Introduction
Minimum wages protect workers from exploitation. It also ensures they should get a minimum wage to meet their basic needs. Yes, in short. Under Indian Labour laws, specifically the Minimum Wages Act 1948, it is illegal to pay less than the minimum wages. Let’s examine wage, let’s examine why, as well as the consequences, ramifications and potential changes.
Historical Context:
It is dated back to colonial period. When Industrialization in early 20th century had created the largest pool of the worker, i.e that are planation workers and industrial workers. These workers are often under paid and forced to work round the clock and in inhumane conditions. Then in 1931 Royal Commission on Labour highlighted that Indian workers were living on very less wages, in that wages they are unable to afford the living expense or even the food. So after the independence in 1947, to ensure the social justice, a act had been passed that is the Minimum wages act, 1948. To give workers legal protection against every kind of finically exploitation. This act is not about finance but it deeply tie to India’s vision to become a welfare state.
What do you mean by Minimum Wage?
Minimum wage is the lowest amount that employers can legally pay their workers for certain types of the jobs. It’s not something you can haggle over. Now, when it comes to settling these wage rates, both the central and state governments have their say. A few things should be taken into account, like
1. Description of your job
2. Your skill level, whether you are unskilled, semi-skilled, skilled, or highly skilled.
3. It also depend upon the cost of living and many other regional stuff
It’s all about making sure people get a fair shake, but it can get a bit complicated
How is it fixed?
It is not a uniform concept across the country. It varies from state to state. They differ by state, sector, even depending upon skills and type of job. This act empowers both state and central government to set its own minimum wages rate according to schedules. It has many parameters to it, including the 26 days minimum wage rules, which play a vital role in determining how wages are calculated for workers across different regions and sectors.
Let’s break this down a bit. The entire legal framework regarding wages:
The basic of minimum wages in India is set through the act, that act was passed in 1948, as Minimum Wages Act, 1948. Under this, the rights of workers and their legal rights are protected, and it gives them the right to earn the minimum wages for the work they do. The minimum wages govt of india ensures that no worker is underpaid and that every employee gets fair compensation for their labor.
Challenges in Implementation
Large workforce in India is in unorganized sector- where there are no inspections and workers are not even aware about their rights.
Easily exploited: Ignorance of law always lead them into predator’s hands, they get easily exploited as offering irregular wages, or manipulating records.
No Formal wage slips: mostly get lump sums money at the end of the day.
Fear of retaliation and workers seldom approach.
Raising the minimum wages will stop the employers from higher the workers.
It will make the small businesses uncompetitive.
Why Is it important to have Minimum Wage?
Minimum wage plays a crucial role in our society.
Nobody should be taken advantage of and that is why through this it prevents exploitation of workers.
Basic standard of living is maintain through this.
It also reduces income inequality, which we all know is a growing issue.
When workers earn a decent wages, it improves its productivity and morale.
Happier workers, happier workplace, it strengthens the economy by giving people more purchasing power.
Is Paying Below Minimum Wage an Offence?
Absolutely, yes, it is an offence.
Employers aren’t allowed to pay less than minimum wage, even if someone agrees to it.
Any agreements that involve accepting lower wages are totally void.
For the enforcement of these law and penalizing companies for violation there are Labour Inspectors who keep check on it.
Penalties for Non-compliance and violations
So, Under the minimum wages act 1948, there are mentions of the penalties that can be pretty stiff fine up to ₹500 or even 6 months of imprisonment, or both.
Penalties can really push for compliance and smooth functioning. All these penalties make it serious issue.
Judicial Backing
The Supreme Court rules in the case of People’s Union for Democratic Rights V. Union of India back 1982 that paying less than the minimum wage is actually a form of “forced labour” according to Article 23 of the Constitution.
In Manganese Ore(India) Ltd. V. Chandi Lal Saha(1991), If employer is struggling financially it doesn’t give pass to pay less than the minimum wages as it is rightly said by the court.
In Unichoyi v. State of Kerala (1962): Not giving minimum wages is not the violation of contractual rights but it is against the basic Human rights.
These cases shows that how important court consider the minimum wages as an issue, not technical but an issue of Human dignity and fundamental rights.
Misconception about minimum wages.
Myth: Consent matters, i.e. If workers consent to it, then paying below minimum wage is legal.
Reality: No, those agreements are invalid. Myth: Minimum wage is just for unskilled labour. Reality: Minimum wages is just for unskilled labour. Myth: small businesses and startups don’t have to worry about this. Reality: Every business, big or small, has to follow these rules.
Impact on Employers & Employees
Employers have to keep their wage structures updated according to the latest government info and should keep solid compliance records.
Employees, they have every right to go to the labour commissioner or even court if they feel they are not getting paid what they deserve.
Future of Minimum Wages in India
Looking ahead, Labour law is shaking things up by modernizing how wages are regulated.
It is introducing a National Floor Wage.
It is expanding coverage to all employees.
Ramping up penalties for violations.
Even encouraging digital wage compliance with wages.
Fair and transparent wages system is the key focus of these changes.
About Praans :
At Praans, we help businesses and employees navigate the complexities of Indian labour law—whether they’re remote, hybrid, or on-site.
What we serve:
Labour Law Advisory
WFH Policy Drafting
Payroll & Statutory Compliance (PF, ESI, Gratuity)
HR Documentation & Employment Contracts
State-Wise Registration Services
Labour Law Software for MSMEs & Enterprises
Whether you’re a growing startup or a large corporation, Praans helps you stay compliant, audit-ready, and legally protected.
FAQs
Q1. Is it legal to pay someone less than the minimum wage if they say it’s okay?
Not at all, that’s actually against the law.
Q2. Who decides what the minimum wage is in India?
Both the Central and State Governments have a say in it.
Q3. What should employees do if they find out they are getting paid less than minimum wage?
They can file a complaint with labour commissioner or take it to labour court.
Q4. When they are not paying the wages so is it same as forced labour?
Yes, according to the Supreme Court, it is.
Q5. What about gig workers? Do they get minimum wage protection?
Absolutely, The Code on Wages has provisions that allow the government to protect gig and platform workers.
Conclusion:
It’s not a minor slip up that you are paying below minimum wages, it’s a clear violation of worker’s right and against human rights. For employers, staying compliant isn’t just about avoiding trouble; it builds goodwill and for employees, well, it’s all about protecting their dignity, ensuring they get fair pay, whether it is daily wages or monthly salaries, and maintaining a basic standard of living.
To put it simply: Minimum wage is all about fairness, and paying less than that is punishable offense in India.
Disclaimer
The motive of article’s is solely for general informational purposes and is not a legal advice. While efforts have been made to ensure the accuracy of the content, laws and regulations may change and vary based on jurisdiction. Any actions solely based on the information provided in this article here are not the responsibility of the publisher or author.