CONSTITUTIONALITY OF MINIMUM WAGES ACT 1948 Guided By: Prof. Nuzhat Parween
SUBMITTED BY: MD. ABID HUSSAIN ANSARI B.A. LL.B. (HONS.) 6
TH
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Acknowledgement Firstly, I would like to express my profound sense of gratitude towards the almighty “ALLAH” for providing me with the authentic circumstances which were mandatory for the completion of my project. Secondly, I am highly indebted to Prof. Dr. Nuzhat Parween at Faculty of Law, Jamia Millia Islamia University, New Delhi for providing me with constant encouragement and guidance throughout the preparation of this project. Thirdly, I thank the Law library staff who liaised with us in searching material relating to the project. My cardinal thanks are also for my parents, friends and all teachers of law department in our college who have always been the source of my inspiration and motivation without which I would have never been able to unabridged my project. My father, a lawyer with large access to books of value has been of great help to me. Without the contribution of the above said people I could have never completed this project.
Mohd. Abid Hussain Ansari th
B.A.LL.B (Hons) 6 Semester rd
3 Year
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Table of Contents 1. Introduction and Evolution of Labour Law…………………………………………..7 2. Implementation of Labour laws……………………………………………………..19 3. Introduction to Minimum Wages Act 1948…………………………………………20 4. Background………………………………………………………………………….22 5. Historical Backdrop…………………………………………………………………22 6. Object and Scope of the Legislation………………………………………………...23 7. Criteria for notification of scheduled employment………………………………….24 8. Methods for fixation or revision of minimum wages Fixation……………………...24 9. Advisory Board……………………………………………………………………...26 10. Variable Dearness Allowance (VDA)………………………………………………26 11. Steps taken to reduce disparities: Five Regional Committees………………………33 12. National Floor Level Minimum Wage……………………………………………...34 13. Minimum Wage……………………………………………………………………..35 14. Minimum Wage and the MGNREGA………………………………………………39 15. Sanctity of the Minimum Wage Act………………………………………………...40 16. Recent Initiatives……………………………………………………………………51 17. Amendment in the Minimum Wages Act, 1948…………………………………….52 18. Conclusion…………………………………………………………………………..52 19. Bibliography………………………………………………………………………...53
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List of Cases
1. Bangalore Water Supply and Sewerage Board v. A. Rajappa and Ors. 2. Unichoyi v. State of Kerala 3. Bijoy Cotton Mills v. State of Ajmer 4. B.Y. Kashatriya v. S.A.T. Bidi Kamgar Union 5. State of Rajasthan v. Hari Ram Nathwani 6. Reptakos Brett and Co. v. Its workmen 7. Sanjit Roy v. State of Rajasthan 8. Edward Mills v. State of Ajmer 9. Workmen Represented by Secretary v. Management of Reptakos Brett and Co. Ltd. and Anr 10. Burmah-Shell Oil Storage and Distributing Co. of India, Ltd., Bombay v. Their Workmen 11. Standard Vacuum Oil Company v. Their Employees 12. Linge Gowda Detective and Security Chamber (P) Ltd. v. Authority 13. A. V. Parkash v. Senior Labour Inspector 14. Bandhua Mukti Morcha v. Union of India 15. Patel Ishwerbhai Pramod Bhai v. Taluka Development Officer 16. Chacko v. Varkey 17. Benode Bihari Shah v. State of W.B. 18. Madhya Pradesh Bidi Udyog Sangh, Sagar v. State of Madhya Pradesh 19. Athni Municipality v. Shiettappa Laxman Pattan 20. Shiv Prasad Ghosh v. District Judge 21. President, Cinema Workers‟ Union affiliated to Bhartiya Mazdoor Sangh v. Secretary, Social Welfare and Labour Department 22. Govind Bhawan Karyalaya v. State of U.P. 23. Woolcombers of India v. Workers Union 24. Hydro (Engineers) Put. Ltd. v. The Workmen
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25. Bidi, Bidi Leaves and Tobacco Merchants Association v. State of Bombay 26. Abraham v. Industrial Tribunal 27. Bhikusa Yamasakshatriya v. Sanagmanes Akola Paluka Bidi Kamgar Union 28. Karnataka Film Chamber of Commerce, Bangalore v. State of Karnataka 29. Krishna Flour Mills v. Commissioner of Labour 30. T.G. Lakshmaiah Setty & Sons, Adoni v. State of Andhra Pradesh 31. Bijay Unchana Paul v. State of Assam 32. Chakradharpur Bidi and Tobacco Merchants Association v. State of Bihar 33. Government of India v. Barium Chemicals Ltd. 34. Ramkrishna Ramnath v. State of Maharashtra 35. Militant Security Bureau Put. Ltd. v. B.R. Hehar 36. Union for Democratic Rights v. Union of India 37. Municipal Council, Hatta v. Bhagat Singh 38. V. V. Surya Rau v. Surendra Ramkrishna Tendulkar 39. Executive Engineer, Rural Works Division, Mayurbhanj v. Addl. District Magistrate, Mayurbhanj 40. Sri Gandhian Bus Service Chingleput v. Labour Court 41. Awadh Lal Sah v. State of Bihar 42. B. Ramdas v. The Authority under Minimum Wages Act, Guntur Region, Guntur 43. Delhi Administration v. Presiding Officer 44. A.V. Prakash v. Senior Labour Inspector 45. Bakshsish Singh v. Darshan Engineering Works 46. Premier Tobacco Packers (P) Ltd. v. Assistance Labour Officer 47. Yadav Stores, Nagpur v. Presiding Officer, Labour Court – III 48. Harish C. Brahmbhatt v. Oil and Natural Gas Commission 49. Jaswant Rai Beri and Ors. v. State Of Punjab and Anr 5 | Page
50. Crown Aluminium Works v. Their Workmen 51. West Coast Employers' Federation v. State Of Kerala and Ors 52. The Perumbavoor Merchant's Association v. The Pemmbavoor Municipal Council 53. Kishan Lal & Sons v. Govt. of. Nct. of Delhi & Ors 54. Sanjit Roy v. State of Rajasthan 55. The Management v. The Plantation Officer 56. Elisamma v. The Corporation of Madras 57. Loknath Nathu Lal v. State of Madhya Pradesh 58. Nathu Ram Shukla v. State ofMadhya Pradesh
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Introduction & Evolution of Labour Law The history of labour legislation in India is naturally interwoven with the history of British colonialism. Considerations of British political economy were naturally paramount in shaping some of these early laws. In the beginning it was difficult to get enough regular Indian workers to run British establishments and hence laws for indenturing workers became necessary. This was obviously labour legislation in order to protect the interests of British employers. Then the Factories Act. It is well known that Indian textile goods offered stiff competition to British textiles in the export market and hence in order to make India labour costlier the Factories Act was first introduced in 1883 because of the pressure brought on the British parliament by the textile magnates of Manchester and Lancashire. Thus we received the first stipulation of eight hours of work, the abolition of child labour, and the restriction of women in night employment, and the introduction of overtime wages for work beyond eight hours. While the impact of this measure was clearly welfarist the real motivation was undoubtedly protectionist! To date, India has ratified 39 International Labour Organisation (ILO) conventions of which 37 are in force. Of the ILO‟s eight fundamental conventions, India has ratified four – Forced Labour 1930, Abolition of Forced Labour 1957, Equal Remuneration 1951, and Discrimination (employment and occupation) 1958. Labour law also known as employment law is the body of laws, administrative rulings, and precedents which address the legal rights of, and restrictions on, working people and their organizations. As such, it mediates many aspects of the relationship between trade unions, employers and employees. In other words, Labour law defines the rights and obligations as workers, union members and employers in the workplace. Generally, labour law covers:
Industrial relations – certification of unions, labour-management relations, collective bargaining and unfair labour practices;
Workplace health and safety;
Employment standards, including general holidays, annual leave, working hours, unfair dismissals, minimum wage, layoff procedures and severance pay.
There are two broad categories of labour law. First, collective labour law relates to the tripartite relationship between employee, employer and union. Second, individual labour law concerns employees' rights at work and through the contract for work.
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The labour movement has been instrumental in the enacting of laws protecting labour rights in the 19th and 20th centuries. Labour rights have been integral to the social and economic development since the industrial revolution. Industrial Disputes Act, 1947 came into effect immediately after independence and the object of the Act was to provide for effective machinery for investigation and settlement of industrial disputes. Section 2(j) of the Act of 1947 provides for definition of Industry. The definition of Industry as provided in Section 2(j) of the Industrial Disputes Act, 1947 reads as under, “Industry” means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen;” No write up on the subject, in the backdrop of labour laws in India, is possible without referring to the land mark judgment of the Hon‟ble Supreme Court, Ban galor e Water Suppl y and Sewerage Boar d v. A. Raj appa and Or s., decided on 21.2.1978 and 7.4.1978. In this
landmark judgment 7 judge bench of the Hon‟ble Supreme Court considered pros and cons of the definition of Industry, referred earlier pronouncements and decided the scope of definition of Industry under the Industrial Disputes Act, 1947. I would like to propose the evolution of labour law in India, and the regulatory policy associated with it, across five main periods.
1
Early 1920s
In the very early stages of British colonial control, there was little attention paid to the legal organisation of work by the authorities. Labour organisation and the production process 2
remained, apart from a few exceptions, a matter of family, land and cultural regulation. The
1
A different scenario in terms of periodization in the evolution of Indian labour policy is presented by Shyam Sundar: K. R. S. Sundar, „State in Industrial Relations System in India: From Corporatist to Neo -Liberal?‟ (2005) 48 Indian Journal of Labour Economics 917. Mishra, above n.7, at pp. 13-18; and E. Hill, „The Indian Industrial Relations System: Struggling to Address the Dynamics of a Globalizing Economy‟ (2009) 51 Journal of Industrial Relations 395. 2 These continue to be highly significant factors in the organisation and regulation of labour. J. G. Scoville, M. Toha and S. Triparthi, „Ethnicity, Caste, Religion and Occupational Structure in Traditional Activities: A Preliminary View from North India‟ in J. G. Scoville (ed.), Status Influences in Third World Labor Markets , Walter de Gruyter, Berlin, 1991. Also S. Thorat and K. S. Newman (eds.), Blocked by Caste: Economic Discrimination in Modern India, Oxford University Press, New Delhi, 2010; B. Harriss- White and N. Gooptu,‟ Mapping India‟s World of Unorganized Labour‟ (2001) 37 Socialist Register 89; M. B. Das and P.V. Dutta, „Does Caste Matter for Wages in the Indian Labour Market?‟ Social Development Unit, World Bank, 2007.
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earliest British regulations related to workers in the government service, including the military, and „forced labour‟ for the performance of public works.
3
However, it is very clear from the 1880s onwards there was a succession of legislative interventions by the colonial government, mainly in relation to the employment of women 4
and children, and concerning hours of work, in factories and mines. Much of this legislation 5
was the result of various government-initiated enquiries. However, the legislation made only very slight inroads into working practices in these industries, and was of limited impact 6
insofar as it applied only selectively. Regulation in the plantation sector was focussed principally upon matters relating to labour supply and the problems of the indentured labour system.
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Post - World War One and the 1920s
As mentioned earlier, there is some disagreement about the importance of this period. Several factors had combined to alter the industrial and political landscape, including the emergence of a strong nationalist movement, the rapid development of trade unions (most importantly the formation of the All India Trade Union Congress in 1920), and the emergence of Communist influence in the labour movement following the successful Bolshevik revolution in Russia in 1917. At the same time the newly created ILO began to have an influence on labour policy in India. Much of the legislation of this period was a continuation of the „factory‟-style regulation of the pre-war period, dealing with hours of work, rest periods, female and child protections, health and safety and so on. Typical protective legislation of the period includes the Factories Act 1922, the Mines Act 1922, and the Workmen‟s
Compensation Act 1923, much of it responding to the ratification of various relevant ILO conventions by the colonial Indian government.
