Key Features of Minimum Wages in India

• Provides legal protection against exploitation and non-payment; violations lead to penalties under the law.
• Revised periodically by both state and central governments to align with inflation, cost of living, and economic conditions.
• Sector-specific wages — they differ based on sector, skill level, region, and job type.
• The state government fixes wages for local establishments, and the central government handles industries under its jurisdiction.
• Payments must be made via cash or bank transfer at regular intervals, usually monthly.

Importance of Minimum Wages

• Prevents exploitation by ensuring fair pay for all workers.
• Encourages social justice and reduces inequality among workers.
• Boosts productivity and motivation among employees.
• Supports economic stability by ensuring fair distribution of income.

Minimum Wage Determination

Determination of minimum wages involves several critical factors:

• Based on the cost of living to cover basic needs of workers.
• Depends on the skill level of the worker.
• Varies depending on the type of industry; riskier jobs often have higher wages.
• It is state-specific — fixed based on recommendations by respective states.

Components of Minimum Wages

• Basic Pay: Core wage forming the foundation for all allowances.
• Dearness Allowance (DA): Adjusted to match inflation and cost of living.

Formula: Minimum Wage = Basic Pay + Dearness Allowance (DA)

Note: Other allowances like HRA or conveyance are optional and not part of minimum wages.

Minimum Wage Revision (2025)

The revision of wages is state-specific and ensures alignment with inflation and living costs under the Minimum Wages Act, 1948. Most states revise wages half-yearly, adjusting dearness allowance biannually and basic wages every 3–5 years.

Compliance and Penalties

• Every employer must comply with minimum wage laws.
• Non-compliance can lead to imprisonment in severe cases.
• Employees can legally claim recovery of unpaid wages.
• Initial violations may attract fines from ₹5,000 to ₹10,000.