Constitutional Validity of Minimum Wages Act 

The constitutional validity of Minimum Wages Act has been a matter of debate.

The Minimum Wages Act of 1948 holds a pivotal place in India’s labour legislation landscape. Enacted with the objective of ensuring a decent livelihood for workers, the Act establishes the legal framework for determining and implementing minimum wage standards. 

By focusing on both social welfare and economic growth, the Act addresses the essential rights of workers while also contributing to the nation’s overall development. 

What is the Minimum Wages Act 1948?

The Minimum Wages Act of 1948 is a legal statute that empowers both the Central and State Governments in India to establish and enforce minimum wage standards for various types of employment. This Act outlines the procedures and guidelines for determining minimum wages, ensuring fair compensation for workers in different industries. It is a labour law in India.

The Act differentiates between employments falling under the Central Government’s jurisdiction and those under the State Government, specifying which authority is responsible for setting minimum wage rates in different job categories. 

Need for Minimum Wages Act 

In India, the minimum wages set for workers are often inadequate to cover even basic needs like meals and housing. Establishing a minimum wage serves two vital purposes:

1. Social Goal: Ensuring a minimum standard of living for workers is crucial to combating poverty.

2. Economic Goal: The minimum wage should motivate employees to perform well, boosting the economy and enhancing people’s lives.

For effective change, Indian workers, trade unions and labour groups should actively support minimum wage legislation. Additionally, state labour departments should set fair minimum rates to secure unorganised sector workers’ livelihoods. Ignorance and illiteracy are factors that enable worker exploitation, which can be countered through education on legal rights and benefits, facilitated by trade unions and NGOs.

The Minimum Wages Act of 1948 was enacted by the Indian Legislature to address worker pay concerns, aiming to cover basic needs and decent living standards. The Act empowers both the federal and state governments to set minimum wages and includes provisions for wage adjustments based on essential commodity price changes.

To ensure employees’ rights, the Act establishes advisory committees to resolve wage disputes and appoints a Labor Commissioner to hear cases related to inadequate minimum wage payment. The Act also imposes penalties on employers who violate its rules.

This Act is significant as it promotes social justice, provides legal minimum wage rates, safeguards employee rights and prevents employer exploitation in scheduled employment.

Features of the Act

The Minimum Wage Act is applicable to workplaces with over 1000 employees and addresses issues related to hourly pay rates, time and piece rates. The Act sets minimum rates of pay for basic needs and establishes regulations for hours, overtime and weekly holidays. Violations can lead to a maximum jail term of six months. The Act is seen as a significant development in labour law, with three categories of earnings covered: minimum salary, fair pay and living wages. 

The Act doesn’t formally define “minimum wage” but ensures it covers basic needs, healthcare and education. Fair pay is consistently higher, accounting for an employee’s family needs. Both fair pay and minimum wage are never lower than a livable wage, which extends beyond necessities to include social, insurance and educational needs. Distinguishing between these wages can be challenging, as they can change based on economic conditions. This was noted in the Crown Aluminium Works v. Their Workmen case.

What is the Constitutional Validity of Minimum Wages Act 1948?

The constitutionality of Minimum Wages Act 1948 was challenged in court cases. The judiciary played a key role in establishing its constitutionality, affirming that the Act safeguards workers’ interests, ensuring access to essentials like food, shelter, clothing, education and medical aid. It was emphasised that paying below the minimum wage amounts to forced labour.

Minimum Wages Act is Not violative of Article 19 of the Constitution

The first challenge to the constitutional validity of the Minimum Wages Act, 1948 arose in the case of Bijay Cotton Mills Ltd. v. The State of Ajmer, 1954. In this matter, a dispute emerged between a company and its workers concerning wage improvements. The company contended that the Act’s provisions were unlawful, asserting that they unreasonably restricted employers. The company claimed that these provisions hindered the resumption of trade or business unless minimum wages were paid to workers.

