping or by another method, and it must be
properly disposed of.
 The floor should be disinfectant-washed at least once a week.
 During the manufacturing process, the floor becomes moist; this
must be drained via drainage.

Disposal of wastes and effluents (Section 12)

Every factory has to have a method in place for treating wastes and
effluents produced by the manufacturing process they use.

Ventilation and temperature (Section 13)

 In order to ensure worker comfort and prevent health problems,
sufficient ventilation must be created for the circulation of air in a
factory, which should be maintained at a specific temperature.
 Walls and roofing should be made of a material that is intended for
a particular temperature that shouldn’t go over as much as possible.
 Certain precautions must be taken to protect the employees in
facilities where the manufacturing process requires extremely high
or low temperatures.

Dust and fume (Section 14)

 Every factory has to have efficient measures to remove or prevent
any dust, fumes, or other impurities that might harm or offend the
employees employed and cause inhalation and buildup in any
workroom.
 No factory may operate an internal combustion engine unless the
exhaust is directed outside, and no other internal combustion engine
may be used. Additionally, precautions must be made to avoid the
buildup of fumes that might endanger the health of any employees
inside the room.

Overcrowding (Section 16)

 There should be no overcrowding in factories that might harm the
health of the workers.
  All employees must have ample space in a room to work in the
building.

Lighting (Section 17)

 Every area of a factory where employees are employed must have
adequate natural, artificial, or both types of lighting installed and
maintained.
 All glass windows and skylights that provide lighting for the
workroom in factories must be kept clean on the inside and outside.
 The production of shadows should not cause eye strain during any
manufacturing process, and all factories must have preventative
measures that should not cause glare from the source of light or via
reflection from a smooth or polished surface.

Drinking (Section 18)

 All factories must have the appropriate installations in place, and
maintain convenient locations with an adequate supply of
clean drinking water.
 The distance between any drinking water and any washing area,
urinal, latrine, spittoon, open drain carrying sullage or effluent, or
another source of contamination in the factory must be 6 metres
unless the chief inspector approves a shorter distance in writing.
The labelling must be legible and in a language that workers could
understand.
 In all factories with more than 250 regular employees, there needs
to be a suitable method for providing cold drinking water during hot
weather.

Latrines and urinals (Section 19)

 All factories should have enough restrooms, and urinal
accommodations of the required types must be offered in a location
that is convenient and always accessible to workers.
 Male and female employees must have separate enclosed rooms.
 These locations must be thoroughly cleaned, kept in a hygienic
state, and have sufficient lighting and ventilation.
 Sweepers must be used to maintain latrines, urinals, and washing
facilities clean.

Spittoons (Section 20)

  All factories must have spittoons in easily accessible locations, and
they must be kept clean and hygienic.
 The state government specifies the number of spittoons that must
be given, their placement in any factory, as well as their
maintenance in a clean and hygienic manner.
 Except for spittoons designed, for this reason, no one should spit
within the premises of a factory. A notice must be posted if any
violations occur, with a fine of five rupees.

Safety
Safety is covered in Chapter IV of the Act and is covered in Sections 21–41
of the Factories Act, 1948.

 Employment of young persons on dangerous machines

(Section 23):
No young person is permitted to operate dangerous machines unless he has
been adequately taught the hazards associated with the machine and the
measures to be taken, and has received suitable training in working at the
machine or adequate supervision by a person who has complete knowledge
and experience of the equipment.

 Prohibition of employment of women and children near

cotton openers (Section 27):
Women and children are not permitted to work in any area of a cotton
pressing facility while a cotton opener is in operation. Women and children
may be employed on the side of the partition where the feed-end is located if
the inspector so specifies.

 Hoists and lifts (Section 28):

o Every hoist and lift must be of strong mechanical structure,
enough strength, and sound material. They also need to be
regularly maintained, completely checked by a qualified
person at least once every six months, and a register kept
for the mandatory exams.
o A cage that is properly designed and installed must enclose
all hoist and lift ways to prevent people from being trapped
between any of the equipment.
o No larger load should be carried; the maximum safe
operating load must be marked on the hoist or lift.
o Every hoist or lift gate must have interlocking or another
effective system installed to prevent the gate from opening
except during landing.
  Protection of eyes (Section 35):
The state government may require effective screens or appropriate
goggles to be provided for the protection of persons employed or in the
vicinity of the process during any manufacturing process carried out in any
factory that involves risk to the eyes due to exposure to excessive light or
injury to the eyes from particles or fragments thrown off during the process.

