Minimum Wages, Floor Wage & Wage Authorities — Labour Law I Notes

Minimum Wages — Fixation, Theories & Obligation

A wage so low that a worker cannot feed his family is not a wage at all — it is exploitation dressed up as a bargain. The minimum wage is the law’s floor: pay below it and, said the Supreme Court, you are extracting forced labour.

The three wage levels

Wage theory recognises three ascending levels:

Minimum wage — enough for bare subsistence plus a little for health and efficiency; must be paid regardless of the employer’s capacity to pay.
Fair wage — above the minimum, related to the industry’s capacity and comparable wages.
Living wage — the highest: subsistence plus education, insurance and modest comfort (the Article 43 goal).

Obligation and fixation

Obligation to pay (s.5). The employer must pay every employee at least the minimum wage fixed under the Code; a contract to pay less is void. Minimum wages are based on the number of hours of work (a normal working day) and cover time-rate and piece-rate workers.

Procedure for fixing/revising (ss.6–8). The appropriate Government fixes and revises minimum wages, taking account of the skill of workers and the difficulty of work, by either of two methods:

Committee method — appoint committees and sub-committees to hold enquiries and advise; or
Notification method — publish proposals in the Official Gazette, invite representations by a date not less than two months away, then notify.

Minimum wages must be revised at intervals not exceeding five years.

Section 5, Code on Wages, 2019 (payment of minimum wage — close paraphrase): “No employer shall pay to any employee wages less than the minimum rate of wages notified by the appropriate Government.”

Section 8, Code on Wages, 2019 (procedure — close paraphrase): “In fixing or revising minimum rates of wages, the appropriate Government shall either appoint one or more committees to hold enquiries and recommend, or publish its proposals by notification for the information of persons likely to be affected and specify a date not less than two months from the date of the notification on which the proposals will be taken into consideration.”

In Simple Terms: the Government sets a legal wage floor by either forming advisory committees or publishing proposals for objections, must revise it at least every five years, and the employer must always pay at least that much — his ability to pay is no excuse.

🧩 WORKED EXAMPLE — “I can’t afford the minimum wage”

Facts. A small employer pays below the notified minimum wage, pleading that his unit runs at a loss.

Rule. s.5 obliges payment of at least the minimum wage; capacity to pay is irrelevant to the minimum wage (Crown Aluminium Works, 1958). Paying below it is “forced labour” (PUDR, 1982).

Apply. The loss-making plea cannot justify sub-minimum wages; if the business cannot pay the legal minimum, it has no right to employ on those terms.

Conclusion. The employer is bound to pay the minimum wage and is liable for the shortfall.

flowchart TD
    ROOT["Fixing minimum wages (ss.6-8)"]:::root
    ROOT --> A["Committee method: enquiry + advice"]:::leaf
    ROOT --> B["Notification method: publish proposals,<br/>2 months for objections"]:::leaf
    A --> C["Government notifies minimum wage"]:::good
    B --> C
    C --> D["Revise at least every 5 years;<br/>employer MUST pay (s.5)"]:::good
    classDef root fill:#FFF8DC,stroke:#000,stroke-width:1px,color:#000;
    classDef leaf fill:#E6F3FF,stroke:#1E3A8A,color:#000;
    classDef good fill:#E8F5E9,stroke:#1B5E20,color:#000;
    linkStyle default stroke:#888,stroke-width:1px;

Case Laws

Crown Aluminium Works v Their Workmen (1958) — the minimum wage must be paid regardless of the employer’s capacity to pay.
Unichoyi v State of Kerala (1961) — the concept and constitutional validity of fixing minimum wages upheld.
Workmen v Reptakos Brett & Co. (1992) — laid down the components a minimum wage must cover (nutrition, clothing, housing, children’s education, etc.).

Floor Wage

Across India, the same job could carry wildly different minimum wages from one State to the next — sometimes for no good reason. The Code on Wages fixes a single national bottom rung below which no State may go: the floor wage.