8
3
M. R. Anderson, „Work Construed: Ideological Origins of Labour Law in British India to 1918‟ in P. Robb (ed.), Dalit Movements and the Meaning of Labour in India, Oxford University Press, Delhi, 1993. See also P. Robb, Peasants, Political Economy, and Law, Oxford University Press, New Delhi, 2007, ch. 8. 4 These include the Factories Acts of 1881, 1891 and 1911: DeSousa, above n. 6, at pp. 68-74. Legislation in the mining industry commenced with the Indian Mines Act 1901. 5 These included the Labour Commission set up by the Governor of Bombay in 1875, the Bombay Factory Commission of 1884, the Government of India Factory Commission of 1890, the Textile Factory Committee 1906 and the Factory Labour Commission of 1907. R. K. Das, „Labour Legislation in India‟ (1930) 22 International Labour Review 599. 6 The Factories Act of 1881, for example, only applied to premises using electrical power with 100 or more employees. The Factories Act of 1891 applied to premises with 50 or more employees. 7 Early legislation addressing problems in the plantation sector includes the Assam Labour and Emigration Act of 1901, and the Assam Labour and Immigration (Amendment) Act of 1915. 8 The Workmen‟s Compensation Act was renamed the Employee‟s Compensation Act in 2010.
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However, even if this body of legislation is correctly characterised as „unimportant‟ two further enactments in this period point to what has been described as the emergence of a more modern approach to the regulation of industrial relations: the Trade Unions Act 1926 and the
Trade Disputes Act 1929.27 The regulatory framework set down in these two provisions continues formally to underpin the collective labour law system of present day India. The Trade Unions Act 1926 provided for the registration of trade unions (though registration was not made compulsory), gave unions a legal status, and extended some protections against civil and criminal liability in the course of industrial disputes. The Act was limited in certain respects (for example unregistered unions were excluded from the Act‟s protections), and the legislation provided no support for a collective bargaining system as such, insofar as there was no obligation upon employers to bargain with unions (even registered unions) in the course of an industrial dispute, nor, in the case of such bargaining, was there any legal obligation to bargain in good faith. The Trade Disputes Act 1929 placed severe limitations upon the right to strike, and provided for the compulsory reference of industrial disputes to a conciliation board or a court of enquiry. The outcomes of the reference, however, were not binding upon the parties. Both pieces of legislation were strongly criticised by sections of the trade union movement, including the All India Trade Union Congress. The 1930s
In the context of world economic depression and the associated rise in unemployment, there was also in this period continued agitation for Indian independence in which the All India 9
Trade Union Congress was playing a major role. Mass dismissals were accompanied by a renewed wave of strikes, especially as the economic depression took hold through 1928 and 1929. Against this background, the British government established the Royal Commission on Labour in India on the 4th July 1929. The Commission was effectively boycotted by the Indian labour movement, the All India Trade Union Congress pointing to the British Imperialist government‟s „open and brutal attack upon the trade union movement by means of repressive legislation...‟ and its lack of „bona fides‟ in establishing the Commission.
9 The British colonial government favoured the less nationalistic Indian Federation of Labour: see S. K. Sen, Working Class Movements in India, 1885-1975 , OUP, New Delhi, 1994.
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The Commission handed down its Report
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in 1931, still a period of continued job cuts, wage
reductions, and ongoing industrial unrest and strike action. But during the 1930s, two major factors began to put some further shape on Indian labour law. First, many of the outcomes of the Report of the Royal Commission made their way into a string of new labour legislation between 1933 and 1939. Menon estimates that of 24 pieces of labour legislation introduced by central and provincial governments between 1932 and 1937, 19 arose from the Royal Commission‟s recommendations. Virtually all of this new law was in the nature of protective factory and mines regulation to do with wages, hours of work, and compensation of one sort or another, similar to earlier periods. One exception was the Payment of Wages Act 1936, which empowered the employer to deduct wages of employees absent from work in concert, and without reasonable cause. A further example was the Trade Disputes (Amendment) Act
1938, which authorised provincial governments to appoint conciliation officers to assist in the settlement of disputes. Secondly, and potentially more important, were the developments which followed from the
Government of India Act 1935. The heightened profile given to provincial autonomy11 made possible under these new constitutional arrangements gave rise to popular expectation that more „labour‟- or „union‟-friendly policies would emerge at the provincial government level, and this in turn gave rise to further concentrated periods of extensive strike action. Even prior to the 1935 Act, several provincial governments had begun to experiment with labour law, much of it an important contribution to the development of better working conditions in workplaces. Not all of this, however, was particularly directed to creating a more favourable environment for combined labour activity. One important instance was the introduction of the Trade Disputes (Conciliation) Act 1934 by the provincial government of
10
Report of the Royal Commission on Labour in India, HMSO, London, Cmnd. 3883, 1931 The Royal Commission on Labour had „recommended that legislative authority should remain with the central Government, though the states could also be given jurisdiction provided that no legislation was undertaken by the states without the previous concurrence of the central government and that such legislation did not impair or infringe the central Government‟s legislation‟: Menon. As a matter of constitutional law, legislative power over labour and employment relations had been largely shared concurrently by both Central and State governments since 1919, and hence the Royal Commission was merely recommending the continuance of existing arrangements: Menon. This legal division of power was also continued in the Constitution of India which came into effect in 1950, following the securing of Indian independence from Britain in 1947. Under such legal arrangements Central and State governments have continued to legislate for labour relations. However, there has been ongoing debate over the years concerning the problems of co-ordination and uniformity of labour laws due to the overlap of powers: see Sir A. C. Chatterjee, „Federalism and Labour Legislation in India‟ (1944) 49 International Labour Review 415; and, Das, emphasising lack of uniformity and other problems, and G. B. Pai, Labour Law in India , Butterworth, New Delhi, 2001, emphasising the capacity in these shared arrangements for flexibility in labour market regulation. 11
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12
Bombay.
Whilst novel insofar as it was designed to effect changes to collective labour
relations (by providing for the appointment of a Labour Officer to represent the interests and grievances of workers in the cotton mills), the 1934 Act seems to have been aimed mainly at heading off communist influence among the labour movement following many years of decline in the Bombay-based textile industries and a major strike earlier in that year.
13
However, more adventurous legislation followed after the election of more popular provincial governments in the wake of the Government of India Act 1935. The introduction of the
Industrial Disputes Act 1938 by the Bombay provincial government, for example, among other things made some move in towards the imposition of a legal obligation on the part of employers to recognise trade unions. Again it is necessary to note, however, that these were largely limited measures which were not greeted with general approval by the Indian trade union movement. The All India Trade Union Congress described the 1938 Bombay Bill as „uncalled for, reactionary, prejudicial and harmful to the interest of the workers and “calculated to create slave unions”‟. In general it appears that the expectations created in the popular election of provincial governments remained largely unfulfilled. World War Two and The Pre-- Independence Period
Regulation in the World War Two period appears against the background of considerable industrial unrest and strike action against the conditions and effects of the war itself. These circumstances brought into being several pieces of legislation (at Central and State level) designed to secure labour co-operation in support of the war effort. This legislation included passage in 1941 of s. 49A of the Bombay Industrial Disputes Act, granting power to the Bombay government to refer industrial disputes to compulsory arbitration by an Industrial Court, and banning all strikes and lockouts prior to arbitration. Much of this restrictive legislation in the Bombay province was continued after the war ended in the form of the Bombay Industrial Relations Act 1946. Other relevant legislation included the Central government‟s Essential Services Act 1941, and the Defence of India Rules (Rule 81-A, introduced in 1942, and Rule 56-A, introduced in 1943). Each of these sets of provisions laid down severe restrictions against strikes, and other forms of industrial action, in the course of industrial disputes, including industrial action on the part of employers in some cases. 12
Similar style legislation on industrial disputes, strikes and so on was also introduced in Indore, Cochin and other Indian States during the 1930s: Das, above n. 14, at p. 816-817. 13 D. Kooiman, „Labour Legislation and Working Class Movement: Case of Bombay Labour Office, 1934-37‟ (1981) 16 Economic and Political Weekly 1807; M. D. Morris, „Labor Discipline, Trade Unions, and the State in India‟ (1955) 63 Journal of Political Economy 293.
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General and political strikes were also targeted.
14
The provisions of Rule 81-A in particular
were continued after the war as part of the Industrial Disputes Act 1947 , and, as is noted in subsequent sections of this project work, have remained a core part of the legislation governing industrial disputes and bargaining since that time. To greater or lesser extent, the Trade Disputes Act 1929, its successor the Trade Disputes Act
1947, and earlier provisions such as the Bombay Act of 1934, were essentially designed to enable government agencies to investigate industrial disputes over relevant terms and conditions of employment, and to settle them in appropriate cases. But generally the terms of this legislation were historically directed more towards the control of labour than towards the settlement issue. Certainly there was little or nothing in these various provisions which facilitated the development of collective bargaining in a British- or American-style model. While strikes and lockouts were strictly controlled, the state, at both Central and State levels, exercised strong controls over the circumstances in which disputes might be referred to adjudication, the industries to which the legislation applied, and which unions might be permitted to notify such disputes. The overall impact of this was, then, one of limitation and exclusion. The Industrial Disputes
Act 1947, for example, applied (and applies) generally to „workmen‟ in „industries‟. „Workmen‟ excluded various categories of workers engaged in particular occupations, or in managerial and administrative capacities, and so on.
15
Whereas the term „industry‟ has now
been interpreted quite broadly, many types of employment, including workers in government departments and services, and domestic and agricultural workers are still excluded. Similarly the Trade Unions Act 1926 also contained important limitations on its coverage. It has been said of the system set up under the Industrial Disputes Act 1947 that „the freedom of industrial action on the part of workers [is] more illusory than real‟ and that the „provisions of the law [operate] to restrict the options available to the side represented by the workers‟. What collective bargaining there was, developed without state support and, not surprisingly, evolved almost entirely in the formal (or organised) sectors of the economy. 16 These are 14
In India, many forms of industrial action are unlawful, and much industrial action is correspondingly unlawful in practice: C.K. Johri, „India‟ in R. Blanpain (ed.) International Encyclopaedia for Labour Law and Industrial Relations, Kluwer Law International, Alphen aan den Rijn, Netherlands, Supplement 262, December 2002, at paras. 626-652. 15 B. R. Sharma, „Managerial Employees and Labour Legislation‟ (1992) 28 Indian Journal of Industrial Relations 1. 16 T. Roy, Rethinking Economic Change in India, Routledge, London, 2005, at p. 179. Although India has never ratified the key ILO Conventions pertaining to Freedom of Association and Collective Bargaining, it has been pointed out that as a member of the organisation it has a general responsibility to support these rights from
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largely confined to the public and large corporate sectors and constitute about 3 per cent or less of the workforce in each case. Most scholars have noted that the path taken in the evolution of labour law in India in the post-1945 period basically followed the pattern established earlier in the restrictive policies of the colonial government and in particular the legislation of the war years. Only in a few States were there exceptions made to the overall discretionary power of government to refer or not to refer disputes for adjudication, and in only a few States did laws emerge which created some sort of obligation upon employers to recognise trade unions. One such provision was the Bombay Industrial Relations Act 1946 which, building upon the earlier (and much criticised) attempts in the Bombay Industrial
Disputes Act 1938, distinguished several types of unions, and extended to some of those unions the right to represent workers in particular industries and areas.
17
At the same time, however, there was a continued strengthening of the protective regulation applying to individual worker‟s rights during this period. One example is the Industrial
Employment (Standing Orders) Act 1946 which required employers to provide their employees with clear terms and conditions of employment according to the items set down in a Schedule to the Act and certified by the relevant authority. Other major statutes of this period included the Factories Act 1948 and the Minimum Wage Act 1948. Much of this body of regulation, as we have noted also in the case of the Industrial Disputes Act 1947 , was (and remains) limited in its application because it was applied only selectively to certain kinds of business establishments, and, in respect of some provisions, only to businesses of a certain size as determined by the number of employees. This is a common theme in Indian labour law, with obvious implications for the legitimacy of the labour law system as a whole.
18
Post-I ndependence, 1948 Onwar ds
In the immediate post-war period it was agreed that the Indian Central government would be primarily responsible for labour legislation, and the promotion of labour‟s interests, reflecting a five-year plan of development „dealing with all phases of the worker‟s life, of housing,
an ethical standpoint: see R. Gopalakrishnan and L. Tortell, „Access to Justice, Trade Union Rights and the Indian Industrial Disputes Act, 1947‟ (2006) 22 International Journal of Comparative Labour Law and Industrial Relations 529, at pp. 542-543. 17 K. R. Shyam Sundar, Impact of Labour Regulations on Industrial Development and Employment: A Study of Maharashtra, Institute for Studies in Industrial Development, New Delhi, 2008, pp. 66-68; Johri, at paras. 551554. There are similar laws in other Indian States: for example, the Indian Trade Unions (Madhya Pradesh Amendment) Act 1960. 18 B. Debroy, „Issues in Labour Law Reform‟ in B. Debroy and P. D. Kaushik (eds.), Reforming the Labour Market, Academic Foundation, New Delhi, 2005, at pp. 42-55.