 Precautions against dangerous fumes, gases etc (Section

36):
No person shall be required or permitted to enter any chamber, tank, vat,
pit, pipe, flue, or other confined space in any factory where any gas, fume,
vapour, or dust is present to such a degree as to involve risk to persons
being overcome, unless such chamber, tank, vat, pit, pipe, flue, or other
confined space is provided with an adequate manhole or other effective
means of egress.

 Explosive or inflammable dust, gas etc (Section 37):

o Any factory involved in manufacturing processes that
produce dust, gas, fume, or vapour of a nature that
could explode on ignition must take all reasonably
practicable precautions to prevent any explosion through
o The effective enclosure of the plant or machinery.
o The removal or prevention of the accumulation of such
dust, gas, fume, or vapour, etc., or
o Otherwise by the exclusion or effective enclosure of all
potential ignition sources.
 Precautions in case of fire (Section 38):
o In order to protect and maintain safety to allow people to
escape in the case of fire, all factories should have
precautionary measures in place to avoid the breakout and
spread of fire, both internally and externally. The required
tools and facilities for extinguishing the fire must also be
made accessible.
o All factory employees who are familiar with fire escape
routes and have received sufficient training on the
procedure to be followed in such circumstances must have
access to appropriate measures.

No.(13)- Provisions related to Women:

section aims to keep women and men healthy at all times. Though
unfortunately both women and men had to work overtime with no toilet
breaks by their employer in this COVID-19 pandemic to continue supplying
the growing demands of their consumers.

Section 22: Work on or near machinery in motion

The Factories Act very clearly states in Section 22 that the lubrication of
machinery and/or adjustment of any machinery or any part of it, while it is in
motion, will not be done by any woman or a young person. This Section
exists to prevent any dangerous injury to any woman or child (young
person).

Section 34: Excessive weights

Section 34 gives certain powers to the concerned State Government to make
rules regarding the maximum weight limit which would be lifted by women,
men, and younger people in the factories. It is clearly given that no one can
be employed or asked to move or lift a weight that may cause them harm or
injury.

Section 27: Prohibition of employment of women and

children near cotton-openers
Section 27 of the Factories Act prohibits any women in employment to be
employed in any part of a factory for pressing cotton or in which a cotton
opener is used. This is done to keep the women healthy as there is a high
risk of the cotton bales generating flames. When wet cotton bales are being
pressed (in cotton pressing) they generate high amounts of heat and the
things around them can catch fire. In many instances, the dry cotton bales
nearby have caught on fire and have caused fire-related accidents and burns
to the people in the immediate vicinity. Women are not allowed in the
process so as to prevent burn-related injuries.

Furthermore, the sudden opening of cotton bales (in the cotton opening) may
result in the steel straps holding them to split open and disengaging, which
sometimes hits the people nearby, this can cause a lot of pain and injury.
Hence, so as to protect women from such injuries, they are prohibited to be
employed in cotton opening procedures. Though women can be employed in
other parts of cotton factories that are not hazardous to health such as cloth-
making, weaving, cotton cleaning, dyeing, etc.
Improvement and initiative to protect women’s
interests
There is vocational training for women under the Directorate General of
Employment and Training. This training program was made to make women
independent and so they could speak up, talk and learn. This training
program helps them in getting better jobs in the job market. The Directorate
General of Employment and Training (DGE&T) is the main agency for
providing vocational training in the traditional and contemporary courses and
it even certifies women to be able to keep up with the trained skill workmen
to any industry and/or service sector. The courses under the DGE&T help
women achieve their goals and dreams by providing them with a much-
needed confidence boost along with the training they need to secure a job in
the job market. The DGE&T also plans long-term training programmes for
women’s vocational training in the entire country. The institution has eleven
institutes from the central sector and offers many courses to help women
find jobs or self-employment by giving them the skills necessary to do so.
The vocational training even exists in the state sector and the women are
exclusively taught craftsmanship through a network of people under
administrative control. Some of the courses offered by DGE&T are
dressmaking, electronics, architecture, and secretarial practice.

