Section 5: Payment of minimum rate of wages

Overview

This section of the Code on Wages, 2019, deals directly with the payment of minimum wages to employees. It’s a core provision ensuring that workers receive at least the legally mandated minimum amount for their work. This is a fundamental right of every employee in India.

Scope and Coverage

• Which employees and establishments are covered: This section applies to all employees. This includes workers directly employed by an establishment, as well as those employed through contractors. It covers establishments across all sectors – factories, shops, and other commercial establishments.
• Any thresholds or exclusions: There are generally no exclusions based on the number of employees or the size of the establishment. The obligation to pay minimum wages applies universally, as determined by the appropriate Government.

Key Obligations and Rights

• Main duties of employers: Employers must pay their employees wages that are equal to or greater than the minimum rate of wages fixed by the Central or State Government, whichever applies. They cannot deduct amounts that bring the wage below the minimum wage level.
• Important rights or protections for employees: Employees have the right to receive at least the minimum wage as notified by the government. This ensures a basic standard of living and prevents exploitation. Employees can approach labour authorities if their employer fails to comply.

Compliance and Penalties

If an employer violates this provision by paying less than the minimum wage, they can face serious consequences. This includes inspections by labour officials, who can investigate complaints and verify wage records. Penalties can include fines, and in some cases, imprisonment. Repeated or serious violations can lead to more severe punishments.

Practical Examples

• Example 1 from a typical workplace: Ramesh works in a garment factory. The government has fixed the minimum wage for garment workers at ₹8,000 per month. Ramesh’s employer cannot pay him less than ₹8,000, even if he is a new employee or on probation.
• Example 2 for a borderline scenario: Priya works in a small retail shop. The minimum wage is ₹9,000 per month. Priya’s employer wants to deduct ₹500 for damages to shop property. While deductions are permissible under the Code, the employer must ensure that Priya’s net wage after the deduction remains at least ₹9,000. If the deduction brings her wage below ₹9,000, it is a violation.