Sanjoy Ghose

“Justice will not be served until those who are unaffected are as outraged as those who are.”  ― Benjamin Franklin

Having argued and lost one of independent India’s handful of challenges to a Minimum Wage Notification, I am a tad unsure whether my outrage would qualify as one of an unaffected.  That dilemma notwithstanding, I share with you my thoughts on the proposed suspension of the Minimum Wages Act, 1948 (“MWA”) by the State of Uttar Pradesh via the route of an Ordinance styled “Uttar Pradesh Temporary Exemption from Certain Labour Laws Ordinance, 2020” (“Ordinance”).  Citing the COVID Pandemic, the Ordinance proposes to suspend the operation of 38 labour laws with the exception of Section 5 of the Payment of Wages Act, 1936, the Employees Compensation Act, 1932, the Bonded Labour System (Abolition) Act, 1976 and the Building and Other Construction Workers Act, 1996 for a period of three years.

Close at the heels of this announcement, an alleged draft of this Ordinance has been circulating on social media.  The Ordinance draft, while suspending the MWA, states that the State would on its own fix ‘minimum wages’ and the employers would have to abide by the same.

The importance of “minimum wages” as an instrument of social protection was highlighted in the International Labour Organisation Constitution adopted in the year 1919, as a part of Treaty of Versailles, after the end of Great War. The Preamble makes a link between ensuring just conditions of labour and maintenance of international peace.

The concept of minimum wages first evolved with reference to remuneration of workers in those industries where the level of wages was substantially low as compared to the wages for similar types of labour in other industries.

The International Labour Conference, in 1928, adopted the Minimum Wage-Fixing Machinery Convention, 1928, which called upon States to set in place machinery through which minimum wages may be set with respect to various trades. In India the task of labour reform was undertaken by the Royal Commission on Labour, which, in its 1931 Report pointed out the need for systematic collection of labour statistics, which could be utilised for several reformative measures, including the fixation of minimum wages.

In 1943, the Standing Labour Committee and the Indian Labour Conference (ILC) set up a Labour Investigation Committee so as to inquire into the matters relating to working conditions and minimum wages. In 1946 the Standing Labour Committee suggested specific legislation exclusively dedicated to the issue of minimum wages. A tripartite committee, also known as the Fair Wages Committee, was established which aimed to set a policy for “fair wages”. The Committee consisted of representatives of employers, employees and the Government.[1]

The MWA can be counted as one of India’s first attempts at legislating working rights. The MWA laid down detailed procedures for setting minimum wages in various industries, by the appropriate government, after an elaborate consultative process involving the traditional triple stakeholders, i.e. the government, the employers, and the employees.

The MWA statutorily mandates a twin choice path towards determining the minimum wages.  The State could either opt to set up an advisory committee having representation for the employers, the employees and the state which would then make recommendations.  In fact, at the option of the State, separate committees can be set up for each industry or each region.  The second option was to directly publish the proposals and obtain response from the public and stake holders.(Section 5, MWA)  Therefore, what emerges is that the process of determination of minimum wages is not only deliberative and consultative but it is also participatory, involving all stake holders.

The notion of universal, ensured minimum wage was also enshrined in the Constitution, a document which was taking shape contemporaneous to the MWA.  Article 39 of the Directive Principles of the State of Policy. mandates that government policies must be oriented towards securing an adequate means of livelihood for all citizens. Article 43 elaborates on the State’s obligation to protect, through both legal and economic means, the citizens’ right to work for a dignified living wage, ensuring a decent standard of life.[3]

The ILC, which is a tripartite consultative committee constituted to advise the Government on the issues concerning working class of the country, in its conference held in 1957, recommended the norms and factors, based on which minimum wages may be calculated.

Over the years, the concept of minimum wages, and a host of issues surrounding it have come up for consideration of various Courts on several occasions, and on each occasion, the Courts have only gone on to further reinforce the social benefits sought to be ensured by the concept, and the underlying enactment.

The Supreme Court, in Edward Mills Co. Ltd., Beawar & Ors. v. The State of Ajmer & Ors, noted that the legislative policy was apparent on the face of the MWA. What it aimed at was the statutory fixation of minimum wages with a view to obviate the chance of exploitation of labour.

In Bijay Cotton Mills & Ors v. State of Ajmer, the Supreme Court held that it is in the interest of the general public that the labourers should be secured adequate minimum ages, and therefore, the intentions of the employers, whether good or bad, are irrelevant. Courts have time and again rejected the argument that the capacity of an employer to pay a certain amount has any role to pay in the fixation of minimum wages.[6]

The principles of the absolute freedom of contract and the doctrine of laissez faire yielded place to new principles of social welfare and common good. There can be no doubt that fixing wage structures attempts, gradually and by stages, to attain the principal objective of a welfare state, to secure “to all citizens justice, social and economic”. To the attainment of this ideal the Indian Constitution has given a place of pride and that is the basis of the new guiding principles of social welfare and common good.[7]