 The company also argued that the rights of employees were curtailed, as they couldn’t work in a trade or industry unless mutually agreed terms existed between them and their employers. Thus, the company alleged that this Act violated Article 19(1)(g) of the Indian Constitution, which safeguards trade and business freedom.

However, the Supreme Court of India ruled that the Act’s provisions were not unreasonable and were allowed under Article 19 of the Indian Constitution. The Court highlighted that these provisions were enacted for the public’s benefit, in line with the Directive Principles of State Policy outlined in Article 43 of the Constitution. Although these provisions might pose challenges for employers in conducting or initiating businesses, they were established to safeguard the broader public interest. As such, the Act could not be considered unreasonable or invalidated on these grounds.

Similarly, in the case of Bhikusa Yamasa Kshatriya v. Sangamner Akola Bidi Kamgar Union, 1958, the Bombay High Court determined that the establishment of committees and Advisory Boards under the Minimum Wages Act, 1948 did not violate the legal stipulations of the enacted legislation. Upon thorough scrutiny of the Act, it was observed that Section 3(3)(iv) of the Act did not conflict with Article 19(1) of the Indian Constitution, nor did it infringe upon the Constitution’s guarantee of equal protection under the law. Hence, the Minimum Wages Act is constitutionally valid with respect to Article 19.

Minimum Wages Act is Not violative of Article 14 of the Constitution

Minimum Wages Act is not violative of Article 14 of the Constitution which states equality before the law. 

India’s Union Labour and Employment Minister, Shri Mallikarjuna Kharage, highlighted that the variation in minimum wages among different states stems from diverse socio-economic conditions, commodity prices, paying capacity, productivity and more. These factors influence the wage rates paid to workers in specific states. 

In the case of N.M. Wadia Charitable Hospital v. State of Maharashtra, 1986, the Bombay High Court ruled that setting distinct minimum wage rates for various localities is in accordance with the Constitution and the nation’s labour laws. As such, establishing different minimum wage rates for different regions is not discriminatory and does not violate the principles of the Constitution.

Hence, the Minimum Wages Act is constitutionally valid with respect to Article 14.

Minimum Wages Act is Not Violative of Article 43

The importance of providing labourers with wages that cover not only basic survival but also uphold health and dignity is a matter that’s difficult to challenge. This aligns with a directive principle of State policy found in Article 43 of our Constitution. 

Employers shouldn’t raise concerns if they are required to pay minimum wages to their labourers, even if these labourers, due to their financial constraints and vulnerability, might agree to work for lower wages. This perspective was upheld in the case of Bijay Cotton Mills Ltd v/s The State Of Ajmer.

Present Status of Constitutional Validity of Minimum Wages Act 1948? 

The Minimum Wages Act 1948 is constitutionally valid.

Despite challenges, the Act has been found constitutionally sound and in line with the principles of the Indian Constitution. The Act’s provisions have been recognised as serving the public interest by ensuring fair wages for workers, promoting their well-being and safeguarding their basic rights. 

The Act’s alignment with the Directive Principles of State Policy, particularly Article 43, which emphasises the importance of securing living wages for labourers, further supports its constitutionality. Moreover, the Act has been held not to violate fundamental rights such as Article 19 (freedom of trade and business) and Article 14 (equality before the law) of the Indian Constitution. 

Courts have considered factors such as diverse socio-economic conditions and local variations in setting minimum wages, finding them to be reasonable and non-discriminatory. Overall, the Act’s constitutionality has been upheld based on its contribution to the general welfare and the betterment of workers’ conditions.

Conclusion

The Constitutional Validity of Minimum Wages Act is upheld through judicial affirmation, aligning with the Indian Constitution’s principles. The Act addresses social and economic goals by ensuring a minimal standard of living for workers and promoting productivity. It empowers federal and state governments to set minimum wages, protects workers’ rights through dispute resolution mechanisms and penalises non-compliance. The Act’s enactment supports social justice, prevents exploitation and contributes to equitable labour practices.