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welfare, work, better working conditions, and fair wages‟. Many of these social values were articulated in the Constitution of India 1950 , particularly its commitment to economic, political and social justice in the Preamble, and its general egalitarian conception of national 19
development.
Consistent with this socio/political outlook, we have noted the introduction of a raft of protective legislation in the form of the Factories Act 1948, and the Minimum Wages Act
1948. Important also to note are the Dock Workers (Regulation of Employment) Act 1948, which among other things sought to „decasualize‟ dock labour, the Employees‟ State
Insurance Act 1948, providing for an insurance system for employees in cases of sickness, maternity, injury and death, the Plantations Labour Act 1951, which sought to regulate conditions of work and provide welfare measures for India‟s high employment industries in tea and rubber plantations, and the Employees' Provident Fund and Miscellaneous Provisions
Act 1952 , one of the most important pieces of legislation in India's social security system. It follows from what we have said earlier, however, that this period did not mark out a completely new approach to the issue of labour regulation in India. When it came to the regulation of collective labour relations in particular, the restrictive policies of government control which had characterised the colonial and immediate post-war period continued to hold sway. As various authorities have noted, the major influence on the formation of postindependence labour and economic policy was the priority given to government-directed „nation building‟ - in which the need for trade union co-operation in securing industrial peace and labour support for industrialisation and economic development (economic nationalism) was paramount.
20
Consequently the development of labour law in India continued to follow
the dual pattern already identified. In support of the state planned and organised economy, 19
21
The Indian Constitution 1950 contains specific goals relating to labour, including the „right to work‟, „just and humane conditions of work‟, a „living wage‟ and a „decent standard of life‟ in addition to the right to form trade Unions: Constitution of India 1949 ss. 14, 15, 19, 39, 41, 43 and 43A in particular. For further information: R. Gopalakrishnan, „Enforcing Labour Rights Through Human Rights Norms: The Approach of the Supreme Court of India‟ in C. Fenwick and T. Novitz (eds.), Human Rights at Work: Perspectives on Law and Regulation, Hart Publishing, Oxford and Portland, Oregon, 2010 20 C. P. Thakur, Labour Policy and Legal Framework in India: A Review, Institute for Studies in Industrial Development, New Delhi, 2008, at p.8; S. Ghose, „Alternate Dispute Settlement Mechanisms in India - A Study of Industrial Adjudication‟ in A. Sivananthiran and C. S. Venkata Ratnam (eds.), Prevention and Settlement of Disputes in India, ILO, New Delhi, 2003, at p. 83; Such an outlook has retained currency even in more recent times: C.S. Venkata Ratnam (ed.), Industrial Relations in Indian States, Indian Industrial Relations Association/Global Business Press, New Delhi, 1996. 21 In the early period of political independence the Indian government established strong controls over the nation‟s economy in an avowedly „socialistic‟ stance. This included the establishment of state monopolies or controls over industries considered vital to the development of the economy. This policy was formulated as part of the 1948 Industrial Policy Resolution and articulated in various Five Year plans introduced sequentially from the late 1940s onwards. In 1956 the industries brought under the control of the Indian government were
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the Indian government continued its strong interventionist role in industrial relations. The laws regulating trade unions and industrial disputes remained largely fixed on the model set by the legislation introduced over the period from 1926 to 1947, and this in turn had certain implications for the Indian industrial relations system. While trade union organisation was legally sanctioned, collective bargaining (at least nominally) „recognised‟, and strikes and lockouts to a degree legalised and regulated, the level of state intervention in the actual industrial relations process, and the emphasis given to the maintenance of „industrial peace‟ effectively circumscribed the possibility that collective bargaining might develop as the primary form of industrial relations in India: in effect „collective bargaining was held to be
incompatible with economic planning‟ . Overall the law on bargaining has changed little since these formative days, although in an important amendment to the Trade Union Act in 2001 it was provided that trade unions were required to have at least 100 members or to represent at least 10% of the workforce in order to secure registration under the Act, thereby making the formation and legalisation of unions far more onerous than had previously been the case.
22
As
noted earlier, some States did move to provide unions with a right to recognition, and some subsequent legislation made the refusal to bargain on the part of an employer an „unfair labour practice‟, more or less making the duty to bargain legally obligatory. Probably the best example of this legislation is the Maharashtra Recognition of Unions and Prevention of
Unfair Labour Practices Act 1971 , which supplemented the Industrial Relations Act 1946 of Bombay, although that legislation was limited in its application to nine industries only. In 1982 the Indian Central government amended the Industrial Disputes Act of 1947 introducing the concept of the „unfair labour practice‟ into national labour law.
23
This legislation
outlawed various practices by employers unions and workers designed to disrupt the legitimate processes of dispute settlement under the Act. The refusal by an employer to bargain collectively in good faith with the recognized trade union was listed as an unfair practice. Whilst on its face this provision might seem to have amounted to a major
expanded considerably, and included, among others, iron and steel, transport, arms and defence equipment, mining, electrical power, and telecommunications. The government‟s policy also included various supports for the development of private industry including tariff protection. A. S. Mathur, Labour Policy and Industrial Relations in India , Ram Prasad and Sons, Agra, 1968, at ch. 2; R. Mohan, „Industrial Policy and Controls‟ in B. Jalan (ed.), The Indian Economy: Problems and Prospects , Penguin, New Delhi, 2004. 22 Trade Unions (Amendment) Act 2001 (Act 31 of 2001), s. 5 (which inserted s. 9A into the Trade Unions Act, 1926). 23 Industrial Disputes (Amendment) Act 1982: The proscribed „unfair labour practices‟ are listed in the Fifth Schedule to the Industrial Disputes Act 1947. Originally similar provisions had been proposed as part of amendments to the Trade Unions Act in 1947. However, these proposals came to naught in effect: Advani, above n. 62 at pp. 24-25; C. Myers, Labor Problems in the Industrialization of India , Harvard University Press, Cambridge Massachusetts, 1958, at ch. 8.
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breakthrough in collective bargaining law in India, it does not appear to be regarded as particularly important by Indian labour law scholars, perhaps principally because it has had little impact in practice. What collective bargaining there is in India and it does exist at all levels and across many industries, has evolved in a de facto sense, and, as noted earlier, has been largely limited to the public, and corporate, sectors of the economy. In the mid-1990s the proportion of Indian workers covered by collective bargaining agreements was estimated to be lower than five per cent. On the other hand, Indian labour law continued to develop in a second dimension; that is, in respect of the relations between the employer and the individual worker. Here we can identify two main categories of intervention. The first concerns the continued regulation for protective labour standards which took place at both Central and State levels. We have already noted the continuation of this pattern in the post-World War Two period, and, as Sundar has pointed out, the ongoing regulation for minimum wages, equal pay, social security and insurance, maternity benefits, health and safety, leave and holidays, housing and so on, occupied much of the regulatory space which was taken up in the contents of collective agreements in industrialised Western countries. The second area of development concerns employment security. Originally the termination of, or dismissal from, employment was not an appropriate subject of an individual „industrial dispute‟ pursuant to the Industrial Disputes Act 1947, and there was thus little limitation on the employer‟s right to fire an employee as it saw fit, other than a requirement that appropriate notice be given. Nor did the legislation place limitations upon the power of the employer to retrench or lay off redundant workers. However, pursuant to amendments to the Industrial Disputes Act in 1953, 1976 and 1982 the Central government began gradually to introduce important new regulations pertaining to retrenchments, lay-offs, and plant and industry closures. These regulations, including the allimportant Chapters VA and VB of the Act required, inter alia, permission by the appropriate authorities for mass redundancies and firm closures, minimum notice periods and further relief in the form of compensation. As far as individual dismissals are concerned, a 1965 amendment to the Industrial Disputes Act created a right in an individual employee to notify an „industrial dispute‟ over his or her discharge, dismissal, retrenchment or other form of termination, whether or not that person was represented by a trade union. A subsequent amendment, in 1971, empowered the Industrial Tribunals and the Labour Court to investigate the dismissal of employees, and make appropriate orders, including reinstatement and compensation, where the dismissal was found to be unfair. As a consequence of these legal 17 | Page
changes, the Labour Court and other tribunals developed a general broad discretion to review the dismissal of workers and to award relief according to notions of substantive and procedural injustice. In 1976, amendments to the Act substantially increased (from one month to three months) the amount of notice required to be given to certain categories of employees who had been in continuous service for at least one year, and prohibited the dismissal of workers by way retrenchment, lay-off, or industry closure in factories, mines and plantations employing 300 or more persons (later reduced to 100 or more in 1982) without permission of the appropriate government. Other legislation introduced in the 1970s and into the 1980s consolidated this evolving protective framework of laws for employees engaged in the regulated (formal) sectors of the economy. Aside from further strengthening the law on dismissal, major legislation was introduced by the Central government in 1970 which strictly limited and regulated the use of contract and agency labour. Further, the Industrial Disputes (Amendment) Act of 1982, in addition to declaring certain collective behaviours by both employers and unions to be „unfair labour practices‟ declared certain hiring practices, such as the continuing employment of workers on casual or temporary contracts with „the object of depriving them of the status and 24
privileges of permanent workmen‟, also to be unfair. Overall, then, the post-Independence period was, at least at the level of the individual worker in the regulated sector, clearly a period of important consolidation in employment protection. Not only the Central government, but also several of the State governments, played an important role in this development. In his study of the impact of Indian labour regulation on unemployment, Sarkar notes that in the period from 1970 to 2006 there were changes in only nine of 40 variables used in one quantitative study of Indian labour law. Of those 9 changed variables, 8 were numerically assessed to have been of advantage to labour and thus of disadvantage to management. Of those 8, 7 pertained to the individual employment rights (employment status and security) of workers. What this says about the overall protective strength of Indian labour law is problematical, and we address this issue in the following section of the paper. But what it does confirm is that in the long sweep of post-war evolution in Indian labour law, Indian governments were concerned principally with the construction and maintenance of a „floor of rights‟ for certain classes of labour, and at the same time restricting the industrial, if not the political, development of collective labour influence.
24
The Industrial Relations Act 1947, Fifth Schedule
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Implementation of Labour laws
The Ministry of Labour has the responsibility to protect and safeguard the interests of workers in general and those constituting the deprived and the marginal classes of society in particular with regard to the creation of a healthy work environment for higher production and productivity. The Ministry seeks to achieve this objective through enacting and implementing labour laws regulating the terms and conditions of service and employment of workers. In 1966, the Ministry appointed the First National Labour Commission (NLC) to review the changes in the conditions of labour since independence and also to review and assess the working of the existing legal provisions. The NLC submitted its report in 1969. The important recommendations of NLC have been implemented through amendments of various labour laws. In the areas of wage policy, minimum wages, employment service, vocational training, and worker‟s education, the recommendations made by the NLC have been largely taken into account in modifying policies, processes, and programmes of the government. In order to ensure consistency between labour laws and changes in economic policy, and to provide greater welfare for the working class, the Second NLC was constituted in 1999.All labour laws provide for an inspectorate to supervise implementation and also have penalties ranging from imprisonment to fines. Cases of non-implementation need to be specifically identified and complaints filed before magistrates after obtaining permission to file the complaint from one authority or the other. Very few cases are filed, very rarely is any violator found guilty, and almost never will an employer be sent to prison. Consequently these powers are used by corrupt officials only for collecting money from employers. This does not however mean that no labour laws are implemented. On the contrary experience has proved that the implementation of such laws is directly proportional to the extent of unionisation. This generalisation is particularly true of the informal sector.
