Minimum Wages under the Code on Wages

A minimum wage is the legally prescribed lowest wage that an employer must pay an employee. The Code on Wages, 2019 requires the appropriate government to fix minimum wage rates, while a floor wage fixed by the Central Government provides a lower limit for those rates.

Coverage and responsibility for fixation

The Code extends minimum-wage protection beyond the scheduled employments covered by the earlier minimum-wages law. Its framework covers employees across organised and unorganised sectors.

• Under Section 6, the appropriate government must fix the minimum rates of wages payable to employees.
• The appropriate government is the Central Government for establishments and activities assigned to its jurisdiction by the Code; it is the State Government for other establishments.
• Under Section 5, an employer cannot pay an employee less than the minimum rate notified by the appropriate government.

Criteria and forms of minimum wages

The Code permits differentiated rates rather than requiring one identical minimum wage for every worker throughout India.

• Under Section 6, fixation must primarily consider workers' skill categories, such as unskilled, semi-skilled, skilled and highly skilled, or the geographical area, or both.
• The government may additionally consider the arduousness of work, including difficult temperature or humidity conditions, hazardous occupations and underground work.
• Minimum rates may be fixed for time work or piece work; for employees doing piece work, a minimum time rate must secure a minimum wage on a time-work basis.
• Rates may be expressed by the hour, day or month, with the manner of calculation prescribed.

Procedure for fixation and revision

Under Section 8, the appropriate government can use either of two procedures to fix or revise minimum wages.

• Under the committee method, committees conduct inquiries and recommend rates for fixation or revision.
• Under the notification method, proposed rates are published for affected persons to submit representations, allowing at least two months from the notification date.
• The government considers the recommendations or representations before notifying the rates; when revising through the notification method, it must also consult the concerned Advisory Board.
• Minimum wage rates must ordinarily be reviewed or revised at intervals not exceeding five years.

Relationship with the floor wage

Under Section 9, the Central Government fixes a floor wage, taking account of workers' minimum living standards. Different floor wages may be fixed for different geographical areas.

• Minimum wage rates fixed by the appropriate government cannot fall below the floor wage.
• If existing minimum rates exceed the floor wage, the appropriate government cannot reduce them to that floor.