A
minimum wage is the lowest remuneration that employers may legally pay to
workers or it is the price floor below which workers may not sell their labour.
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 labour in other industries. As far
back as 1928, the International Labour Conference of International Labour
Organization, at Geneva, adopted a draft convention on minimum wages 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 exist for the effective regulation of wages and where wages are
exceptionally low. Also, at the Preparatory Asian Regional Labour Conference of
International Labour Organisation held at New Delhi in 1947 and then at the 3rd
session of the Asian Regional Labour Conference, it was approved that every
effort should be made to improve wage standards in industries and occupations
in Asian Countries, where they are still low. Thus, the need of a 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 demobilized personnel
seeking employment in industries.
The
justification for statutory fixation of minimum wage is obvious. Such
provisions which exist in more advanced countries are even necessary in India,
where workers’ organizations are yet poorly developed and the workers’
bargaining power is consequently poor.
To
provide for machinery for fixing and revision of minimum wages a draft Bill was
prepared and discussed at the 7th session of the Indian Labour Conference in
November, 1945. Thereupon the Minimum Wages Bill was introduced in the Central
Legislative Assembly. The Minimum Wages Bill having been passed by the
Legislature received the assent on 15th March, 1948. It came on the Statute
Book as the Minimum Wages Act, 1948.
The
Act provides for fixation by the appropriate Governments of minimum wages for
employments covered by Schedule to the Act. The Central Government is the
appropriate Government in respect of 45 scheduled employments in the Central
Sphere. The minimum wages fixed for Central sphere are applicable to the
scheduled employments in the establishments under the authority of Central
Government, railway administrations, mines, oil-fields, major ports or any
corporation established by a Central Act. Employments other than the scheduled
employment for Central Sphere come under the purview of the State Government
and accordingly State Government wages are applicable in such employments. The
minimum wages for Central Sphere are revised from time to time based on the
increase in Consumer Price Index effective from April and October.
According to
Section 3(1)(b) of the Minimum Wages Act, 1948, “the appropriate government
shall review at such intervals, as it may think fit, such intervals not
exceeding five years, the minimum rates of wages so fixed and revise the minimum
rates if necessary.
The
norms recommended by the Indian Labour Conference, in 1957, fox fixing the
minimum wages are: (a) consumption units for one wage earner; (b) minimum food
requirements of 2700 calories per average Indian adult; (c) clothing requirements
of 72 yards per annum per family; (d) rent corresponding to the minimum area
provided for under Government’s Industrial Housing Scheme; and (e) fuel,
lighting and other miscellaneous items of expenditure to constitute 20% of the
total minimum wage.
In
1991, the Hon’ble Supreme Court delivered a historic judgement and directed
that children’s education, medical requirement, minimum recreation including
festivals/ceremonies, provision for old age, marriage etc. should further
constitute 25% of the minimum wage and be used as a guide in fixation of
minimum wage. The Act envisages appointment of an Advisory Board, by the
appropriate Government, for the purpose of advising the appropriate Government
in the matter of fixing and revising minimum rates of wages.
The Central
Government revises the wages in the scheduled employments from time to time in
accordance with the provisions of the Minimum Wages Act, 1948. Draft
Notifications for all the Scheduled Employments in the Central Sphere were
issued on 1st September, 2016 simultaneously, in fact for the first time. The
basic rate of minimum wages for an unskilled worker in the scheduled employment
other than agriculture has been proposed at Rs.350 in Area ‘C’ from the current
minimum wage (basic wage + variable dearness allowance) of Rs.246 resulting in
an increase of about 42%. The basic rate of minimum wages for an unskilled
worker in the scheduled employment “agriculture”
has been proposed at Rs.300 in Area ‘C’ from the current minimum wage (basic
wage + variable dearness allowance) of Rs.211 resulting in an increase of about
42%.
The
proposed revision in the rates of basic minimum wages would indeed provide much
needed solace to the labour fraternity.
Bonus
Bonus
payment is an extra payment given for doing one’s job well also known as performance-related
pay or pay for performance.
The
practice of paying bonus in India appears to have originated during First World
War when certain textile mills granted 10% of wages as war bonus to their
workers in 1917. In certain cases of industrial disputes demand for payment of
bonus was also included. In 1950, the Full Bench of the Labour Appellate
Tribunal evolved a formula for determination of bonus. A plea was made to raise
that formula in 1959. At the second and third meetings of the eighteenth
Session of Standing Labour Committee (G.O.I) held in New Delhi in March/ April
1960, it was agreed that a Commission be appointed to go into the question of
bonus and evolve suitable norms. A Tripartite Commission was set up by the
Government of India to consider in a comprehensive manner, the question of
payment of bonus based on profits to employees employed in establishments and
to make recommendations to the Government. The Government of India accepted the
recommendations of the Commission subject to certain modifications. To
implement these recommendations the Payment of Bonus Act, 1965 was enacted,
which came into force on 25-9-1965.
The objective
of the Payment of Bonus Act, 1965 is to provide for the payment of bonus to the
persons employed in certain establishments on the basis of profits or on the
basis of production or productivity and for matter connected therewith.
It
applies to (i) Every Factory; and (ii) Every other establishment in which 20 or
more persons are employed on any day during an accounting year subject to the
exemptions under section 32. Every employee shall be entitled to be paid by his
employer in an accounting year, bonus, in accordance with the provisions of
this Act, provided he has worked in the establishment for not less than thirty
working days in that year. While the minimum bonus is 8.33% of the salary or wage
earned by the employee during the accounting year, the maximum bonus is 20% of
such salary or wage.
Two ceilings are available under the
said Act generally known as eligibility limit and calculation ceiling
respectively. Clause 13 of Section 2 of Payment of Bonus Act, 1965 defines an
employee based on salary or wage per mensem. This is usually taken as the
“eligibility limit” for computation of bonus. Similarly, Section 12 of the
Payment of Bonus Act, 1965 provides for calculation of bonus of an employee
based on salary or wage per mensem. This is known as “calculation ceiling”.
The two
ceilings are revised from time to time to keep pace with the price rise and
increase in the salary structure. At present, the calculation ceiling has been
enhanced to Rs.7000 or the minimum wage for the scheduled employment, as fixed
by the appropriate Government, whichever is higher and the eligibility limit has
been enhanced to Rs.21,000/-.
Due
to this revision, additional 55 lakh workers would be benefited. This would
indeed, be a good gesture on the part of the Government towards the labour
fraternity.
Source
: PIB