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Introduction to Minimum Wages Act 1948 The Minimum Wages Act was enacted primarily to safeguard the interests of the workers engaged in the unorganized sector. The Act provides for fixation and revision of minimum wages of the workers engaged in the scheduled employments. Under the Act, both central and State Governments are responsible, in respect of scheduled employments within their jurisdictions to fix and revise the minimum wages and enforce payment of minimum wages. In case of Central sphere, any Scheduled employment carried on by or under the authority of the Central Government or a railway administration, or in relation to a mine, oil-field or major port, or any corporation established by a Central Act, the Central Government is the appropriate Government while in relation to any other Scheduled employment, the State Government is the appropriate Government. The Act is applicable only for those employments, which are notified and included in the schedule of the Act by the appropriate Governments. According to the Act, the appropriate Governments review/revise the minimum wages in the scheduled employments under their respective jurisdictions at an interval not exceeding five years. However, there is large scale variation of minimum wages both within the country and internationally owing to differences in prices of essential commodities, paying capacity, productivity, local conditions, items of the commodity basket, differences in exchange rates etc. The objective of this study lesson is to thoroughly acclimatize the students with the law relating to minimum wages. The M in imu m Wages Act, 1 948, is an Act to provide for fi xin g min imu m r ates of wage s in cer tai n employments. Th e empl oyment s ar e those wh ich ar e incl uded in t he schedul e and
are referred to as ‘Scheduled Employments’. The concept of minimum wages first evolved with reference to remuneration of workers in those industries where the level of wages was substantially low as compared to the wages for similar types of labours in other industries. As far back as 1928, I ntern ationa l L abour Confere nce of I nternational L abour Organi sation, at Geneva adopted a draft convention on
Minimum Wage requiring the member countries to create and maintain a machinery whereby minimum rates of wages can be fixed for workers employed in industries in which no arrangements exits for the effective regulation of wages and where wages are exceptionally low. Also, at the Preparatory Asian Re gional L abour Confere nce of I nternational L abour 20 | Page
Organisation held at New Delhi in 1947 and then at the third session of the Asian Region al L abour Confere nce, it was approved and occupation in Asian Countries, where they are still
low. Thus, the need of legislation for fixation of minimum wages in India received an impetus after World War II, on account of the necessity of protecting the interest of demonbilised personnel seeking employment in the industries. To provide for machinery for fixing and revision of minimum wages a draft bill was prepared and discussed at the 7
th
Session of the I ndian L abour Confere nce in November, 1945. Thereupon the Minimum Wages bill was introduced in the Central Legislative Assembly.
25
The Act was enacted so as to provide 'social justice' and 'living wages' as pointed out in Article 43 of the Constitution ( Directive Principles of State Policy). Living Wages and fair wages are possible after getting awareness and collective bargaining by trade unionism. Preamble says: To provide for fixing minimum rates of wages in certain employments.
Minimum Wages Act, 1948 is Act XI of 1948. It has 31 Sections and 1 Schedule. The Sections are not arranged in Chapters. The Minimum Wages (Central) Rules, 1950 and Minimum Wages (Central Advisory Board) Rules, 1949 are enacted by following the Act. Individual states brought their own rules, such as the Andhra Pradesh Minimum Wages Rules, 1960. The minimum wages act up hails the ARTICLE 43 of the Indian constitution, which states that, „Living wage‟, etc, for workers. The State shall endeavor 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 a decent standard of life and full enjoyment of leisure and social and cultural opportunities and, in particular, the State shall endeavor to promote cottage industries on an individual or cooperative basis in rural areas. The spirit of the minimum wages act of India is relied in the soul on of the article 43 of Indian constitution, which SADLY is enshrined in part IV of the constitution and hence is non-enforceable by law. Another constitutional provision that the minimum wages act is said to defy is the ARTICLE 19(1g) which says that „to practice any profession, or to carry on any occupation, trade or
businesses‟.
25
The Minimum Wages Act, 1948
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It is questioned by certain jurists that the provisions of the minimum wages act that ask for providing a fixed minimum wage by the employers to the labours is a „ BAR‟ to their fundamental right guaranteed under 19(1g). But this question has been raised again and again in the honorable courts which have dissented from this opinion and upheld the validity of minimum wages act.
Background: A tripartite Committee Viz., " The Co mmittee on F air Wage" was set up in 1948 to provide guidelines for wage structures in the country. The report of this Committee was a major landmark in the history of formulation of wage policy in India. Its recommendations set out the key concepts of the 'living wage', "minimum wages" and "fair wage" besides setting out guidelines for wage fixation. Article 39 states that the State shall, in particular, direct its policy towards securing a. that the citizen, men and women equally shall have the right to an adequate livelihood and b. That there is equal pay for equal work for both men and women. Article 43 states that the State shall endeavour, by suitable legislation or economic organization or in any other way, to give all workers, agricultural, industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure, and social and cultural opportunities.
Historical Backdrop:
The initiative started with the resolution placed by one Shr i. K. G. R. C houdhary in 1920 for setting up Boards for determination of minimum wages in each industry.
The I nter national L abour Confere nce adopted in 1928 Convention No. 26 and
Recommendation No. 30 relating to wage fixing machinery in trades or parts of trades.
On the recommendation of the Standing L abour Committe e and I ndia n L abour Conference , a Labour Investigation Committee was appointed in 1943 to investigate
into the question of wages and other matters like housing, social conditions and employment.
A draft bill was considered by the I ndian L abour Confere nce in 1945. 22 | Page
The 8th meeting of the Standing L abour Committe e recommended in 1946 to enact a separate legislation for the unorganized sector including working hours, minimum wages and paid holidays.
A Minimum Wages Bill was introduced in the Central Legislative Assembly on 11.4.46 to provide for fixation of minimum wages in certain employments. It was passed in 1946 and came into force with effect from 15.3.1948.
Under the Act, Central and State Governments are appropriate Governments to i. ii.
notify scheduled employment fix/revise minimum wages
The Act contains list of all these employments for which minimum wages are to be fixed by the appropriate Governments. There are two parts of the Schedule. Part I has non-agricultural employments whereas Part-II relates to employment in agriculture.
OBJECT AND SCOPE OF THE LEGISLATION The Minimum Wages Act was passed in 1948 and it came into force on 15th March, 1948. The National Commission on Labour has described the passing of the Act as landmark in the history of labour legislation in the country. The philosophy of the Minimum Wages Act and its significance in the context of conditions in India has been explained by the Supreme Court 26
in Unichoyi v. State of Keral a , as follows:
“What the Minimum Wages Act purports to achieve is to prevent exploitation of labour and for that purpose empowers the appropriate Government to take steps to prescribe minimum rates of wages in the scheduled industries. In an underdeveloped country which faces the problem of unemployment on a very large scale, it is not unlikely that labour may offer to work even on starvation wages. The policy of the Act is to prevent the employment of such sweated labour in the interest of general public and so in prescribing the minimum rates, the capacity of the employer need not to be considered. What is being prescribed is minimum wage rates which a welfare State assumes every employer must pay before he employs labour”.
26
(A.I.R. 1962 SC 12)
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According to its preamble the Minimum Wages Act, 1948, is an Act to provide for fixing minimum rates of wages in certain employments. The employments are those which are included in the schedule and are referred to as „Scheduled Employments‟. The Act extends to whole of India. Criteria for notification of scheduled employment
Under the provisions of the Minimum Wages Act, 1948, both Central and State Governments are appropriate Governments to fix, review and revise the minimum wages of the workers employed in the scheduled employments under their respective jurisdictions. The appropriate Governments have also been empowered to notify any employment in the schedule where the number of employees is 1000 or more and fix the rates of minimum wages in respect of the employees employed therein. There are 45 scheduled employments in the Central Sphere while in the State Sphere the number of such employments is as many as 1596. The Minimum Wages Act does not provide for any discrimination between male and female workers or different minimum wages for them. All the provisions of the Act equally apply to both male and female workers. Methods for fixation or revision of minimum wages Fixation
Section 3 empowers appropriate Government to fix the minimum rates of wages in the scheduled employments. Section 3 lays down that the „appropriate Government‟ shall fix the minimum rates of wages, payable to employees in an employment specified in Part I and Part ii of the Schedule, and in an employment added to either part by notification under Section 27. In case of the employments specified in Part II of the Schedule, the minimum rates of wages may not be fixed for the entire State. Parts of the State may be left out altogether. In the case of an employment specified in Part I, the minimum rates of wages must be fixed for the entire State, no parts of the State being omitted. The rates to be fixed need not be uniform. Different rates can be fixed for different zones or localities.
27
27
Basti Ram v. State of A.P. A.I.R. 1969, (A.P.) 227
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The constitutional validity of Section 3 was challenged in Bij oy Cotton M ill s v. State of Ajmer ,
28
The Supreme Court held that the restrictions imposed upon the freedom of contract
by the fixation of minimum rate of wages, though they interfere to some extent with freedom of trade or business guarantee under Article 19(1) (g) of the Constitution, are not unreasonable and being imposed and in the interest of general public and with a view to carrying out one of the Directive Principles of the State Policy as embodied in Article 43 of the Constitution, are protected by the terms of Clause (6) of Article 9. Revision:
Revise the Minimum rates at an appropriate interval not exceeding five years. Procedure for Fixation/Revision:
In Section 5 of the Minimum Wages Act, 1948, two methods have been provided for fixation/revision of minimum wages. They are Committee method and Notification method. Committee Method
Under this method, committees and sub-committees are set up by the appropriate Governments to hold enquiries and make recommendations with regard to fixation and revision of minimum wages, as the case may be. Notification method
In this method, Government proposals are published in the Official Gazette for information of the persons likely to be affected thereby and specify a date not less than two months from the date of the notification on which the proposals will be taken into consideration. After considering advice of the Committees/Sub-committees and all the representations received by the specified date in Notification method, the appropriate Government shall, by notification in the Official Gazette, fix/revise the minimum wage in respect of the concerned scheduled employment and it shall come into force on expiry of three months from the date of its issue.
28
1955 S.C. 3
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ADVISORY BOARD
The advisory board is constituted under Section 7 of the Act by the appropriate Government for the purpose of co-coordinating the work of committees and sub-committees appointed under Section 5 of the Act and advising the appropriate Government generally in the matter of fixing and revising of minimum rates of wages. According to Section 9 of the Act, the advisory board shall consist of persons to be nominated by the appropriate Government representing employers and employees in the scheduled employment who shall be equal in number, and independent persons not exceeding 1/3rd of its total number of members, one of such independent persons shall be appointed as the Chairman by the appropriate Government. In B.Y. Kashatri ya v. S.A.T. Bi di Kamga r U ni on,
29
It is not necessary that the Board shall
consist of representatives of any particular industry or of each and every scheduled employment. An independent person in the context of Section 9 means a person who is neither an employer nor an employee in the employment for which the minimum wages are 30
to be fixed. In the case of State of R aj asth an v. H ari Ram Nathwa ni ,
it was held that the
mere fact that a person happens to be a Government servant will not divert him of the character of the independent person. Variable Dearness Allowance (VDA)
31
In order to protect the minimum wages against inflation, the Central Government has made provision of Variable Dearness Allowance (VDA) linked to Consumer Price Index Number for Industrial Workers (CPI – IW). As regards States Governments/Union Territory Administrations, 26 of them have made VDA as a component of minimum wages. Both Central and State Governments are revising the minimum wages in respect of these scheduled employments from time to time with 100% neutralization. Accordingly, VDA is revised periodically twice a year effective from 1st April and 1st October in the Central Sphere. Minimum wages are expected to cover the essential current costs of accommodation, food
and clothing of a small family. The Minimum Wage Act, while being very progressive has led to specific problems. Doubts have been raised on the existence of a clear and coherent wage policy in India particularly in unorganized sector. This is mainly due to its poor norms 29
A.I.R. (1963) S.C. 806 (1975) SCC 356 31 While fixing or revising Minimum Wages, Dearness Allowance (D.A) linked to cost of living index called Variable Dearness Allowance (V.D.A), in addition to basic wages so as to neutralise the cost of living. 30
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of fixation, enforcement, implementation and coverage in various parts of the country. Some of the issues and concerns faced in India regarding minimum wages are summarized below: i.