What it is — and how it differs from minimum wage

The floor wage is a national baseline fixed by the Central Government under s.9 of the Code on Wages, 2019. It may be set differently for different geographical areas, taking into account the minimum living standards of workers. Its effect: once a floor wage is notified, no State’s minimum wage may be lower than it; and where an existing minimum wage is already higher, the employer cannot reduce it to the floor.

Floor wage vs minimum wage — keep them apart:

The floor wage is set by the Centre as a national bottom line.
The minimum wage is set by each appropriate Government for its scheduled employments, and must be equal to or above the floor wage.

Section 9, Code on Wages, 2019 (close paraphrase): “The Central Government shall fix a floor wage taking into account the minimum living standards of a worker … and may fix different floor wages for different geographical areas. The minimum rates of wages fixed by the appropriate Government shall not be less than the floor wage; and where the existing minimum wages are more than the floor wage, the appropriate Government shall not reduce them.”

In Simple Terms: the Centre sets a national wage floor (which can vary by region); every State’s minimum wage must sit on or above that floor, and no minimum wage already higher can be pulled down to it.

⚠️ Trap — floor wage is NOT the minimum wage. Do not treat them as the same. The floor wage is a national baseline set by the Centre; the minimum wage is set by the appropriate Government and can only be equal to or higher than the floor.

flowchart TD
    ROOT["Floor Wage (s.9) - Central Government"]:::root
    ROOT --> A["National baseline; may vary by area"]:::leaf
    A --> B["State minimum wage MUST be >= floor wage"]:::good
    A --> C["Existing higher minimum wage cannot be reduced"]:::good
    classDef root fill:#FFF8DC,stroke:#000,stroke-width:1px,color:#000;
    classDef leaf fill:#E6F3FF,stroke:#1E3A8A,color:#000;
    classDef good fill:#E8F5E9,stroke:#1B5E20,color:#000;
    linkStyle default stroke:#888,stroke-width:1px;

Case Laws

People’s Union for Democratic Rights v Union of India (1982) — paying below the statutory minimum is “forced labour” under Article 23; the constitutional root of a guaranteed wage floor.

Minimum-Wage Authorities & Remedies

A right to the minimum wage is worthless without a quick way to recover the shortfall. The Code gives the worker a claims authority — no need for a full civil suit.

The claims machinery

Under s.45 of the Code on Wages, 2019, the appropriate Government appoints an authority (not below the rank of a Gazetted Officer) to hear and decide claims arising under the Code — unpaid minimum wages, unlawful deductions, delayed wages, unpaid bonus. A worker (or a trade union or Inspector on his behalf) files a claim.

Who, when, where, how:

Who may claim — the employee, a registered trade union, or the Inspector-cum-Facilitator on the worker’s behalf.
When — within the limitation period of three years from the date the amount became due.
Where — before the appointed claims authority.
How — a summary enquiry; the authority may direct payment of the amount due plus compensation, and its order is recoverable as an arrear of land revenue. An appeal lies to the appellate authority.

Section 45, Code on Wages, 2019 (claims authority — close paraphrase): “The appropriate Government may … appoint one or more authorities … to hear and determine the claims which arise under the provisions of this Code … A claim may be filed within a period of three years from the date on which the claim arises.”

In Simple Terms: if you are underpaid, you go to a claims authority (not a full court) within three years; it can order the shortfall plus compensation, and you can appeal.

flowchart TD
    A["Underpayment / unlawful deduction"]:::root
    A --> B["Claim to authority (s.45)<br/>by worker/union/Inspector, within 3 years"]:::leaf
    B --> C["Summary enquiry"]:::leaf
    C --> D["Order: amount due + compensation"]:::good
    D --> E["Appeal to appellate authority"]:::leaf
    classDef root fill:#FFF8DC,stroke:#000,stroke-width:1px,color:#000;
    classDef leaf fill:#E6F3FF,stroke:#1E3A8A,color:#000;
    classDef good fill:#E8F5E9,stroke:#1B5E20,color:#000;
    linkStyle default stroke:#888,stroke-width:1px;

Case Laws

Town Municipal Council, Athani v Presiding Officer, Labour Court (1969) — on the limitation and recovery of wage claims before the statutory authority.

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