Mr. Higgin defined the concept of the minimum wage as the lowest wage amount paid to an unskilled worker who is a human living in a civilized society. The minimum wage in India till 2018 was Rs. 375/day which also meant that every unskilled labor should at least get Rs. 9750/ month. It should be such that the worker is able to fulfill his basic necessities adequately. Laws and acts have been made to ensure the payment of minimum wage so that no employee is exploited, poverty is reduced, and the standard of living also improves. Critics consider this economically taxing for business.
In this glossary, let's read more about the minimum wages act and rates and how they changed over the years-
- Minimum Wage Meaning
- Minimum Wages Act
- Minimum Wages Rates
- Why does India have no National Minimum Wage Rate?
- What happens in case of non-compliance?
Minimum Wage Meaning
As the word suggests, the minimum wage is the wage amount that a contract-based/ hourly worker, labor, is entitled to receive per state or national laws.
Minimum Wages Act(MWA)
Let’s look at the years when the MWA commenced in India and its updates separately, below-
- MWA 1948- This year, the Parliament of India enacted and commenced this act on 15 March and cited it as act no.11 of 1948. This was made to set the minimum wages for unskilled and skilled workers to prevent the exploitation of unorganized labor.
- MWA 2020- In 2020, the act was updated two times, once in April and then in October. For instance, the rate for variable dearness allowance was updated in the Agriculture department as 368-445 per day for unskilled and semi-skilled workers.
- MWA 2021- In April 2021, the act was iterated again, making the minimum between 618 to 681 per day.
Minimum Wage Rates
The minimum wage rates keep fluctuating depending on the update on the act for it. There have been three significant changes in the act in 1948, 202, and 2021. Minimum wage rates 2021 for unskilled and skilled workers is 618 and 681 per day.
Why does India have no National Minimum Wage Rate?
As per the minimum wage act 2019, all industry workers are entitled to receive a minimum wage fixed by the state government of their respective state. Before that, only workers from up to 40 industries were allowed to have received minimum wage. However, in January 2021, the labor union did a nationwide strike to increase workers’ minimum compensation. So, in April 2021, the it rose from INR 250 to INR 350-400. But, with the economic slowdown, reverse migration, and lockdown in 2020, there had been no increase in the minimum wage rate.
What happens in case of non-compliance?
According to the new wage code, the government has appointed inspectors and facilitators to inspect and ensure the companies are compliant with the code. The penalty in case the company is found not to be paying the minimum wages is estimated based on the nature of the offense. However, the maximum penalty is a fine of up to 1,00,000 INR and/ or imprisonment for three months.
If laborers file a complaint and the complaint is found genuine upon inspection, the company would be penalized. To file a complaint, the one worker or workers collectively can help a lawyer or official of a registered trade union.
To save your company from getting penalized, you can mention the minimum amount in your payroll management software.