A project for reducing sexual harassment in factories and workplaces was

supported by the United Nations fund which is training thousands of women
workers in India and Bangladesh through education. Many of the teachers
there were victims themselves and hence understand the pain of their
students and hence know how to teach them how to stand up for themselves
and stop the sexual harassment once and for all. This project is even
supported by the United Nations Trust Fund to End Violence against Women,
and focuses on 24 different factories and all of their 3,500 women workers
and 15,000 other workers and imparts them the education necessary to
stand up to such uncivil behaviour by their co-workers.

The Government of India also has done quite a few things for the women in
factories; there are maternity benefits given via The Maternity Benefits Act,
1961 which states how long the maternity leave will be and what work the
woman will be allowed to do after she comes back to work (after having her
child). The Act does not just give maternity benefits but also certain other
benefits. Many provisions of the Factories Act aim at the welfare of women
and focus on their wellbeing and go to the extent of penalising the employer
if the women are not given certain benefits.

The Maternity Benefit Act provides for a paid leave for 12 to 26 weeks which
greatly helps the women. Recently the government has been making policies
to increase women’s participation in the country’s workforce. They have
given tax incentives to companies to hire women and having women in their
companies and factories above a threshold they will get tax reductions. The
media has been taking an active role in spreading awareness about sexual
exploitation in the workplace and even has written articles about how we
need more women in manufacturing industries, both in the factories and
upper management.

Women in factories have faced many hardships, there was a time they
were denied jobs or were given jobs with sub-par conditions and less than
average wages which they had to still take as they were desperate. It
improved to the point that legislation was implemented to aid them but
the benefits were only on paper and not practically. Now, finally, the
benefits are showing in practice, with the help of different NGOs and
United Nations Welfare schemes along with our women care bodies
established by the government, women in factories are finally getting
what they duly deserve. Women are getting the wages that they duly
deserve, and receiving the most benefits that they are supposed to.
Though there are some places where they need help, it has improved a
lot than it was a decade ago. But we must stay vigilant as then only then
can we stop exploration of any kind, to man, woman, or child. The
government must keep implementing laws for the benefit of all and make
bodies to see the valid practical implementation of those beneficial laws.
Only then can we say we have achieved true equality and women in all
workplaces will be safe!

No.(15)-Employment of young persons: •

A child who has not completed his 14th year cannot be employed in any factory. •

An adolescent who has completed 14th year can be allowed only after a

certificate of fitness is granted. (work as a child). A person who has completed

15th year and is fit for full days’ work can be granted a certificate of fitness to

work as an adult. • A certificate of fitness is valid for 12 months. •

An adolescent who has received certificate of fitness to work as an adult is

treated as an adult for working hours and leaves. •

An adolescent who has not attained the age of 17 years but has received

certificate of fitness to work in a factory as an adult is allowed to work

between 6:00 AM and 7:00 PM. •

A child is not allowed to work for more than 4 and a half hours in any day and

night. night means time interval between 10:00 PM to 6:00 AM. •

A female child cannot be allowed to work in any factory except between 8:00

AM and 7:00 PM. •

It is mandatory for manager of a factory to maintain register of child workers

which includes name, nature of work and number of certificate of fitness.

No.(16)-The Minimum Wages Act, 1948

The Minimum Wages Act, 1948, was passed for the welfare of workers. The
Act fixes minimum wages to ensure that workers are not exploited in the
workplace. This Act was enacted specially to safeguard the rights of the
unorganised sector, as they are an easy target for exploitation because of
work instability and a lack of bargaining power.

The Minimum Wages Bill was introduced in the central legislative assembly
on April 11, 1946, and passed in the same year. However, the Minimum
Wages Act (hereinafter referred to as the “Act”) came into force on March 15,
1948.