Nor ms for fi xi ng mini m wages
The Act does not set out a minimum wage in rupee terms, but just stipulates that the wage be a living wage
32
which is to be decided by labour department in each state. Certain norms have
been laid out including that of calorie requirements, yards of cloth per family and so on. The Act also stipulates that minimum wage rates are to be revised keeping in mind inflation. Additionally, the guidelines laid down for the minimum wage by the 15th Indian Labour Conference (ILC) and the Supreme Court suggest that a minimum wage for 8 hours of work should be high enough to cover all the basic needs of the worker, his/her spouse and two children. However, in many states while fixing the minimum wages, they are not linked to the payment of dearness allowance. As a result, real wages of workers keep eroding due to inflation, pushing them below the poverty line. Another inadequacy is that though the MWA requires wages to be revised every five years, this rarely happens. The MWA also has a clause which states that if wages are not revised, the existing wages should continue. Such an arrangement has only led to greater laziness and unaccountability on the part of state labour departments, leaving some workers to live below poverty line. Further to overcome these inadequacies, the National Commission on Rural Labour in 1990, recommended that the MWA should be amended to compel timely revision of wages and it should be linked to VDA. It should also ensure enhancement of wages every six months on the basis of the Consumer Price Index. How far the amendment has been implemented in states is unknown. (For example, states like Rajasthan, Orissa etc. do not have provision for VDA). Different wages are fixed for the same work in different sectors. For instance, a watchman in the shop or commercial establishment may be fixed higher or lower wages than a watchman in the plastic industry or in a construction or maintenance of roads or building operations, though a watchman‟s job will be the same wherever he may work. To overcome these deficiencies, several states like Himachal Pradesh, West Bengal, Andhra Pradesh, etc., have rationalized all the different occupation categories into just four categories - unskilled, semiskilled, skilled and highly-skilled.
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"Living wage" is the level of income sufficient to allow workers to support their families.
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As per this system, only one notification is applicable to all industries, rather than the timeconsuming system of notifying wages individually for various industries. Though the system gives clear and detailed information of minimum wages, it has not been adopted by all states, including the Indian Labour Ministry website, which gives the minimum rate of wage (that is wages for unskilled workers), for each occupation. The fixation of minimum wage in India depends upon various factors like socioeconomic and agro-climatic conditions, prices of essential commodities, paying capacity and the local factors influencing the wage rate. It is for this reason that the minimum wages vary across the country. In the absence of any criteria stipulated for fixing the minimum wage in the Minimum Wages Act, the Indian Labour Conference in 1957 had said that the following norms should be taken into account while fixing the minimum wage. The norms for fixing minimum wage rate are a) three consumption units per earner, b) minimum food requirement of 2700 calories per average Indian adult, c) cloth requirement of 72 yards per annum per family, d) rent corresponding to the minimum area provided under the government's Industrial Housing Scheme and e) fuel, lighting and other miscellaneous items of expenditure to constitute 20 per cent of the total minimum wage f) Fuel, lighting and other miscellaneous items of expenditure to constitute 20% of the total Minimum Wages, g) Children
education,
medical
requirement,
minimum
recreation
including
festivals/ceremonies and provision for old age, marriage etc. should further constitute 25% of the total minimum wage.
33
In September 2007, the national minimum floor level wage
34
was increased to Rs 80 per day
for all scheduled employments from Rs 66 in 2004 to Rs. 45 in 1999, Rs. 40 in 1998 and Rs. 35 in 1996. ii .
Coverage
33
http://labour.nic.in/wagecell/welcome.html The national minimum floor level wage represents the lowest level of wage for any employment in the country. The wage rate is applicable to all employments which are currently not covered under the Minimum Wage Act. The State Government has to ensure that the minimum wage fixed under MWA is not lower than the national minimum wage rate. 34
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In order to have minimum wage fixed, the employment or industrial activity has to be included in the schedule of Employments. Currently the number of scheduled employments in the Central government is 45 whereas in the state sphere the number is 1232. The criterion for inclusion in the list of scheduled employment is that there should be at least 1000 workers engaged in that activity in the state. Thus, many activities are excluded from the list. This criterion for inclusion has left a very large number of workers in the unorganised sector outside the purview of the Minimum Wage Act. iii.
Implementation
The main problem of minimum wage legislation in India is its poor implementation. The Act empowers the appropriate government (Central, State or Local) to fix a minimum wage for workers in unorganised sectors. However, often exemptions from the payment of minimum wages have been granted to industries. In addition, minimum wage levels have been revised only at long intervals (where the actual prescribed limit is within 5 years). Such a failure in implementation of MWA is not only due to loopholes in policy design but is also an outcome of lapses in the administration. Poor implementation of MWA does not affect organised workers as much as it does to workers in unorganized sectors. Unorganised workers are employed with millions of employers (generally small trade, enterprise, sole proprietor or household) who are scattered and hence becomes difficult to cover them under law. This diversity in locations and nature of work has left them vulnerable to exploitation in the absence of a broad legal standard. Also, many workers for the fear of losing their jobs do not report about payments lower than the minimum wage rate. At times, these workers are even forced by their employers to certify payments below minimum wages. i v.
Enforcement
Poor enforcement of the Act is another issue prevalent in most of the states in India. The issue arises mainly due to lack of awareness amongst the workers about minimum wage provisions and their entitlement under the labour laws. Surveys have shown that almost 80 per cent of the workers in unorganized sector earn less than 20 rupees a day or less than half the government-stipulated rural minimum wage of 49 rupees a day and urban wage of 67 35
rupees . This is particularly true in remote areas and in areas where workers are not
35
March 11, 2008, Rising labour concerns for Indian government, Business Standard.
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unionized or otherwise organised. As a result their wages have long since failed to keep pace with rising costs and continue to diminish in real value over time. The enforcement of the Minimum Wages Act, 1948 is secured at two levels. While in the Central Sphere, the enforcement is secured through the Inspecting officers of the Chief Labour Commissioner (Central) commonly designated as Industrial Relations Machinery (CIRM), the compliance in the State Sphere is ensured through the State Enforcement Machinery. They conduct regular inspections and in the event of detection of any case of non-payment or under-payment of minimum wages, they advise the employers to make payment of the shortfall of wages. In case of non-compliance, penal provisions prescribed in the Act are taken recourse to. v.
Need for meanin gful min imu m wage policy
In spite of vast number of workers in unorganized sector, and their substantial contribution to the national economy, they are amongst the poorest sections of India‟s population. It is therefore imperative that urgent steps are taken to improve their condition. Infrequent revisions and inadequate cost of living adjustments have been a marked feature of minimum wages in India. The rates of minimum wages so fixed in few states, is not enough even for two times meal in a day, leave aside the needs of health, education and shelter. In specific terms, the issues and problems of the wage policy in both organised and unorganised sector, relate to the elements like need based minimum wage, protection of the real wages through compensation for rise in the cost of living, incentives for increases in productivity, allowances for hazards of occupation, wage differentials for skills, etc. Though it is desirable to have a National Wage Policy it is difficult to conceive a concept of the same. The National Wage Policy has been discussed on many occasions in different fora. Because fixation of wages depends on a number of criteria like local conditions, cost of living and paying capacity also varies from State to State and from industry to industry, it would be difficult to maintain uniformity in wages. The Indian Labour Conference, held in November, 1985 expressed the following views:-
"Till such time a national wage is feasible, it would be desirable to have regional minimum wages in regard to which the Central Government may lay down the guidelines. The Minimum Wages should be revised at regular periodicity and should be linked with rise in the cost of living " 30 | Page
Accordingly, the Government issued guidelines for setting up of Regional Minimum Wages Advisory Committees. These Committees renamed subsequently as Regional Labour Ministers Conference, made a number of recommendations which include reduction in disparities in minimum wages in different states of a region, setting up of inter-state Coordination Council, consultation with neighbouring States while fixing/revising minimum wages etc. The main objective to be considered while fixing or revising the minimum wage rate should be two fold – 1. Social objective: that is, by providing sufficient purchasing power to the worker, enable him/her to have a basic standard of living. In long run such a step would help in abolishing labour exploitation and poverty. 2. Economic objective: The rate of minimum wage should be fixed at such a level which would motivate workers and enable them to enjoy the benefits of economic growth, and thereby contribute to the economy.
36
For example, the Sixth Central Pay
Commission (CPC) has fixed the minimum wage of Central Government employees at Rs 5740. The first four scales of pay suggested by the Fifth CPC for the Group D Employees of the government have now been removed, under the Sixth CPC. The existing employees in these grades are to be moved to Group C cadres through a process of training thereby indicating that the unskilled functions in the governmental sector would be contracted or outsourced. Two major and recent initiatives for providing social security to the workers in the informal sector have been passed in the parliament; a) the National Rural Employment Guarantee (NREG) Act 2005 and, b) the Social Security for Unorganised (Informal) Sector Workers. The National Rural Employment Guarantee (NREG) Act 2005 is meant for the working poor in villages to take care of the problem of underemployment and thus to enhance their income that would make them less poor or cross the officially determined poverty line. It entitles adult citizens in rural areas to seek work up to 100 days per household per year. With the implementation of National Rural Employment Guarantee Scheme, hopes are raised for meeting basic needs of workers in unorganised sector, by earning minimum wages at least.
36
http://www.amrc.org.hk
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On the other hand, Social Security scheme covers health (hospitalisation for self and family) and maternity, life and disability and old age security in the form of state pension for those belonging to poor households and a provident fund for others. The scheme is based on contributions from workers, employers and government in the ratio of 1:1:1. Minimum Wage legislation in India requires the active support of workers, trade unions, and labour associations. It would also require sincerity on part of the labour departments in each state to determine minimum wage rate on the basis of ethical and humanitarian concerns in order to ensure basic subsistence to workers in unorganized sectors. Implementation of government policies and legislations is the main problem in the unorganized sector. Also, low productivity in unorganised sectors, limitation of avenues for gainful employment, lack of organisation on the part of workers, affects their bargaining capacity, accounting for their vulnerable situation. Hence, involvement of non-government organizations and trade unions can play an important role in better enforcement of minimum wages act. For example, Self Employed Women Association (SEWA) in Ahmedabad. SEWA is the 7th largest trade union organisation in India working towards organizing women workers (mainly in informal sector) for full employment, which means employment whereby workers obtain work security, income security, food security and social security (at least health care, child care and shelter). SEWA has been organising workers in the dyeing, chemical and screen-printing industry, agarbatti rollers, ragpickers, street vendors, etc for many years now. Involvement of such organisations gives a voice to workers in unorganised sectors in collective bargaining. Ignorance and illiteracy are the main reasons for exploitation of workers in unorganized sectors. Trade unions and NGOs can help by making the workers aware of the legal provisions of the minimum wage rate and the benefits to which they are entitled. Also, minimum wage data is not readily available. Only limited official data is available from national labour ministry website which may or may not be updated on regularly basis. The information available does not permit extensive comparison on wages in formal and informal sector due to different formats of reporting or recording of wage rate in each state. Minimum Wage Checker on Paycheck website provides the information on minimum wages in each Indian state. The minimum wage data collected from labour department in each state is uploaded on the website in a detailed format enabling inter-state comparison easy.
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The need of the hour is not only to increase the basic rates of minimum wages but the basic approach towards the whole issue also needs to be changed. The prevailing system of minimum wages, instead of abolishing the poverty, is in fact increasing it. Initiatives like strengthening the enforcement machinery, simplifying the procedure relating to coverage and revisions of minimum wage rate, linking the rates with the Consumer Price Index Numbers (CPI), and increasing the involvement of various workers' organisations in the implementation of the Minimum Wages Act, are some of the steps advocated to improve the situation. Steps taken to reduce disparities: Five Regional Committees
There is disparity in rates of minimum wages in various regions of the country. This is due to differences in socio-economic and agro-climatic conditions, prices of essential commodities, paying capacity, productivity and local conditions influencing the wage rate. The regional disparity in minimum wages is also attributed to the fact that both the Central and State Governments are the appropriate Government to fix, revise and enforce minimum wages in scheduled employments in their respective jurisdictions under the Act. To bring uniformity in the minimum wages of scheduled employments, the Union Government has requested the States to form regional Committees. At present there are five Regional Minimum Wages Advisory Committees in the country, which are as under: Region
Eastern Region [6]
States/UTs covered
West Bengal, Orissa, Bihar, Jharkhand, Chhattisgarh and Andaman & Nicobar Islands
North Eastern Region (8)
Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Tripura and Sikkim
Southern Region (6)
Andhra
Pradesh,
Karnataka,
Tamil
Nadu,
Pondicherry
Kerala, and
Lakshadweep Northern Region (9)
Punjab, Rajasthan, Himachal Pradesh, Jammu & Kashmir, Haryana, Uttar 33 | Page
Pradesh,
Uttarakhand,
Delhi
and
Chandigarh Western Region (6)
Maharashtra,
Gujarat,
Goa,
Madhya
Pradesh, Dadra & Nagar Haveli and Daman & Diu National Floor Level Minimum Wage
In order to have a uniform wage structure and to reduce the disparity in minimum wages across the country, a concept of National Floor Level Minimum Wage was mooted on the basis of the recommendations of the National Commission on Rural Labour (NCRL) in 1991. Keeping in view the recommendation of NCRL and subsequent rises in price indices, the National Floor Level Minimum Wage was fixed at Rs.35/- per day in 1996. Keeping in view the rise in Consumer Price Index the Central Government raised the National Floor Level Minimum wage to Rs.40/- per day in 1998. Further to Rs.45/- w.e.f. 01.12.1999 and Rs. 50/per day w.e.f. 01.09.2002. Based on the norms suggested by the Working Group and its acceptance by the Central Advisory Board subsequently in its meeting held on 19.12.2003, the National Floor Level Minimum Wage was revised upwards to Rs.66/- per day with effect from 1.02.2004. On the basis of increase in the Consumer Price Index, the Central Government further revised the National Floor Level Minimum Wages from Rs.66/- to Rs.80/- per day with effect from 01.09.2007. It is, however, clarified that the National Floor Level Minimum Wage, is a non-statutory measure to ensure upward revision of minimum wages in different in States/UT‟s. Thus, the State Governments are persuaded to fix minimum wages such that in none of the scheduled employments, the minimum wage is less than National Floor Level Minimum Wage. This method has helped in reducing disparity among different rates of minimum wages to some extent.
