Minimum wages in India - Types, Industries, and Penalties

Hello Everyone, in this post we will look into the Minimum Wages in India, the types of labour, industries, exclusions as well as penalties.

In this post we cover the topics as mentioned below:

What is the Minimum Wages Act?
Different types of labour
Industries
Calculation of Minimum Wages Rates
Exclusions
Offences and penalties
Rates of Minimum Wages for States

What is the Minimum Wages Act?

This is an Act of Parliament concerning Indian labour law that sets the minimum wages which must be paid to skilled and unskilled labours.

When India introduced this act in 1948, it gave both the Central Government and State Government higher authority to fix wages.

Thus, this act became legally non-binding but statutory. If the payment of wages to a worker is below the accepted minimum wage rate, then it is termed forced labour.

A fair wage is a level of wage that not just maintains a level of employment but also seeks to increase it keeping in mind the industry’s capacity to pay.

The concept of a minimum wage gives a guarantee of basic livelihood and preserves efficiency. It also provides for education, medical requirements, and some level of comfort to the worker.

Latest update for the state of Telangana and Hyderabad
The commissioner of labour, Telangana, Hyderabad & the competent authority under the Minimum Wages Act, 1948, has declared the average state industrial workers Consumer Price Index Number for the half year ending Dec, 2021 as follows :-
Part-I ( Industrial workers): Increase of 32 points from 1595 to 1627
Part-II ( Agricultural Workers): Increase of 34 points from 1194 to 1228
These are applicable for the period from 01.04.2022 to 30.09.2022 in various scheduled Employment notified under the Minimum Wages Act, 1948, in the state of Telangana for the purpose of calculation of Various Dearness Allowances.

For the latest rates of other states, visit – Minimum wages in India part-2.

Different types of labour

Unskilled
Semi-skilled
Skilled

(i) Unskilled:

The one who does simple duties, which only requires little or no previous experience. It is necessary to have familiarity with the working environment.

His work thus may require in addition to physical exertion familiarity with a variety of articles or goods.

(ii) Semi-skilled:

A semi-skilled worker has a defined routine nature where he does not need much of the judgment, skill, and but for the proper discharge of duties given to him.

The important decisions are generally made by others. His work is limited to the performance of routine operations of limited scope.

(iii) Skilled:

A skilled employee is capable of working efficiently of practising independent judgment and doing his duties responsibly.

He must have a thorough knowledge of the trade, craft, or industry in which he is employed.

Industries

The rate of wages within the scheduled employments is different across states, sectors, skills, regions, and occupations as a result of the distinction in cost of living, regional industries capability to pay, consumption patterns, etc.

Hence, there is no single uniform minimum wage rate across the country and the structure has now become very complex.

Calculation of Minimum Wages Rates –

Conversion of the monthly rate of wages into daily rates of wages and vice-versa shall be worked out by dividing the monthly rates by 26 and by multiplying the daily rates by 26.
The proposed minimum wages rates include the remuneration payable to the employee in respect of the day of the rest in every period of seven days.

Now let us look into the State of Karnataka – Chemical Industry (Zone-1) for example:

Chemical Industry (Zone-1)
Skill Level	Basic per Day (in Rs.)	VDA per Day (in Rs.)	Total per Day (in Rs.)
High skilled worker	593.21	26.26	619.47
Skilled worker	539.28	26.26	565.54
Semi-skilled worker	490.25	26.26	516.51
Unskilled worker	445.69	26.26	471.95
Office Staff Accountant, Manager	631.00	26.26	657.26
Office boy peon, Servant / Watchman / Lift operator, Attender, Helper, Mazdoor, and Equivalent Job	445.69	26.26	471.95
Driver	539.28	26.26	565.54

Exclusions

Workers: The wages given to disabled people and those payable to a dependent family member of the employer.
Industries: Unscheduled industries are generally excluded. But with every revision, a state can add a minimum wage for an occupation or specify it for a sector.

Offences and penalties

Violation of the Minimum Wages Act like on the working hours and others come under the Central Act get a penalty of five years of imprisonment and Rs. 10,000 fine under section Act 22.

Any agreement whereby an employee reduces his right under this act shall be null and void.

Rates of Minimum Wages for Bihar

Class of employment	Basic Per Day	Basic Per Month	VDA Per Day	VDA Per Month	Total Per Day	Total Per Month
Unskilled	366	9516.00	7.00	182.00	373.00	9698.00
Semi-skilled	380	9880.00	8.00	208.00	388.00	10088.00
Skilled	463	12038.00	9.00	234.00	472.00	12272.00
Highly skilled	566	14716.00	11.00	286.00	577.00	15002.00
Supervisory / Clerical	403	10478.00	8.08	210.00	411.00	10688.00

Note:

The minimum rates of wages above are based on the All-India Average Consumer Price Index Number (1960 -100) 8163.00 which is the average of the indices for the Second half of the year, 2021 (July-December).
Minimum wages have been revised on the suggestion made by the minimum wage advisory board on 23.03.2022 by adding 15% added after the 34% neutralization in the consumer price index, so that actual wages may increase.
An employee shall for the work done on the weekly day of rest be entitled to overtime payment as the prescribed in rule 25 of the Bihar Minimum Wages Rule, 1951.
Men and Women workers shall get the same rates of wages for the same work or a similar nature.
This shall come into force with effect from the date of September 01,2022.