Appropriate Government
The appropriate government has the power to determine the minimum wage
with regard to scheduled employment. According to Section 2(b) of the Act:

1. The central government has the authority to determine the

minimum wage carried under the authority of the central
government and railway administration, or any employment in
relation to mines, oil-field and major ports, or any co-operation
established under any central Act.
2. The state government has the authority to determine the minimum
wage with regard to other scheduled employment.
Section 2(g) of the Act defines scheduled employment as employment that
falls within the purview of the schedule mentioned in the Act or any branch
of work forming part of such scheduled employment. Scheduled employment
is divided into two parts – Part I and Part II. Part I deals with non-
agricultural employment and Part II deals with agricultural employment.

Fixation of minimum rates of wages

Section 3 states that the appropriate government has the authority to fix the
minimum wages for Part I and Part II in the schedule. While determining the
rate of minimum wage specified in Part II of the schedule, the appropriate
government can fix the rate for a part of the state or a specific class.

The appropriate government can review the minimum wages at regular

intervals not exceeding five years and change the rates of minimum wages if
deemed necessary. Even if the appropriate government fails to review the
minimum wages within five years, the government has the right to review
and fix the minimum rate of wages. Until the new rates of minimum wage
are fixed, the old rates of minimum wage will be in force.

The appropriate government cannot fix the rate of minimum wage if the total
number of workers in that employment is less than a thousand members
from that state. However, if it is brought to the notice of the appropriate
government that the total number of workers has increased from a thousand
members, the government can determine the rate of the minimum wage.

While fixing or revising the rates of minimum wages, the appropriate

government can:

1. Fix a different minimum rate of wages for

 different scheduled employment

 different classes of work in the same scheduled employment

 Adults
  Adolescents
 children and apprentices
 minimum wages in different localities.
2. Fix one or more of the wage periods, namely- an hour, a week, a
month, or any longer period.
When the appropriate government fixes or revises a new rate of minimum
wage while any proceeding relating to minimum wages is pending before any
tribunal, such a revised minimum rate of wage will not be applicable in the
proceeding.

Minimum rate of wages

According to Section 4, the appropriate government, while fixing or revising
the new rate of minimum wage, must include one of the following-

1. A basic rate of wages and special allowances, also known as cost of

living allowances, that are provided at specific intervals by the
appropriate government,
2. A basic rate of wage and cash value of concessions for supplies of
essential goods at a lower rate, which may or may not include cost
of living allowance,
3. A basic rate of wage, cost of living allowance and cash value of
concessions.

Procedure for fixing and revising minimum wages

Section 5 of the Act provides two methods for fixing and revising minimum
wages. They are-

By Committee: The committees and sub-committees conduct enquiries and

advise the appropriate government about fixing or revising minimum wages.

The appropriate government can appoint an advisory board under Section

7 of the Act to advise committees and sub-committees on matters relating to
fixing or revising the rate of minimum wages.

By Notification: The appropriate government may directly publish its

proposals by notification in the official gazette. The responses to such
proposals will be taken from the public. Only those responses that are within
two months of the notification will be taken into consideration for fixing
minimum wages.
The appropriate government may approach the committee even if the rate of
the minimum wage is fixed or revised through notification.

Fixing hours for normal working days

Section 13 of the Act empowers the appropriate government to make
provisions in relation-

1. To fix the number of hours of work in a normal working day, which

includes one or more intervals.
2. To provide a day of rest to the employees every week and provide
remuneration on the day of rest.
3. The payment of remuneration for such a day of rest will be the
payment of a normal day, not the overtime rate. The overtime rate
is working more hours than specified work time.
The above-mentioned benefits will be available to the employee only if he
falls within the following category:

1. If the employee could not work because of any foreseen emergency

or unseen work,
2. If the employee is engaged in work of such a nature that he must
perform outside the limits of the workplace,
3. If the nature of the work of the employee is intermittent, to hold
employment of an intermittent nature, the employee, during his
hours of duty, must have a period of inaction. Even if the employee
is on duty on such a day, he will not be mandated to perform any
physical action.
4. If the employee is engaged in work that must be completed for
technical reasons, and;
5. If the employee is involved in a work where he is not able to
perform adequately due to irregular action of natural force, natural
forces are those that are not within human control.

