Minimum Wages is a fundamental concept and a statutory provision in Indian labour law, historically governed by the Minimum Wages Act, 1948 (Act No. 11 of 1948). The Act was created to prevent the exploitation of workers by ensuring they receive a baseline remuneration for their labour. Its origin lies in the push for fair pay during the 1930s and 1940s, culminating in the Act's commencement on March 15, 1948. The problem it solved was the payment of inadequate wages, especially in vulnerable, unorganised sectors.
The mechanism of the original Act, which applied to "scheduled employments," empowered the "appropriate government" (Central or State) to fix and revise minimum wage rates. Section 3 of the Act mandated the fixing of minimum wages, which could be based on time or piece work, and categorised workers as skilled, semi-skilled, or unskilled. The wages were to be reviewed and revised at intervals not exceeding five years. A key provision was the inclusion of a Variable Dearness Allowance (VDA), adjusted to the Consumer Price Index, to protect the real value of wages against inflation. The Act also connected to the Payment of Wages Act, 1936, and mandated payment for overtime at a rate not less than double the normal rate.
The Minimum Wages Act, 1948, has been repealed and replaced by the Code on Wages, 2019 (Act No. 29 of 2019). The core concept of a minimum wage remains, but the Code introduced significant changes. The Code on Wages, 2019, consolidates four laws, including the Minimum Wages Act, 1948, and the Equal Remuneration Act, 1976. The most substantial change is the universalisation of minimum wages, extending coverage to all employees in every sector, both organised and unorganised, whereas the old Act only covered scheduled employments. Furthermore, the Code introduces the concept of a National Floor Wage, to be fixed by the Central Government, below which no State can set its minimum wage. The requirement for the appropriate government to review and revise minimum wages at intervals not exceeding five years has been retained.