Introduction
Minimum wage laws are one of the cornerstones of labour welfare legislation in India. They are designed to prevent the exploitation of workers and ensure fair remuneration for their labour. With the evolution of India’s labour law regime—especially under the Code on Wages, 2019—understanding the legal framework of minimum wages is now more important than ever.
This blog explains who is entitled to minimum wages, how they are decided, and the laws applicable, in a simplified yet legally sound manner.
Relevant Laws Governing Minimum Wages in India
1. The Minimum Wages Act, 1948 (Now subsumed under the Code on Wages, 2019)
This Act was the original legislation that empowered Central and State Governments to:
• Fix minimum rates of wages for certain scheduled employments.
• Review and revise these rates periodically.
- Ensure payment and penalize defaults.
2. The Code on Wages, 2019
Effective from August 8, 2019 (notified rules awaited in some states), this code:
• Repeals four key laws:
o Minimum Wages Act, 1948
o Payment of Wages Act, 1936
o Payment of Bonus Act, 1965
o Equal Remuneration Act, 1976
- Extends minimum wage coverage to all employees, not just those in scheduled employment.
- Mandates floor wages by the Central Government, which states must follow.
What Is a Minimum Wage?
A minimum wage is the lowest compensation an employer is legally required to pay to a worker for services rendered. It is not negotiable and cannot be waived off even by mutual agreement.
Under Section 6 of the Code on Wages, 2019, the appropriate Government (Central or State) must fix:
• Time work wage (per hour, day, or month)
• Piece work wage
• Overtime wage
- Different wage rates based on skill level, location, and work type
Who Is Entitled to Minimum Wages?
Under the Code on Wages, every employee in any industry, trade, business, or manufacturing—whether skilled, unskilled, semi-skilled, or highly skilled—is entitled to:
• Minimum wages
• Equal remuneration for same work (as per Section 3 of the Code)
- Timely payment of wages
This includes:
• Daily wage earners
• Contract and outsourced workers
• Casual and part-time workers
• Domestic workers (in states where included)
- Platform or gig workers (if included by State rules)
How Are Minimum Wages Decided?
By Whom:
• Central Government: For sectors like railways, mines, oilfields, ports, etc.
- State Government: For all other employments within the state.
Based on Factors Mentioned in Section 8 of the Code:
• Type of work (skilled/semi-skilled/unskilled)
• Region (urban, rural, metro)
• Cost of living (includes housing, food, education, medical needs)
• Nature of employment (permanent/temporary/seasonal)
Floor Wage [Section 9]:
• The Central Government may fix a floor wage after consulting the Central Advisory Board.
• No state can fix minimum wages lower than the floor wage.
Revision and Updating of Minimum Wages
Under the Code:
• Wages must be revised at intervals not exceeding five years (Section 8).
• Variable Dearness Allowance (VDA) must be adjusted periodically to match inflation trends.
States like Gujarat, Maharashtra, and Tamil Nadu issue bi-annual notifications updating the VDA component.
Enforcement & Penalty for Non-Compliance
Inspection Mechanism (Section 51):
• Labour Inspectors-cum-Facilitators appointed to enforce compliance.
• Digital inspections and record-keeping encouraged.
Penalties (Section 54 & 56):
• Fine up to ₹50,000 for first offence of non-payment.
• Imprisonment up to 3 months for repeated violations.
• Workers can file claims for difference in wages under Section 45.
Difference Between Minimum Wage, Fair Wage, and Living Wage
Definition
Minimum Wage, Legally enforceable floor below which wages cannot fall.
Fair Wage Wage that balances the employer’s paying capacity and worker’s needs.
Living Wage Ideal wage for a decent standard of life (higher than minimum/fair wage).
Landmark Case Laws
• Unichoyi v. State of Kerala (AIR 1962 SC 12)
➤ Upheld constitutionality of minimum wages as a necessary safeguard for workers.
• Bijay Cotton Mills v. State of Ajmer (AIR 1955 SC 33)
➤ Recognized the right of the State to impose minimum wages as reasonable under Article 19(6).
Conclusion
India’s minimum wage laws are now broader, more inclusive, and more enforceable under the Code on Wages, 2019. As both an employer and employee, it is essential to understand these provisions to stay compliant, avoid penalties, and ensure fair treatment at the workplace.
If you’re a business owner, HR head, or a worker needing clarity on wage rights, feel free to connect with our legal experts.