Consultations with the Advisory Board constituted under the Act, as well as consideration of representations mad by persons who are like to be affected by the fixation / revision of minimum wages (i.e. employers and employees) have been held to be a vital aspect of such exercise.[8] It is has been held to be a right of employees to make representations for enhancement of wages, just as employers have a right to make representations for reduced minimum wages.[9] The process envisaged under the Act mandates such consultations, whose essence is “the communication of genuine invitation, extended with a receptive mind, to give advice.”[10] In any case, the entire process of fixation / revision of minimum wages ends up affecting rights and obligations of several stakeholders, and would certainly require compliance with the principles of natural justice.[11]

Today, minimum wages across India are set in terms of the guiding principles laid down by The Workmen represented by Secretary vs. The Management of Reptakos Brett & Co. Ltd. & Anr, and the 1957 Conference. Some of the factors to be considered are:

1. 3 consumption units per earner;
2. Minimum food requirement of 2700 cal. per average Indian adult;
3. Cloth requirement of 72 yards per annum per family;
4. Rent corresponding to the minimum area provided under the government’s industrial housing scheme;
5. fuel, lighting and other miscellaneous items of expenditure to constitute 20% of the total Minimum Wage; and,
6. Other factors such as Children Education, Medical requirement, Minimum recreation, including festivals/ceremonies and provision for old age, marriages etc.

It has been held repeatedly that a wage structure which approximately answers the six components noticed above is nothing more than a minimum wage at subsistence level, and that employees are entitled to such minimum wages at all times and in all circumstances.

In this background, the Uttar Pradesh adventure is a departure from years of tradition and judicially recognised means of determining “minimum wages”.  Suspending the MWA on the one hand and stipulating state determined unilateral ‘minimum wages’ on the other cannot hide the obvious intent of the State.  It is to denude the process of its deliberative, participatory and consultative character. This leaves it to the whims and caprice of the State as the unilateral determinant of minimum wages which cannot be tested against any known parameters.  Even more insidious in this sleight is the impact the suspension of the MWA would have on the right of the aggrieved worker to claim compensation which could go upto as much as ten times the shortfall between the wages actually paid and the notified minimum wages.(Section 20(3), MWA)

The draft of the Ordinance states that breach of any of the provisions (which would technically include the government’s unilaterally determined ‘minimum wages’) would be as per the original legislation. While this would work for those provisions such as rights of women and children saved by the Ordinance.  However, as MWA itself would be suspended, and given the determination of the ‘minimum wages’ would be an unilateral exercise by the State outside the architecture of the MWA, a breach on the part of the employer to pay such wages would not constitute a breach of the MWA.  Therefore, not only the employer is being freed from the obligation to pay a scientifically determined minimum wages but is also been inoculated against any action should such employer be in default.

The concept of minimum wages, as distinct from living wages and fair wages, is that this is the bare minimum that would be required for a workman to keep her flesh and bones together.  The MWA only makes available a machinery to determine this bare minimum in a scientific and democratic manner.  By suspending this, the State open’s itself to a charge of compelling workers to work at rates less that what is the bare minimum to keep her body together.  Is this not forced labour that is frowned upon by Article 23 of the Constitution?[15]  Is it not an assault on their right to life guaranteed by Article 21 of the Constitution of India?

At the time of writing, the President is yet to accord approval to this travesty.  Being a lawyer by training and a compassionate human being, I hope he shares Ben Franklin’s outrage too.

[1] Sidra Mehboob, Romana Asmat; Minimum Wages Law: A Historical Retrospect, International Journal of Law and Legal Jurisprudence Studies, Volume 3 Issue 1

[2] Section 5, MWA

[3] Raghu Vinayak Sinha, Shivkrit Rai, Ria Kotian; A brief legal history of the Minimum Wages Act (1948) and its implementation in India; South Asia Democratic Focus, Issue 33, 12.12.2017

[4] AIR 1955 SC 25

[5] AIR 1955 SC 33

[6] Unichoy v. State of Kerala, AIR 1962 SC 12; Woolcombers Of India Ltd. v. Woolcombers Union & Anr., 1974 3 SCC 318

[7] Crown Aluminium Works vs Their Workmen, AIR 1958 SC 30

[8] Bijay Cotton Mils (Supra); Gangadharan Pillai v. State of Kerala, AIR 1968 Ker 218;

[9] Basti Ram Narain Das v. State of Andhra Pradesh & Anr., AIR 1969 AP 227

[10] Tourist Hotel v. State of Andhra Pradesh and Anr., MANU / AP / 0157 / 1974

[11] Chandra Bhavan Boarding and Lodging, Bangalore vs. The State of Mysore & Anr., (1969) 3 SCC 84

[12] (1992) 1 SCC 290

[13] Sanjit Roy v. State of Rajasthan, ( 1983 ) 1 SCC 525

[14] Section 20(3), MWA

[15] PUDR v UOI 982 AIR 1473 (The Asiad Case)

The author is an Advocate and a NLSIU (Batch of 1996) graduate. Research Assistance provided by Naman Jain, Advocate.

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