34 | Page
Minimum Wage The Indian economy is characterised by a dualism, i.e., the existence of comparatively well organised sector along with the decentralised sector with a large population which is self37
employed . According to reports, 422.6 (94%) million workers out of the total workforce of 457.5 million belong to the unorganised/informal sector
38
in India. These workers contribute
to more than 60 per cent to India‟s GDP growth. The Constitution of India envisages a just and humane society and accordingly gives place to the concept of living wage in the chapter on Directive Principles of State Policy. The Minimum Wages Act, 1948 is based on Article 43 of the Constitution of India which 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 (emphasis added) conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities".39 The term 'Labour' is included in the 'concurrent list' of the Constitution which provides for labour legislation both by the central and the state governments. Labour laws for most workers in the informal sector are enforced by the state governments, while that for contractors and casual workers in establishments is regulated by the central government. All labour laws enacted by the central government directly or indirectly influence wage level and structure of wages in the informal sector. The Minimum wage legislation is the main labour legislation for the workers in unorganized sector. In India, the policy on wage determination had been to fix minimum wages in sweating employments and to promote fair wage agreements in the more organised industries. Wages in the organised sector are determined through negotiations and settlements between employer and employees. On the other hand, in unorganised sector, where labour is vulnerable to exploitation due to illiteracy and does not have effective bargaining power, the intervention of the government becomes necessary.
37
http://planningcommission.nic.in/plans/planrel/fiveyr/6th/6planch24.html Informal sector in India is broadly characterized as consisting of units engaged in the production of goods and services with the primary objectives of generating employment and incomes to the persons concern. The workers in informal sector are engaged in economic activities which are not officially regulated and which operate outside the incentive system offered by the state and its institutions. 39 http://nceus.gov.in/Report_Bill_July_2007.htm 38
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The Minimum Wage Act, 1948 provides for fixation and enforcement of minimum wages in respect of schedule employments to prevent sweating or exploitation of labour through payment of low wages. The objective of the Act is to ensure a minimum subsistence wage for workers. The Act requires the appropriate government to fix minimum rates of wages in respect of employment specified in the schedule and review and revise the minimum rates of wages at intervals not exceeding five years. Once a minimum wage is fixed according to the provisions of the Act, it is not open to the employer to plead his inability to pay the said wages to his employees. The minimum wage rate may be fixed at a. time rate, b. piece rate, c. guaranteed time rate and d. Overtime rate. The Act provides that different minimum wage rate may be fixed for i. ii.
different scheduled employments, different works in the same employment,
iii.
adult, adolescent and children,
iv.
different locations or
v.
Male and female.
Also, such minimum wage may be fixed by a) an hour, b) day, c) month, or d) Any other period as may be prescribed by the notified authority. The Minimum Wage Act, 1948 (Section 12.1) states “Where in respect of any scheduled
employment a notification under section 5 is in force the employer shall pay to every employee engaged in a scheduled employment under him wages at a rate not less than the minimum rate of wages fixed by such notification for that class of employees in that employment without any deductions…”.
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As per Section 4(1), the minimum rates of wages fixed or revised by the appropriate authority (Central or State Government) for the scheduled employments shall take into account the following: 1. a basic rate of wages and a special allowance at a rate to be adjusted at intervals with the variation in the cost of living index number applicable to such workers; or 2. a basic rate of wages with or without the cost of living allowance, and the cash value of the concessions in respect of supplies of essential commodities at concessional rates, where so authorised; or 3. an all-inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of the concessions, if any The 15th Indian Labour Conference (1957) defined the following norms to calculate minimum wage: 1. 3 consumption units for one earner. 2. Minimum food requirements of 2700 calories per average Indian adult. 3. Clothing requirements of 72 yards per annum per family 4. Rent corresponding to the minimum area provided for under Government‟s Industrial Housing Scheme. 5. Fuel, lighting and other miscellaneous items of expenditure to constitute 20% of the total Minimum Wages Other parameters
i.
"Children
education,
medical
requirement,
minimum
recreation
including
festivals/ceremonies and provision for old age, marriage etc. should further constitute 25% of the total minimum wage." ii.
Local conditions and other factors influencing the wage rate.
These norms were further enhanced by the Supreme Court in its judgment in the case of Reptakos Br ett and Co. v. I ts workm en
40
by an additional 25% of the total minimum wage
for education, medical requirement, minimum recreation including festivals/ceremonies and provision for old age, marriage etc
40
(1991)
37 | Page
However in complete disregard of the above, the daily minimum wage today in most states hovers around Rs 100, with Nagaland even lower at Rs 80 and Delhi highest at Rs 203. As per calculations done by NTUI, the daily minimum wage today, as per norms fixed in the 15th ILC, is Rs 260 in rural areas and Rs 347 in urban areas (not including rent). The fact that essentials like fuel, lighting, education, medical treatment are estimated to be only 45% of food expense assumes that these are heavily subsidized by the State – an obviously incorrect assumption, especially in light of current neoliberal policies. Further these guidelines do not account for transportation costs, which are significant and increasing given current migration patterns. Fixing a minimum wage below the norms prescribed by the 15th ILC is not an oversight but a calculated exercise. The Second National Commission on Labour Report notes, “ Wage
Boards after the Second Pay Commission (1957-59) have not found it possible to fix the need-based minimum wages recommended by the Indian Labour Conference (1957). The Report of the Committee, set up by the first National Commission on Labour, on the Functioning of the System of Wage Boards (cited in the Report of NCL, 1969) found it infeasible because the need-based minimum would be beyond the capacity of the industry to pay and might result in the transference of the burden to the consumer”. Subsequently the Sub-committee „D‟ of the Standing Committee of Labour Ministers (1981) diluted the norms prescribed in the 15th ILC recommending, “the level of minimum wage should not be below the poverty line”, and further diluted by The Report of the Committee of Secretaries of States (1981) which reduced per day caloric requirements to 2400 calories in rural areas and 2100 calories in urban areas However even these low statutory wages are not being paid. As per simulations from household data in the ILO report, “ Extending the C overage of M in imu m Wages in I ndia ”, at least up 73 million workers (out of 173 million waged workers) received “ wages below the national min imu m wage fl oor of Rs. 66 per day in 2004-05. Thi s in clude s more than h alf of al l casual workers (58.6 mil li on earn ers) and anothe r one-four th of all salari ed workers (or 14.5 mil li on work er s). Un sur pri sin gly, fe male wo r kers and thos e residi ng i n ru ral areas are more li kely to earn below mi ni mum wages”. The report adds, “These high proportions
may result from a variety of reasons, but presumably include a large number of workers in “schedules” that are not-covered by the minimum wage legislation.”
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Minimum wage inadequate for minimum needs and the widespread prevalence of payment below minimum wage is an outcome of both lacunae in the legislation and poor enforcement. As highlighted above, the Minimum Wage Act does not define the method of calculation of minimum wage, thus allowing arbitrary fixation by Central and state governments. Further, respective governments are only advised to revise wage rates after a period not exceeding five years, which too is optional. The Act also doesn‟t mandate inflati on indexation. Indexation was recommended only in the Labour Ministers‟ Conference (1988) and the variable dearness allowance (VDA) linked to CPI. Only 26 states/UTs incorporate VDA as a component of minimum wage. Further, the Act covers only those employments listed in the two schedules, thus leaving a whole raft of employments not notified (e.g., domestic workers) outside the protection of the legislation. Finally enforcement is strictly top-down through labour inspectors with no mechanism for bottoms-up reporting to enforce compliance. This year‟s Labour Ministry‟s report notes that 66% workers are employed in enterprises having less than 10 workers and 44% are employed in seasonal or ad-hoc enterprises. Given the dispersed and casual nature of employment, it is obvious that top-down enforcement (even if sincere) is very difficult. This has obvious policy implications such as the need for market level intervention through employment guarantee programs, and aggregated delivery of social security benefits. Minimum Wage and the MGNREGA
While enforcing compliance with the Minimum Wage Act is difficult, the MGNREGA has been remarkably effective in actualizing minimum wages for the unorganized worker. The Mahatma Gandhi National Rural Employment Guarantee Act entitles each rural family up to 100 days of unskilled work at minimum wage. The introduction of the Act increased worker bargaining power even on non-NREGA works thus raising extremely depressed wage rates to prevailing minimum wage rates across the country. By reducing distress migration, the MGNREGA also helped reduce deflationary pressure on wage rates in urban areas due to surplus labour. Thus experience with NREGA demonstrates the value of employment guarantee programs in the implementation of minimum wages. However the gains from the MGNREGA are not just being squandered away, they are in fact being reversed. In January, 2009, the Government of India issued a notification under Section 6(1) of the MGNREGA, which delinked MGNREGA wages from the Minimum Wage Act freezing MGNREGA wages at the prevailing state minimum wage or up to Rs 100 per day. 39 | Page
Today, MGNREGA wages in at least 19 states are less than the prevailing state minimum wage, thus hitting the worker not just in real economic terms, but de facto capping market wages to below minimum wage. Sanctity of the Minimum Wage Act
Supreme Court in three separate rulings has held that nonpayment of minimum wages is tantamount to „forced labour‟ prohibited under Article 23 of the Constitution. The Supreme Court holds that „forced labour‟ may arise in several ways, including “compulsion arises
from hunger and poverty, want and destitution” . In Sanji t Roy v. State of R aj asth an41, the Supreme Court held that the Exemption Act in so far as it excluded the applicability of the Minimum Wages Act 1948 to the workmen employed in famine relief work is “clearly
violative” of Article 23. Thus even public works ostensibly initiated by the government for the sole purpose of providing employment are subject to the Minimum Wage Act. Drawing on the Supreme Court rulings, Andhra High Court set aside the Government of India notification mandating that prevailing state minimum wage be paid. This has been underscored in the legal opinion provided by Additional Solicitor General, M s. In dira Jaising , to the Central Employment Guarantee Council (CEGC) Working Group on
Wages where she made it clear that using Section 6(1) to allow a payment of less than minimum wage in MGNREGA works will amount to forced labour. 15 eminent jurists and lawyers of India too have asked Government of India to immediately revoke its unconstitutional notification and ensure that minimum wages are paid to all workers in India. Three Chief Ministers (Rajasthan, Andhra Pradesh and Kerala) have written to the Prime Minister requesting the Ministry of Rural Development’s (MoRD) compliance with the Minimum Wage Act, followed by a letter from the Chairperson, NAC and UPA, to the Prime Minister calling his attention to find urgent resolution of this matter. Finally, the Labour Ministry too has reiterated its “fundamental objection” to Section 6(1), warning that using Section 6(1) to allow payment of less than prevailing state minimum wage will not stand legal scrutiny. However despite this overwhelming legal and political consensus, both the Government and the Government of Andhra Pradesh continue to be in contempt of the Andhra Pradesh High Court (July 2009) citing fiscal concerns. In fact in his response to the Chairperson, NAC 41
(1983)
40 | Page
regarding violation of minimum wages in NREGA, the PM has asserted that the wage rate under NREGA is independent of the provisions of the Minimum Wages Act, a statement that runs counter of the established Constitutional, legal and political opinion 42
In the case of Edw ard M ill s v. State of Aj mer , wherein, power was delegated to the administrative authority to add any industry within the ambit of the Minimum Wages Act, 1948. The court held that there is no excessive delegation as the purpose of the Act, which was to avoid exploitation of labour due to unequal bargaining power, provided sufficient policy guideline for executive to act. In case of Wor km en Repr esent ed by Secr etar y v. M anagement of Reptakos Br ett an d Co. L td. and Anr
43
, the court held that the children‟s education, medical requirement, minimum
recreation including festivals/ceremonies, provision for old age, marriage etc. should be constitute 25% of the minimum wage and used as a guide in fixation of minimum wages. The State Governments have been requested from time to time to keep the above norms and pronouncement in view while fixing/revising the minimum wages. In Bur mah-S hell Oi l Storage and Di stri buting Co. of I ndia, L td., Bomba y v. Their 44
Workmen