Wages of a worker who works for less than a normal

working day
Section 15 states that if an employee works less than the prescribed hours of
work for a day, he will be entitled to receive the full amount of remuneration
as of a normal working day. However, the employee will not receive the full
amount on a normal working day if his failure to work was caused by his
unwillingness to work.
Claims
Section 20 of the Act provides the qualifications of ‘the authority’ to decide
the claims arising from non-compliance with the provisions of the Act. They
are-

1. Commissioner for Workmen’s Compensation

2. Any officer of the Central Government exercising duties as a Labour
Commissioner for any officer of the State Government, not below
the rank of Labour Commissioner.
3. Any officer who has experience as a judge of a civil court or as a
stipendary magistrate.
The aggrieved employee, legal practitioner, or any person on behalf of the
aggrieved employee can register a complaint before the authority. The
applicant should apply within six months of non-payment of the prescribed
minimum wages. The applicant can apply after six months if he has sufficient
reason to satisfy the authority.

The authority provides both the employer and employee with the right to be
heard. The authority, if it thinks it is necessary, may call for further inquiry
before making the final decision.

In the case of payment less than the rate of the minimum wage, if the
payment of the minimum wage and compensation decided by the authority
payable to the employee exceeds the amount of the actual minimum wage,
the authority must ensure that the compensatory amount does not exceed
ten times the actual minimum wage.

In the case of non-payment of wages, the authority may order compensation

to the employee along with the payment of wages not exceeding ten rupees.
The authority can still order compensation even if the parties have a court
settlement. The decision of the authority will be deemed final.

If the application for payment of less than the minimum wage is found to be
malicious or vexatious, the authority may award compensation of fifty rupees
to the employer from the applicant.

Penalty for certain offences

Section 22 of the Act mentions the penalty for payment of minimum wages
less the prescribed amount. If the employer pays less than the minimum rate
of wages or contravenes any provision of Section 13, he shall be punished
with imprisonment for the amount not exceeding six months or a fine of five
hundred rupees or both.

Criteria for fixing the minimum wage

There are no specific criteria for fixing or revising the rate of minimum wage
by the appropriate government. However, the Tripartite Committee of the
Indian Labour Conference, 1957, held in New Delhi, laid down five norms for
fixing the minimum wage. They are

1. The minimum wage must be three consumption units per worker.

2. The minimum wage must fulfil the basic food requirement of an
adult of 2700 calories.
3. It must fulfil the clothing requirements of the family.
4. Fuel, lighting, and other items must constitute up to 20% of the
minimum wage.
5. With respect to housing, the rent provided by the government under
the Government Industrial Housing Scheme must be taken into
consideration.

only fulfils his and his family’s basic needs but also can afford to afford other

luxuries like education, insurance, etc. Living wages are the ultimate goal of

a nation. However, every country cannot provide living wages considering its

economic conditions.

No.(17)- The Code of Wages, 2019

The Code of Wages, 2019 was enacted to align the labour laws with the
present economic conditions prevalent in the country and new technological
advancements. The Code of Wages, 2019 consolidates four labour laws-

1. The Payment of Wages Act, 1936

2. The Minimum Wages Act, 1948
3. The Payment of Bonus Act, 1965
4. The Equal Remuneration Act, 1976.
The draft code was prepared by employers’ and workers’ representatives,
regional Labour Conferences, inter-ministerial consultations, and based on
reports of the Parliamentary Standing Committee on Labour in nine tripartite
meetings. The Code of Wages was passed in the Lok Sabha on July 30, 2019
and in the Rajya Sabha on August 2, 2019. The Code of Wages received
presidential assent on August 8, 2019

Key changes in Code of Wages, 2019 w.r.t

minimum salary
The Code introduced new changes with respect to the minimum wage. They
include-

Floor wages
In the Minimum Wages Act, 1948, both the central government and the state
government have the power to fix or revise the rate of minimum wages in
the employments mentioned in the schedule. However, the new code
changed this method of fixing minimum wages.

