Minimum Wages

Understanding Minimum Wage Regulations and Compliance in India

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Search for minimum wage information by state. Data is sourced from the Saralweb Minimum Wages Project.

Overview

The Minimum Wages Act, 1948 is a crucial piece of legislation in India that ensures workers receive fair remuneration for their labor. This act empowers both the Central and State Governments to fix minimum wages for different categories of workers in various industries.

Minimum labour wages in India are determined under Minimum wages Act, 1948 and are determined by considering 5 factors as per the recommendations of 15th Labour Conference:

  1. The cost of three consumption units- husband, wife and two children for one earner. Income from women and children should be ignored
  2. Satisfy the minimum food requirement of 2700 calories per person
  3. Clothing requirement of 72 yards for a family annually
  4. Rent of the minimum area as specified by Government's Industrial Housing Scheme
  5. 20% of minimum wage should be the cost of fuel and miscellaneous items of expenditure

Currently, minimum wage rates in India are defined for nearly 2,000 different types of jobs for unskilled workers and over 400 categories of employment, with a minimum daily wage for each type of job. The monthly minimum wage calculation includes the variable dearness allowance (VDA) component, which accounts for inflationary trends, that is, the increase or decrease in the Consumer Price Index (CPI), and where applicable, the house rent allowance (HRA). The calculation of the minimum wage factors in the skill-level of the worker and the nature of their work. Broadly, workers in India are categorized as unskilled, semi-skilled, skilled, and highly skilled.

Key Provisions

Wage Fixation

Minimum wages are fixed by the appropriate government (Central or State) for different scheduled employments, taking into account factors such as skill level, location, and cost of living.

Payment Obligations

Employers must pay wages not less than the minimum wage rate fixed for the scheduled employment. Wages include basic wage and allowances, but exclude overtime, bonus, and other special payments.

Record Keeping

Employers must maintain registers and records of wages paid, work performed, and other relevant details as prescribed under the Act. These records must be available for inspection by authorities.

Minimum Wage Components

Basic Wage

The core component of minimum wage, which must be paid to all workers in a scheduled employment.

Dearness Allowance (DA)

An allowance linked to the cost of living index, adjusted periodically to account for inflation.

Special Allowances

Additional allowances such as house rent allowance, transport allowance, or other benefits as specified.

Upcoming Changes

Code on Wages received the assent of the President of India in September 2020. The code absorbs our Central labour legislations namely the Payment of Wages Act, 1936, the Minimum Wages Act, 1948, the Payment of Bonus Act, 1965 and the Equal Remuneration Act, 1976. The code not only regulated the minimum labour wages in India but also the wages of employees performing managerial and supervisory duties. The minimum wages under the Code of Wages, 2019 will be shared once published.