Legal Consequences of Not Paying Minimum wages to Employees?

S. N. Pattnayak

Chief Executive

Legalsindia

Labour is a simultaneous subject under the Indian Constitution. Minimum wage rates for employees are determined by both the Central Government and the Provincial Governments. These minimum wage rates are declared at the national level, state level, sector level as well as occupational levels. Minimum wages are also established for any region, sectors, occupation and also for trainees, youth as well as piece rate workers.

Minimum wage rates in India are fixed under the Minimum Wages Act, 1948. The Minimum Wages Act 1948 is a Parliament Act which concerns about Indian labor law.  This sets the minimum wages which should be paid to skilled as well as unskilled labours. In the Indian Constitution, a ‘living wage’ has defined as the level of income for a worker which ensures a basic standard of living including good health, comfort, dignity, education, and contingency. Minimum wage not only guarantees the bare existence and preserves efficiency but also provides for education, medical requirements and some level of comfort.

Payment of Wages Act 1936 says that all wages should be paid in current coin or currency notes or in both. An amendment in 2017 in the 1936 Act, now allows the employer to pay wages in coins or currency notes or by check or by crediting the wages in worker’s account. The amended Act has reserved the requirement of taking prior authorization from the worker about the mode of payment of wages. The relevant government can specify certain industrial or other establishments requiring those to pay either by check or bank transfer.

According to the provisions under Payment of Wages Act, 1936 wages need to be paid before the termination of the 7th day after the last day of the wage period where there are less than 1000 workers employed and in rest case on the 10th day. Also, the payment of wages has to be in current coin or currency notes and by cheques or by crediting the wages in the employee’s bank account after obtaining his written authority.

Each and every employer is responsible for the payment of all wages compulsory to be paid under the Payment of Wages Act in 1936 to persons employed by him.

Penalties can be imposed on employers for breakings of any provisions of the Act. For breaking of Section 5, 7 8, 9, 10, 11, 12 and 13 of the act which mentions about timely payment of wages, fines , extentpayment of wages in current coins and currency, deductions for damage or recovery of advances or loans. In such cases fine not less than Ra. 1000 whicextend to Rs. 5000 can be imposed and on subsequent conviction fine between Rs. 5000 and Rs. 10000 is imposed.

For failing to maintain registers, wilfully refusing or neglecting to provide information or refusing to answer or wilfully giving a false information required to be furnished under the Act. Fine not less than 1000 Rs. and Maximum of Rs. 5000 charged for such offences. For second or subsequent verdict fine not less than 5000 Rs. and extend to Rs.10000 can be charged.

Offences such as paying his employees less than the minimum wages fixed or failure to pay them overtime wages and for work done by them on the day of rest, etc. is punishable under Section 22 of Minimum Wages Act, 1948 by imprisonment up to six months or fine or both.

Section 22 B provides that cognizance of offence should be taken only when the Authority under Section 20 of the Act sanctions the application and the appropriate Government gives its sanction to file a complaint.

Section 22 C of the act describes who could be believed guilty in case if the employer happens to be an incorporated body or firm or association of persons, etc.

Section 22 D deals with the cases of payment of wages due to an employee who is dead or not traceable.

Current Minimum Wage Rate as per LABOUR DEPARTMENT NOTIFICATION Delhi, the 3rd March 2017  is given below

No. F. Addl.LC/Lab/MW/2016/4859.—In exercise of the powers conferred by sub-section (2) of section 5 of the Minimum Wages Act, 1948 (XI of 1948) read with the Government of India, erstwhile Ministry of States notification No.104-J dated the 24th August, 1950 and Ministry of Home Affairs notification No.S.O.530. dated the 6th February, 1967 and all other powers enabling him in this behalf and in continuation of notification no. F.12 (1)142/11/MW/Lab/ 2023-2047 dated the 26th July, 2011, the Lt. Governor of the National Capital Territory of Delhi, after considering the recommendations of the Minimum Wages Advisory Committee constituted vide notification no. 13(16)/MW/1/2008/Lab./1859 dated the 15th September, 2016 under sub-section (1) of section 5 of the Minimum Wages Act, 1948 and Cabinet Decision no. 2466 dated the 25th February, 2017 of Government of National Capital Territory of Delhi is pleased to revise, the minimum rates of wages for the class of workmen/employees mentioned in all the Schedule employments as mentioned in earlier notification no. F.12 (1)142/11/MW/Lab/ 2023-2047 dated the 26th July, 2011, in the National Capital Territory of Delhi, namely:—

These rates shall come into force with effect from the date of notification in the Official Gazette.

Note: 1. The minimum rates of wages being fixed are linked with All India Consumer Price Index Series, 2001 (Base 2001=100). For Dearness Allowance neutralization, the rate of adjustment shall be Rs. 1.35 per point for Unskilled, Rs. 1.50 per point for Semi skilled, Rs. 1.65 per point for Skilled, Rs. 1.50 per point for Non matriculates, Rs. 1.65 per point for Matriculates but not Graduate and Rs. 1.80 per point for Graduate and above. Adjustment will be made six monthly, i.e., on 1st April and 1st October each year after taking into account the average index numbers for July to December of the previous year and January to June of the current year respectively.

2. In case there is decline in All India Consumer Price Index, as a result of which dearness allowance apparently decreases, in that case there shall be no impact on notified applicable minimum rates of wages for different category of workmen/employees.

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3. Amount of Dearness Allowance in fraction, if any, would be rounded off to the next higher rupee.

4. It is further clarified that after revision in minimum rates of wages, all workmen who are covered under The Employees State Insurance Act, 1948 and Employees Provident Fund & Misc. Provisions Act, 1952 and the employers would continue to deposit employer’s contribution towards ESI and PF as per prescribed rates of contribution.