, the Labour Appellate Tribunal had occasion to consider the content of the living wage. In that connection it referred to the Report of the Fair Wages Committee, and observed that the level of national income in India is so low that the country is unable to afford to prescribe by law a minimum wage which would correspond to the concept of a living wage. The rudder is set in the direction of a living wage", observed the Appellate Tribunal, but the destination is not yet within sight; the gradual emergence of a welfare State will naturally help but even here progress is necessarily slow. In Standa r d Vacuum Oi l Company v. Th eir Empl oyees45, the Labour Appellate Tribunal was called upon to consider the plea that the companies were paying a living wage to their employees. In dealing with the said contention the Appellate Tribunal observed that "the measurement of the living wage standard in terms of money has not been prescribed by law of the country, nor, as far as we are aware, has been determined anywhere in any scientific basis ". In its opinion, it was neither possible nor necessary to fix the amount with exactitude which should form the minimum living wage after an exhaustive enquiry for considering the 42
1955 AIR 25, 1955 SCR (1) 735 1992 AIR 504, 1991 SCR Supl. (2) 129 44 [1953] 2 L.L.J. 246 45 [1954] 1 L.L.J. 484J 43
41 | Page
question of bonus, because, according to the principle laid down the whole gap between the existing wages and the living wage need not be filled up. That is why it thought that it would be sufficient for the purpose if an approximate idea can be formed by taking into account the approximate expenditure on the necessary items of requirements of the living wage standard. On these considerations the plea raised by the companies was rejected. It would thus be seen that the oil companies have been persistently making the claim before the industrial tribunals that they need not be called
upon to pay bonus to their employees on the ground that they
are paying them a living wage. In the case of L i nge Gowd a Detective and Secur it y Chamber (P) L td. v. Authority
46
, A
detective agency is not covered under the provisions of this Act. There is no logic that when the employees as engaged through the detective agency worked in an engineering industry, the employer is liable to pay the minimum wages but when the same employees engaged by the detective agency are on private duty, they are not entitled to such minimum wages. Hence, no relief could be granted, either against the contractor or the principal employer. 47
In A. V. Park ash v. Seni or L abour I nspector , The definition of “employer” is a restrictive definition and only a person who employs one or more employees in any scheduled employment would be the employer within the meaning of the Act and no doubt it includes the employees as detailed in the various sub-clauses of section 2(e). In Band hua M ukti M orc ha v. Union of India
48
, it was held that a piece-rated worker is also
entitled to receive the minimum wages irrespective of his output. In Patel I shwerbh ai Pr amod Bhai v. Tal uk a Development Off icer 49, Where certain tubewell operators were working in the District and Taluka Panchayats they would be in the Scheduled employment as contemplated by section 2(g), employment under any local authority being item 6 in the Schedule to the Act, and as such, would be entitled to minimum wages under the Act. In Chacko v. Varkey 50, An ex-employee is competent to claim relief under the Minimum Wages Act.
46
1998 LTR 77 1994 LLR 304 (Karn) 48 (1984) SCC (L&S) 389 49 1983 Lab 1C 321: (1983) 1 SCC 403: 1983 (62) FJR 189: (1983) 1 LLJ 237 50 1961 (3) FLR 508: 1961-62 (21) FJR 493 47
42 | Page
In Benod e Bi har i Shah v. State of W .B.,
51
it was held that there is correlation between
minimum rates of wages and hours of work. Minimum wages are to be fixed on basis of standard normal working hours, namely 48 hours a week. 52
In M adhya Prade sh B idi Udyog Sangh, Sag arv. State of M adhya Pr adesh , Any payment which partakes the nature of lay-off compensation cannot fall within the term “wages” as defined in section 2(h). 53
In Athni M unicipa lity v. Shi ettappa Laxm an Pattan , Having regard to the context and object of the Act, a discharged employee must also be held to be an employee within the meaning of the Act. 54
In Shi v Pr asad Ghosh v. Di stri ct Judge , Under the definition of the word “employer” in section 2(e) (iv) of the Act, any person responsible to the owner for the supervision and control of the employees or for the payment of wages to them is also an employer. In President, Cinema Workers’ Union aff il iated to Bhar tiya M azdoor Sangh v. Secretary, 55
Social Welf are and L abour Department ; The Govt. cannot take shelter under proviso to
sec, 3(1) (b) of the Act for postponing to issue the revised notification after five years. The Govt. cannot indefinitely postpone the issuance of revised notification fixing minimum wages. Definitely, the period of 13 years cannot be said to be reasonable period. 56 In Govin d Bh awan Karyalaya v. State of U.P. , Where a notification by itself does not
intend to make any classification of workmen except classification for fixing minimum rates of wages for adult employees, it was held that such classification is permissible in law, and accordingly such notification is not bad or invalid. 57 In Woolco mbers of I ndia v. Workers Un ion , The minimum wages must be paid by the
employer notwithstanding the want of financial capacity. 58
In H ydro (E ngin eer s) Put. L td. v. Th e Wor kmen , In order to make the wages realistic they must be commensurate with the price rise in essential commodities. The apology that the
51
1976 Lab I.C. 523 (Cal) 1981 Lab 1C 363: 1981 Lab LN 434: (1981) LLJ 756 (1965) II LLJ 307 54 1963 (6) FJR 447: (1963) II LLR.) 384 55 2005 LLR 648 56 1998 LLR 287 57 AIR 1973 SC 2758: 197,3 (27) FLR 38 52 53
43 | Page
employer may be constrained to shut his business if minimum wages are to be paid is simply untenable. 59
In Bi di, B idi L eaves and Tobacc o M er chants As sociation v. State of B ombay , Section 3 empowers the appropriate Government to fix the minimum rates of wages, thereby enabling the appropriate Government to alter the existing legal condition between the employer and employee which is not commensurate with the provisions of the Act. 60
In Uni choyi (U) v. State of K er ala , Employer‟s capacity to pay is no bearing in fixing the minimum wages of the employees. Such consideration is antilogs to the principles enshrined within the Constitution of India. In Abraham v. I ndustrial Tri buna l 61, The Act does not confer any power on the government to insist that an employer employing workers on time rate should pay them at piece-rates. Neither the government has any power to issue any notification on the basis of section 3 to make such metamorphosis of payment. 62
In Bh i ku sa Yamasakshatr i ya v. Sanagmanes Akola Palu ka Bi di K amgar U ni on , Cost of living index is not a strict basis for fixing the rates of minimum wages and if not strictly adhered to, it does not constitute a breach of statutory duty. In Kar nataka Fi lm Ch amber of Comme rce, Bangalore v. State of K arn ataka 63, Section 4 is a definite indication that basic wage is an integral part of the minimum wage. It is not correct to say that a minimum wage under section 4(1) necessarily should consist of basic wage and dearness allowance. The language of section 4 does not lend itself to such an interpretation. On the plain terms of section 4(1) it is clear that the payment of dearness allowance would arise only if the basic wage fixed for a category of workmen fell short of the minimum wage which the State Government has to fix taking into consideration the needs of the workers‟ family consisting of three consumption units. In Kris hna Fl our M ills v. Commis sioner of L abour 64, The State issued a notification to pay separate allowance in addition to the basic wages, which was not challenged as to its validity 58 59 60
1969 (18) FLR 189: (1969) 1 LLJ 713 1962 (4) FLR 71: (1961) II LLJ 663 Ibid 23
61
(1961) II LLJ 556 62 AIR 1960 Bom 299: (1959) II LLJ 578 63 1986 Lab 1C 1890: LLR 1986 Kant 2183 64 1997 (77) FLR 241
44 | Page
by the appellants. Held, they have to pay the „wages‟ now being paid and in addition to that the minimum rate of “cost of living allowance” is to be paid by them separately, as per the notification, even if they are paying higher rate of wages. In T.G. L akshm aiah Setty & Sons, Adoni v. State of Andhra Pradesh 65, What is contemplated by the Act to be notified under section 5(i) (b) is no doubt draft proposals. The objection to draft proposals can be made both by employers and employees as well. Thus, if the employees had exercised their privilege to represent and ask for higher wages and if eventually the State authorities had adopted higher rates of minimum wages that cannot be found fault with. 66
In Bi j ay Unchan a Paul v. State of A ssam , It is necessary that the appropriate Government in issuing notifications for prescribing the rates of minimum wages under the Minimum Wages Act, 1948, punctiliously follows the letter of law and strictly complies with all the procedures laid down in the Act. In Chakr adharpur Bi di and T obacco M er chants Association v. State of Bihar
67
, The
Advisory body has no functioning of quasi-judicial nature and their recommendation/decision is not binding on the State Government but the same remains only a recommendation and nothing more than that. Merely because one member of the Board was extra, the recommendation of the Advisory Board would not be vitiated. 68 In Govern ment of I ndia v. Bar ium Chemica ls L td. , The term “independent persons” is
used in contradiction to the words “persons representing employers and employees in the
scheduled employment”. Therefore, the term contemplates neither the category of employers nor the employees. Also there is no reason to think that Government employees are excluded In Ramkri shna Ramnat h v. State of M ahar ashtr a69, The variety of expression of the term
“independent persons” in section 9 is that it has the condition of being auto-cephalous. Therefore, the provisions of the Act do not prescribe that a government servant cannot be a member of the Advisory Board or that if he is a member he cannot be considered to be an
“independent person” within the meaning of section 9.
65
1981 Lab 1C 690 1969 (19) FLR 11 67 1997 (77) FLR 339 68 1985 Lab 1C 1634: AIR 1985 SC 1351: 1985 (67) FJR 157: 1985 (51) FLR 256 69 1963 (7) FLR 373: (1963) II LLJ 458 66
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In M il itant S ecuri ty Bu reau Put. L td. v. B.R. Hehar
70
, once a contractor‟s establishment is
covered under the Minimum Wages Act, the employees engaged through the contractor shall be entitled to the wages as fixed under the Act. In Uni on f or D emocratic Rights v. Union of India
71
, Where a person provides labour or
service to another for remuneration which is less than the minimum wages, such labour is
“forced labour” within the meaning of article 23 of the Constitution and thereby entitles the person to invoke article 32 or article 226 of the Constitution of India. In Municipal Council, Hatta
v. Bhagat Singh 72, Section 14 provides for payment of
overtime only to those employees who are getting minimum rate of wages under the Act. It does not apply to those getting better wages under other Statutory Rules. In V. V. Sur ya Rau v. Sur endr a Ramkr ishna Te ndul kar 73, Every employer, including a contractor who engages labourers for others who owns the establishment/factory, etc., is bound by the provisions of this Act, to comply with the requirement of maintaining Registers etc., there is no exemption to this mandatory obligation of the employer including any contractor. In Executi ve En gineer, Rur al Works Division, Mayur bhanj v. Addl. Di stri ct M agistrate , Mayurbhanj
74
, Claim of arrears of differential wages made by employee. There was delay in
filing application beyond limitation period. Claimant submitted that they were pursuing their grievance before Labour Officer- Only when they failed, they approached, the authority. Held that delay had been rightly condoned. In Sr i Gandh ian B us Ser vice Chi ngl eput v. L abour Court
75
, Where a period of limitation is
prescribed by section 20 of [he Act, power of the authority is coupled with the privilege to condone delay, the delay has to be explained and sufficient cause shown just opposite under section 5 of the Limitation Act, 1963. In Awadh L al Sah v. State of B ih ar 76, The minimum wages becoming payable can be claimed by an application presented within six months from the date on which it became 70
(1991) 2 CLK 245 (Bom) 1982 Lab 1C It46: 1982 (45) FLR 140:1983 (62) FJR 1 1998 LLR 298 73 1997 (77) FLR 280 74 2005 LLR 121 75 (1964) I LLJ 709 76 1984 Lab 1C 169 (Pat HC) 71 72
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payable and if presented after the expiry of the period of limitation, the applicant has to satisfy the authority that he had sufficient cause for not making the application within such period. In B. Ram das v. The Author ity unde r M in imu m Wages Act, Guntu r Region, Gun tur 77, while making the enquiry into the claim petition under section 20 of the Act, the authority acts in quasi-judicial capacity and ipso-facto should ensure that no prejudice is caused to the employer by failure to follow the rules of natural justice. In Delhi Administ ration v. Presidi ng Offi cer 78, The disabled employee whose quality and quantity of work are not questioned should not be denied dignity of labour by paying them less than the minimum wages merely because they are disabled, more so when the enterprise is run by Govt. 79
In A.V . Prakas h v. Seni or L abour I nspector , The appropriate Government is enabled to fix the minimum rates of wages payable to the employees employed in an employment specified in Part 1 or Part II of the Schedule or an employment added to either part by notification under section 27. The detective and security service cannot in any way be linked to any of the scheduled employment detailed in Parts I and II. In case of Bakshsish Sin gh v. Dar shan Engin eer in g Works ,
80
it was held that there is one
principle which admits of no exception. No industry has right to exit unless it is able to pay its workmen at least a bare minimum wage. If an employer even a bare subsistence or minimum wage, he would have no right to conduct his enterprise on such terms. 81 In case of Premier Tobacco Packer s (P) L td. v. Assistance L abour Off icer , it was held that
an order imposing a monetary liability caused by violation of provisions of the statute cannot be upheld except in the presence of strict proof. In case of Bij ay Cotton Mi ll s L td. v. State of A jmer 82, it was held by the court that it is a criminal offence not to pay the minimum wages fixed under the provisions of the act.
