No move to fix national minimum wage at Rs. 18,000/month

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Seeking to clear the air, the labor ministry has clarified that the Centre has not fixed Rs 18,000 as national minimum monthly wage under the Code on Wages Bill. It also denied any move to revise the formula of fixing wages by increasing the number of family members from three to six, as demanded by trade unions.

The statement comes as a big relief to employers who have been “apprehensive” about the move, saying it would affect their competitiveness, but deals a blow to trade unions, who have been demanding higher minimum wages and a revised unit-based formula for fixing wages from three members of a family to six, including dependent parents.

Background:

The Minimum Wages Bill was introduced in the Lok Sabha last month. Some news reports have been published regarding the fixation of minimum wage as Rs 18,000 per month by the central government.

The Code on Wages, 2017:

It seeks to consolidate laws relating to wages by replacing: (i) the Payment of Wages Act, 1936, (ii) the Minimum Wages Act, 1949, (iii) the Payment of Bonus Act, 1965, and (iv) the Equal Remuneration Act, 1976.

  • The Code will apply to establishments where any industry, trade, business, manufacturing or occupation is carried out. This will also include government establishments.
  • The central government will make wage-related decisions for its authorities, and establishments related to railways, mines, and oil fields, among others. State governments will make decisions for any other establishments.
  • Wages include salary, allowance, or any other component expressed in monetary terms. This will not include bonus payable to employees or any travelling allowance, among others.

Minimum Wage:

1. National minimum wage:  The central government may notify a national minimum wage for the country.  It may fix different national minimum wage for different states or geographical areas. The minimum wages decided by the central or state governments will not be lower than the national minimum wage.  The central or state governments will not reduce the minimum wages fixed by them, if these wages are higher than the national minimum wage.

2. Fixing the minimum wage:  The Code requires employers to pay at least the minimum wages to employees.  These wages will be notified by the central or state governments.  This will be based on time, or number of pieces produced, among others.  The Code specifies that the central or state governments will review or revise the minimum wage every five years.

3. Working hours:  The central or state governments will fix the number of hours that will constitute a working day.  Further, they will provide for a day of rest for employees every week.  An employee will receive overtime for working beyond these working hours on any day.  This amount will be at least twice the normal wage of the employee.