Section 9 of the Code empowers the central government to determine the

floor wages for all employment across different geographical locations. The
appropriate government has to fix the minimum wage, not less than the floor
wage determined by the central government.

Wages for overtime work

Under the Minimum Wages Act, if an employee works overtime beyond the
normal working hours, the employer is required to pay the amount of wages
for overtime work as prescribed under the Act or by the appropriate
government, whichever is higher.

The code has uniformized the wages for overtime work. Section 14 of the
Code states that the employer is required to pay twice the normal rate of
wages for overtime work.

Increase in penalty amount

The Code increased the amount of penalty for non-compliance with the
provisions of the rate of minimum wages as prescribed by the Act. Section
54 states that if an employer pays less as prescribed by the Code, he shall be
held liable with a fine up to fifty thousand.

If the employer is found violating the provisions of minimum wages under

the Code more than once, he will be liable to imprisonment for a term of
three months and a fine of one lakh rupees.

Though the Code of Wages was passed in 2019 itself, it is not yet in force.
On December 18, 2020, the central government, by notification in the official
gazette, enforces certain provisions of the Code to the extent they relate to
the central government. They include-

The Central Advisory Board

Section 42 of the Code states that the central advisory board consists of
members nominated by the central government. They include-

1. Persons representing employees

2. Persons representing employers
3. Independent persons not exceeding one-third of the total members
of the board
4. Five representatives from the state governments
One-third of the members of the board shall be women and the chairman will
be appointed by the central government from among the individual persons.

The Central Advisory Board shall provide suggestions to the central

government with regard to fixing or revising the rate of minimum wages. The
central government may issue directions to the state government regarding
the matters dealt with by the board.

The Central Advisory Board is empowered to regulate its procedures, which

include committee and sub-committee meetings. The Act shall prescribe the
term of office for the members of the board.

With Section 42 of the Code coming into force, Section 8 of the Minimum
Wages Act, which dealt with the Central Advisory Board, is repealed.

Power of the appropriate government to make rules

Section 67 empowers the central government to make rules regarding the
procedure of the Central Advisory Board and the term of office of the
members of the board, as mentioned in Section 42.
Components of minimum wage
Section 7 of the Code mentions that the minimum wage may include any one
of the following components-

1. The basic rate of wages and allowance provided by the appropriate

government at specific intervals is also known as the cost of living
index.
2. The basic rate of wages and cash value of concessions with or
without the cost of living index.
3. The basic rate of wages includes the cash value of concessions and
cost of living index.

Procedure for fixing or revising the minimum wage

Section 8 specifies that the appropriate government for fixing or revising the
minimum wage rate may follow the committee method or notification
method.

The committee includes the following categories of people:

1. Persons representing employees

2. Persons representing employers
3. Individual persons not exceeding one-third of the total members of
the board
The appropriate government fixing or revising the minimum rate of wages
shall consult the advisory board under Section 42. The appropriate
government is required to revise the rate of minimum wages every five-year
period.

The power of the central government to fix floor wage

Section 9 empowers the central government to determine the floor wage for
all employment across all the states. The appropriate government has to fix
the rate of minimum wage not less than the floor wage specified by the
central government.

If the appropriate government has already fixed the minimum wage, which is
higher than the floor wage, then the appropriate government shall not
reduce the rate of the minimum wage.
Components of minimum wage
The minimum wage must not only include the mere remuneration that covers
the basic survival of life but must also provide for the preservation and
betterment of the worker These utilities must be incorporated into the
minimum wage of the worker, regardless of the financial status of the
employer. Therefore, nothing more will be added to the components of the
minimum wage that will bring it next to the fair wage.

The International Labour Organisation states that the minimum wage should
possess the following components:

 Basic pay
 Annual bonus
 Tips
 In-kind benefits (Educational and medical insurance, pension and
retirement plans, and travel benefits)
 Productivity and performance pay
 Allowances and premiums for non-standard work hours or
dangerous work.
Section 4 of the Minimum Wages Act of 1948 deals with the components of
the minimum wage.