77
1987 Lab 1C 1493: 1987-2 APLJ (HC) 137 2004 (100) FLR 334 1994 LLR 304 (Karn) 80 1994 LLR IC 690 81 1988 Lab IC 283 (AP- HC): 1988-I LLN 743 78 79
82
Ibid 25
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In case of Yadav Stores, N agpur v. Presidi ng Off icer , L abour Court – II I,it was held that in a comprise or a settlement between the employer and the employee resulting in the employee relinquish or reducing his claim with regard to wages under the Minimum Wages Act shall be null and void, as his right under the Act is a definite claim. In H arish C. Brahmbha tt v. Oil and Natu r al Gas Commi ssion 83, under the circumstances, it is not a case in which the interim relief is required to be extended any more. However, considering the fact that the matter is pending before this Court since 1986 and since 1986, the petitioners have been continued in service by virtue of the interim order of this Court as well as they were paid Rs.150/- per day since the order of the learned single Judge in Civil Application No. 7111 of 2000, in my view, the interim reliefs granted earlier are required to be continued for the purpose of enabling the petitioners to take appropriate recourse to law. In the facts and circumstances of the case, the interim reliefs, which are granted earlier, are ordered to be continued up to 16th January, 2004. In case of Jaswant Rai B er i an d Ors. v. State Of Pun jab An d Anr .84, if it is open to the Government to depart from the advice tendered by the Advisory Committee, then Section 5(2) contravenes Article 19(1)(g) of the Constitution. This matter, however, has been authoritatively decided by the Supreme Court in Bij ay Cotton M il ls Ltd . v. State of A jm er 85, wherein it has been held that the Government's power to fix minimum wages is not in contravention of Article 19(1) (g) of the Constitution and that it is protected by Article 19(6). In Crow n Al uminium Works
v. Their Wor kmen 86, has observed that there is, however, one
principle which admits of no exceptions. No industry has a right to exist unless it is able to pay its workmen at least a bare minimum wage. It is quite likely that in under-developed countries where unemployment prevails on a very large scale, unorganised labour may be available on starvation wages; but the employment of labour on starvation wages cannot be encouraged or favoured in a modern democratic welfare State. In West Coast E mpl oyer s' F eder ation v. State Of K er ala and Or s87, the award I. D. No. 17 of 1957 would not be superseded by the notification, although it purports to supersede the wage rates fixed under all the awards, it is only necessary to say, that the award in I. D. No. 83 84
on 23 December, 2003 AIR 1958 P H 425
85
Ibid 47
86
AIR 1958 SC 30 (C) (1967) ILLJ 756 Ker
87
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17 of 1957 applies only to some of the tile factories in the Feroka area and that no employer from that area has come to this Court to challenge the notification. Petitioners 1 to 3 cannot ventilate the individual grievances of their members, the decision in Th e Per umbavoor 88
M er chant' s Association v. The Pemmbavoor M un icipal Counci l , and the 4th petitioner
has no tile factory in the Feroke area. So, the argument that under Section 3 (2A) the direction in Ext. P-1 Notification that the rates of wages fixed in all awards will be superseded is bad does not arise for consideration. 89 In Kisha n L al & Sons v. Govt. of. Nct. o f D elh i & Ors , The petitioner is accordingly
directed to make payment of wages to the respondent no. 3 at the rate, whichever is higher, between the last drawn wages and the minimum wages which are notified by the authorities from time to time. The arrears of the wages at this rate shall be paid to the respondent/workman at the address disclosed in his affidavit filed in support of the application within a period of four weeks from today. Month by month wages in terms of the order passed today shall be paid to the workman at the same address on or before the 7th of each english calender month. 90
In Sanj it Roy v. State of Raj asth an , it has been observed that in so far as the Rajasthan Famine Relief Works Employees (Exemption from Labour Laws) Act exempts and excludes the applicability of the Minimum Wages Act in relation to workmen employed in famine relief work and permits payment less than the Minimum Wages, it offends Article 23 of the Constitution and is ultra vires. 91
In Th e M anagement v. The Plantation Off icer , the authority had found that 'B' and 'C' divisions are one and the same plantation and covered by the provisions of the Plantations Labour Act and that the workers have received minimum wages notified for the plantation labours, this court is not inclined to interfere with the impugned order. Hence the writ petition will stand dismissed. No costs. Consequently connected miscellaneous petition stands closed. 30.01.2012. In Elisamma v. The Corporation of M adras92, Inasmuch the Appellants/Workers have not been provided with the work from 4.2.2000, the refusal of work by the 1st Respondent/ 88
1966 Ker LJ 587 CM No. 48/2005 in WRIT PETITION (CIVIL) NO. 2211/1998 90 AIR 1983 SC 328 91 W.P.No.5715 of 2009; on 30 January, 2012 92 W.A.No.3560 of 2002; on 11 May, 2011 89
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Corporation of Madras to the Appellants/Petitioners is not a valid one in the eye of law and accordingly, the Writ Appeal filed by the Appellants/Workers is allowed by this Court in the interest of justice, by setting aside the order of the Learned Single Judge passed in W.P.No.3206 of 2000 dated 28.3.2002 as well as the subsequent order dated 5.7.2002 passed under the caption 'Being Spoken to'. Consequently, W.P.No.3206 of 2000 filed by the Appellants/ Petitioners, in seeking a Writ of Mandamus to continue to employ them as Sanitary Workers according to law, is allowed by this Court to prevent an aberration of justice and to promote substantial cause of justice. There shall be no order as to costs. Further, the 1st Respondent/Corporation of Madras is directed to provide employment to the Appellants/Workers within a period of eight weeks from the date of receipt of copy of this Judgment. The definitions of “employees” and “employer” are quite wide. Person who engages workers 93
through another like a contractor would also be an employer . It was held in Nathu Ram 94
Shukla v. State of M adhya Pr adesh
that if minimum wages have not been fixed for any
branch of work of any scheduled employment, the person employing workers in such branch is not an employer with the meaning of the Act. Similarly, in case of L oknat h Nathu Lal v. 95
State of M adhya Pr adesh , an out-worker who prepared goods at his residence, and then
supplied them to his employer was held as employee for the purpose of this Act.
93 94 95
(1998 LLJ I Bom. 629) A.I.R. 1960 M.P. 174 A.I.R. 1960 M.P. 181
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Recent Initiatives
Based on the recommendations of the Minimum Wages Advisory Board (MWAB) in its meeting held on 22.01.2008 and 26.06.2008, the Ministry of Labour & Employment has issued the Final Notification in the Gazette of India (Extra Ordinary) fixing the minimum rates of wages for workers employed in the scheduled employments
“Employment of Sweeping and Cleaning” in the Central sphere at Rs.120/-, Rs. 150/- and Rs.180/- per day and for “Employment of Watch and Ward” a. without arms at Rs.120/-, Rs.150/- and Rs.180/- per day and b. with arms at Rs.140/-, Rs.170/- and Rs.200/- per day for Area „C‟, „B‟ and „A‟ respectively and the Final Notifications in respect of revision of minimum rates of wages for workers engaged in the scheduled employments of “Construction” and “Loading and Unloading” in the Central sphere at Rs.120/-, Rs.150/- and Rs.180/- per day for unskilled workers to Rs.200/-, Rs.220/- and Rs.240/- per day for highly skilled workers in Area „C‟,‟B‟ and „A‟ respectively and for workers engaged in “Non-Coal Mines” in the Central sphere at Rs.120/per day for unskilled Workers (Above Ground) to Rs.240/- per day for highly skilled workers (Below Ground).
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Amendment in the Minimum Wages Act, 1948 There should be one single statutory National Floor Level Minimum Wage (NFLMW) for the entire nation below which wages in any employment cannot be paid. A single wage rate by its very simplicity will be easy to understand and implement. Standardization of minimum wages under NFLMW should also reduce procedural complications in implementation of the law and enhance compliance. The Minimum Wages Act defines wages to include basic, DA and HRA. Some employers split the consolidated wages announced by the Government into these heads so that they do not have to pay PF etc on the full Minimum Wage announced by the Government. They also then do not pay Gratuity on the HRA component. One of the following solutions can be considered:
¾ Wage in Minimum Wages Act to be defined as basic and DA only.
¾ Section 20 to be amended to provide for the recovery of the amount determined by the Authority, as arrears of land revenue as is done in Payment of Gratuity Act so that the Authority does not have to file an application before the Court.
¾ Section 22 B (a) – Filing of claim application and its being upheld should not be a condition precedent to the initiation of prosecution proceedings. ¾ The Minimum Wages Act should also provide for Payment of Wages by remittance in bank account of the employee.
Conclusion To sum up, effective implementation of the Minimum Wages Act, 1948, including that of the revision of minimum wages at national floor level minimum wage or higher; which primarily falls in the State sphere, is assiduously pursued by us through discussion, writing letters, personal interaction and visits to States, including the North-Eastern States. The State Governments are regularly asked to fix and revise minimum wages in scheduled employments to be at least at par with National Floor Level Minimum Wage of Rs.80/- per day as at present. What they actually do is in keeping with their respective paying capacity.
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Bibliography
1. Labour and Industrial Laws- S.N. Misra(25th edition) central law publishing 2. An introduction to labour and industrial law- Avtar Singh (2nd edition) Lexis Nexis Publication 3. A study of Industrial Law- G.M. Kothari (5th edition) lexis nexis publication 4. http://labour.nic.in/upload/uploadfiles/files/Divisions/wage_cell/4fd9beba b42a0mwact.pdf 5. https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd= 7&cad=rja&uact=8&ved=0CFAQFjAG&url=http%3A%2F%2Fwww.sli deshare.net%2Ftanujpoddar%2Fminimum-wages-act-19485843728&ei=PKU5U8W5BMn9rAfc4DoAQ&usg=AFQjCNGwRxgr__5yzbXfh9qPuwEYsBtd0w&bvm=bv.6 3808443,d.bmk 6. http://karunadu.gov.in/karnatakachildlabour/ChildLaborLawsRights/Mini mum%20wages%20act-1948.pdf 7. https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd= 12&cad=rja&uact=8&ved=0CC8QFjABOAo&url=http%3A%2F%2Fpbl abour.gov.in%2Fpdf%2Fnotifications%2Fnc08_minimum_wages_act_19 48.pdf&ei=ZaU5U_rEFMGKrQf3sIDAAQ&usg=AFQjCNFQ3UQy8bkF THU3VvC9LyL6hUXTCw&bvm=bv.63808443,d.bmk
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