The Constitutional Validity of The Minimum Wages Act,1948
India introduced the Minimum Wages Act in 1948, giving both the Central government and State government jurisdiction in fixing wages. The act is legally non-binding, but statutory. Payment of wages below the minimum wage rate amounts to forced labour. Wage Boards are set up to review the industry’s capacity to pay and fix minimum wages such that they at least cover a family of four’s requirements of calories, shelter, clothing, education, medical assistance, and entertainment. Under the law, wage rates in scheduled employments differ across states, sectors, skills, regions and occupations owing to difference in costs of living, regional industries' capacity to pay, consumption patterns, etc. Hence, there is no single uniform minimum wage rate across the country and the structure has become overly complex.
(A) The act is not unreasonable:
It can scarcely be disputed that securing of living wages to labourers which ensure not only bare physical subsistence but also the maintenance of health and decency is conducive to the general interest of the public. This is one of the directive principles of the state policy embodied in Article 43 of the constitution.
Individual employers might find it difficult to carry on the business on the basis of minimum wages fixed under the Act but this must be not be the entire premise and reason to strike down the law itself as unreasonable.
“ The restrictions, though they interfere to some extent with the freedom of trade or business guaranteed under Article 19(1)(g) of the constitution, are reasonable and , being imposed on the general interest of the general public, are protected by the terms of the clause (6) of the article 19.” This quote is a part of judgment in the case “ Gulmuhommad Tarasaheb , a bidi factory by its proprietors Shamrao vs State of Bombay, AIR 1962 Bom 97: AIR1955, Sc33:1963, Ker 115: 1964 Tri 32.
An another important judgment that favours and supports the constitutional Valitity of the Minimum Wages Act,1948 is , “ V. Unichonoy vs State of Kerala,1962, SC12. This case raised the same questions which were raised in the case of Gulmuhommad Tarasaheb vs State of Bombay, AIR 1962 Bom 97”., which were , “that , can a state be prevented from making any law, in the interest of general public, where it creates restrictions and interferes to some extent with the freedom of trade or business guaranteed under Article 19(1)(g) , of the Constitution of India, and it was held that , “ Fixation of minimum wages is for preservation of public order , and if no minimum wage is fixed then it shall lead to arbitrariness by the employers and that shall lead to clashes of interest between employer and labour which shall cause friction in society”.
The article 14 of the Indian Constitution which relates to equality before the law, it must be noted that minimum wages are not fixed equally across the whole nation but they vary from occupation to occupation and industry to industry and from place to place.
The case of Uchinoy vs State of Kerala ,1962 SC12, further quotes the following , “ As regards to the procedure for fixing of the minimum wages, the ‘appropriate government’ has undoubtedly been given very large powers , but it has to take into consideration, before fixing wages, the advice of the committee if one is appointed on the representations on proposals made by persons who are likely to be affected thereby. The various provisions constitute an adequate safeguard against any hasty or capricious decision by the ‘appropriate government’. In suitable cases, the ‘appropriate government’ has also been given the power of granting exemptions from the operations of the provisions of the Act. There is no provision undoubtedly, for a further review of the decision of the appropriate government , but that itself would not make the provisions of the act unreasonable”.
(B) The Act doesn't violate Article 14 of the Indian Constitution.
“On a careful examination of the various of the Act and the machinery setup by this Act, Section 3(3)(iv) neither contravene Article 19(1) of the constitution nor does it infringe the equal protection clause of the constitution. the Courts have also held that the constitution of the committees and the Advisory Board did not contravene the statutory provisions in that behalf prescribed by the legislature”,- this was held in the case of ‘Bhikusa Yamasa Kshatriya vs Sangammar Akola Bidi Kamgar Union”, AIR 1963 SC306. Further , as decided in the case “C.B. Boarding & Lodging, Re(1970) II LLJ 403: AIR 1970: SC 2042 : 38 FIR I .” , it added to the above mentioned case that , “... nor the reason that two different procedures are provided for collecting information.” .
(C) Notification fixing different rates of minimum wages for different localities is not discriminatory.
where the fixation of rates of wages and their revision were manifestly preceded by a detailed survey and enquiry and the rates were brought into force after a full consideration of the representations which were made by a section of the employers concerned, it would be difficult in the circumstances to hold that notification which fixed different rates of minimum wages for different localities was not based on intelligent differentia having a rational nexus with the object of the Act, and thereby violated article 14. when the Government issued notification improving upon the existing minimum wages as revised minimum wages disregarding the contrary report of the committee appointed under Section 5-1(a) ; such notification was bad under the law and was to be made inoperative.”.