How is the wage calculated in India

The minimum wage is not uniform in all states in India. The rate of the
minimum wage is fixed by the appropriate government. To determine the
minimum wages, the workers are broadly classified into three categories:
unskilled, skilled, and highly skilled.

Unskilled worker: An unskilled worker does not require any training or

skills for the work. Such a worker will not be required to use their intellectual
or reasoning abilities in the work. Unskilled workers are generally required
for manual labour.

Skilled worker: A skilled worker possesses high qualifications, training, and

other skills and is capable of making independent judgements in their work.
Highly skilled worker: A highly skilled worker receives the highest wage of
them all. A worker with the most qualifications, leadership qualities, and
interpersonal interactions will be deemed to be a highly skilled worker.

Minimum wages for states across India (Per Month)

(in Indian Rupees)
State Unskilled Skilled Highly Skilled

Andaman and Nicobar Islands 13,988 17,680 19188

Andhra Pradesh 12,344 13,844 14,844

Arunachal Pradesh 6,600 7,200 NA

Assam 9,246.10 13,430.85 17,265.55

Bihar 10,270 13,000 15,886

Chandigarh 12,623 13,298 13,698

Chattisgarh 10,480 11,910 12,690

Dadra and Nagar Haveli 9,237.80 9,653.80 NA

Daman and Diu 9,237.80 9,653.80 NA

Delhi 17,494 21,215 NA

Goa 10,790 13,728 NA

Gujarat 12,012 – 12,298 12,558 – 12,870 NA

Haryana 10,532.84 12,802.69 13,442.82

Himachal Pradesh 11,250 13,062 13,592

Jammu and Kasmir 8,086 12,558 14,352

Jharkhand 8,996.34 12,423.87 14,351.39

 Karnataka 14,424.63 16,858.07 18,260.20

Madhya Pradesh 9,825 12,060 13,360

Maharashtra 12,699 14,310 NA

Nagaland 5,280 7,050 NA

Punjab 10,353.77 12,030.77 13,062.77

Rajasthan 6,734 7,358 8,658

Tripura 7,277 8,928 NA

Uttar Pradesh 10,275 12,661 NA

Uttarakhand 9,913 – 10,031 11,070 – 11,218 NA

West Bengal 9,784 11,804 13,023

The minimum wage is the minimum amount of remuneration that an

employee or worker is paid for their performance. India, being a welfare
nation, embraced the principle of minimum wages and enacted the Minimum
Wages Act, 1948, to prevent exploitation at the workplace and ensure
financial stability. The Act enables the state to fix and revise the rate of
minimum wages, appoint advisory boards to guide the appropriate
government and provide penalties for non-compliance with the provisions of
the Act. Along with these positive aspects of the Act, there are a few
drawbacks that diminish the integrity of the object for which the Act was
enforced.

Since the enactment of the Act in 1948, the country has witnessed many
economic changes, making the Act slightly out of touch. The Act only
provides minimum wages for the employments mentioned in the schedule of
the Act and which have more than 1,000 employees in the state; thus, many
activities do not receive the benefits of the Act. One of the major challenges
is the lack of knowledge among workers with regard to the existence of the
Act. The Code of Wages, 2019 noticed these issues and made modifications
to the previous Act. However, only certain provisions of the code were
enforced. The government must take the necessary steps to create
awareness among the workers about the rights provided under labour laws.

Is Code of Wages, 2019 in force?

The Code of Wages was enacted on August 8, 2019 but the Code is not in
force. Only certain provisions of the Code that relate to the central
government came into force by notification in the official gazette.

Does the Minimum Wages Act, 1948, apply to all

kinds of employment?
The Minimum Wages Act, 1948, applies to both skilled and unskilled work
mentioned in the schedule mentioned under the Act. The provisions of the
Act do not apply to other employments not mentioned in the schedule.

Is the minimum wage the same as the basic salary?

The basic salary is the base salary an employer receives before any additions
or deductions to the original amount. On the other hand, the minimum wage
includes a basic salary, allowances, or cash amounts for concessions for basic
amenities.