Procedure for Fixing and Revising Minimum Wages
Procedure for Fixing Minimum Wages
1. Identification of the Need to Fix Minimum Wages
The employer or the government identifies the necessity of fixing a minimum wage for a certain class of workers or industry.
This usually arises to protect workers from exploitation by ensuring a basic standard of living.
2. Constitution of a Wage Board or Committee
A body of experts, representatives of employers, employees, and independent members is usually formed.
This board investigates wage conditions, cost of living, economic factors, and industrial standards.
It gathers data through surveys, hearings, and consultations.
3. Assessment of Economic and Social Factors
The committee evaluates various factors such as:
Cost of living and inflation rates.
Employer’s capacity to pay.
Nature of work, skill level, and local economic conditions.
Wages paid in similar industries or regions.
4. Drafting the Minimum Wage Proposal
Based on the assessment, the board drafts a minimum wage rate.
It aims to balance workers’ needs for a fair living wage and employers’ ability to pay.
5. Publication and Public Notice
The proposed minimum wage is published for public knowledge.
Interested parties (employers, employees, unions) are invited to submit objections or suggestions.
6. Hearings on Objections
The wage board or relevant authority conducts hearings on objections.
Both employers and workers can present their arguments.
7. Final Fixation and Notification
After considering objections, the board finalizes the minimum wage.
The minimum wage is formally notified, making it legally binding.
Procedure for Revising Minimum Wages
1. Periodic Review
Minimum wages are not permanent and must be periodically reviewed.
Reviews can be triggered by inflation, changes in living costs, or industrial conditions.
2. Reassessment by the Wage Board
Similar to the initial fixing, a wage board reviews current wages, economic changes, and labor market conditions.
3. Recommendation for Revision
The board recommends upward or downward revision based on updated data.
Sometimes the revision includes specific allowances or deductions.
4. Public Notification and Implementation
The revision proposal is published.
Stakeholders are heard, objections are considered.
The revised wage is notified and enforced.
Important Points
Minimum wage fixing and revision require transparency, consultation, and balancing interests.
The authority must act fairly, not arbitrarily.
The process aims to protect workers’ basic rights without imposing undue hardship on employers.
Relevant Case Law
1. Bharat Kumar & Ors. v. State of U.P. (1961)
Principle: The court held that fixing minimum wages is a quasi-legislative function requiring proper investigation and consideration of all relevant factors.
Key takeaway: The fixing of minimum wages must be based on reasonable data and is subject to judicial review if arbitrary.
2. Workmen v. Associated Rubber Industries Ltd. (1961)
Principle: The court emphasized that the process of fixing or revising wages must be fair and follow the principles of natural justice.
Key takeaway: Workers should be given an opportunity to be heard before wage fixation or revision.
3. M.C. Chockalingam v. Tamil Nadu Labour Appellate Tribunal (1985)
Principle: The court held that revision of minimum wages must be periodic to keep up with inflation and cost of living changes.
Key takeaway: Minimum wages should not be static and must reflect economic realities.
Summary
| Step | Fixing Minimum Wages | Revising Minimum Wages |
|---|---|---|
| Initiation | Identification of need | Periodic review or due to economic change |
| Committee formation | Wage board with representatives | Same or similar body reconvenes |
| Data collection | Surveys, cost of living, industry standards | Updated data reflecting current realities |
| Draft proposal | Based on findings | Adjusted wages per new findings |
| Public notice and objections | Stakeholder feedback invited | Stakeholder feedback invited |
| Final decision | Notification of wage rate | Notification of revised wage |
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