As pointed out by one of the India’s Union Labour and Employment Minister Shri Mallikarjuna Kharage ;, “The variation of minimum wages between the states is due to differences in socio-economic and agro-climatic conditions, prices of essential commodities, paying capacity, productivity and local conditions influencing the wage rate. The regional disparity in minimum wages is also attributed to the fact that both the Central and the State Governments are the appropriate Governments to fix, revise and enforce minimum wages in Scheduled employments in their respective jurisdictions under the Act”.
Referring the case of “N.M.Wadia Charitable Hospital vs State of Maharashtra , 1993”, it was decided by the Court that – “ Fixing different minimum wages for different localities is permitted under the constitution and under labour laws , hence the question that any provisio of the Minimum Wages Act is in any way against the provisio of constitution is wrong.
The constitution of India accepts the responsibility of the State to create an economic order, in which every citizen finds employment and receives a “fair wage”. This made it necessary to quantify or lay down clear criteria to identify fair wage. Therefore, a Central Advisory Council, in its first session in November 1948, appointed a tripartite Committee on Fair Wages. The committee consisted of representatives of employers, employees, and the Government. Their task was to enquire into and report on the subject of fair wages to the labour.
(D) Sanctity of The Minimum Wage Act
Supreme Court in three separate rulings, has held that non payment of minimum wages is tantamount to ‘forced labour’ prohibited under Article 23 of the Constitution. The Supreme Court holds that ‘forced labour’ may arise in several ways, including “compulsion arising from hunger and poverty, want and destitution”. In Sanjit Roy Vs. State of Rajasthan (1983), the Supreme Court held that the Exemption Act in so far as it excluded the applicability of the Minimum Wages Act 1948 to the workmen employed in famine relief work is “clearly violative” of Article 23. Thus even public works ostensibly initiated by the government for the sole purpose of providing employment are subject to the Minimum Wage Act.
Drawing on the Supreme Court rulings, Andhra High Court set aside the Government of India (GoI) notification mandating that prevailing state minimum wage be paid. This has been underscored in the legal opinion provided by Additional Solicitor General, Ms. Indira Jaising, to the Central Employment Guarantee Council (CEGC) Working Group on Wages where she made it clear that using Section 6(1) to allow a payment of less than minimum wage in MGNREGA works will amount to forced labour. 15 eminent jurists and lawyers of India too have asked Government of India to immediately revoke its unconstitutional notification and ensure that minimum wages are paid to all workers in India.
The Act and the judgments are in favour of equality provided under Article 14 of the Constitution and a judgement in the case namely, “Engineering Workers Union /vs/ Union of India(1994) I .LLJSup.942Bom.”, pronounces the judgment that , “The provision under Section 3(2)(A), that minimum rate of wages in scheduled employment fixed or revised, shall not apply to the employees during the period of adjudication, violated equality clause of Article 14 and hence that section is void”.
In the view of the Directive Principles of State Policy as contained in the Article 43 of the Indian Constitution, it is beyond doubt that securing of living wages to labourers which ensures not only bare physical subsistence but also the maintenance of health and decency, it is conducive to the general interest of the public.
The Minimum wages Act was passed to fulfill the aspiration as contained in the following resolution:-
“ If the labourers are to be secured the enjoyment of minimum wages and they are to be protected against exploitation by their employers, it is absolutely necessary that restraints should be imposed upon the freedom of contract and such restrictions cannot be said to be unreasonable. On the other hand, the cannot be heard to complain if they are compelled to pay any minimum wages to their labourers even though the labourers , on account of their poverty and helplessness, are willing to work even at lesser wages”.
In the case of “PETITIONER: BIJAY COTTON MILLS LTD./Vs./
RESPONDENT: THE STATE OF AJMER.DATE OF JUDGMENT:
The Constitutional validity of this Act was attacked on the ground that it violates the guarantee of freedom of trade or business etc., envisaged by Article 19(1)(g) of the Indian Constitution, (Constitution of India, Article. 19(1)(g), 19(6)-Minimum Wages Act (XI of 1948), sections. 3,4 and 5-Appropriate
Government-Fixing minimum rate of wages-Whether offends fundamental rights guaranteed under Art. 19(1)(g).)
, it was held that , the restrictions imposed upon the freedom of contract by the fixation of minimum rates of wages though they interfere to some extent with the freedom of trade or business guaranteed under Art. 19(1)(g) of the Constitution are not unreasonable and being imposed in the interest of general public and with a view to carry out one of the Directive Principles of State Policy as embodied in Art. 43 of the Constitution are protected by the terms of el. (6) of Art. 19. It can thus be said that the provisions of the Act are bound to affect harshly and even oppressively a particular class of employers, who for purely economic reasons are unable to pay the minimum rate of wages fixed by the authorities , but have absolutely dishonest intention of exploiting their workers.
The fact that employer might find it difficult to carry on business on settled principle cannot be a sufficient reason for striking down the law itself as unreasonable. The poverty of labourers is also a factor to be taken into consideration while determining the question whether a particular provision is in the interest of the general public.