Is there anything called minimum wages pertaining to Piece rate employees? Is an engagement letter mandatory? - CiteHR
Saswatabanerjee
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Korgaonkar K A
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Hi, I am sreeram. The company i am working for is planning for a new garments factory. The employees will be on a piece rate. need your advice on
1) is there anything called minimum wages pertaining to Piece rate employees
2) is an engagement letter mandatory if so can i have a draft of it
3) leave applicability and OT applicability.
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Dear Sreeram ji,
You are in garment industry and to this industry, MWAct is applicable anywhere in India, to my knowledge.
Your question on piece rate, you have fix the piece rate such a way that for average 8 hours production the wages should not be less than MW rate. You need to convince the authority that your piece rate work out to above MW rate.
Engagement letter / appointment letter, leave, OT etc mandatory.
If to you, appointment letter is not issued, no leave, OT etc is not given, will you accept the employment?
The minimum wages applies to garment factories
The rule for rice rate is that after the end of the month (or if you are paying every day, then at the end of the day) the employee should get minimum ages
So of one of your workers is not able to work fast enough to make min wages (say ₹256 per day), then you have to pay him that amount irrespective of the fact that he didn't earn it.
Dear Saswata ji, I have not understood the above quote. Can you please explain it? Do you mean to say, the under-performer should be rewarded with?
Let's say you are paying ₹20 per garment as piece rate
If the min wages is ₹250 per day, he has to do 13 garments in a shift of 8 hours (7 hours excluding breaks) to achieve minimum wages.
Suppose a worker is inefficient, and can do only 10 garments in a day. In that case, he would earn only ₹200. But the minimum wages is ₹250. So he has to be paid ₹250 even though he has not earned it.
But this is if you are paying daily (not daily rate, but actually paying each days wages each day). If you are paying wages monthly, Similarly you need to pay minimum wages for the month, irrespective of the fact he may not have completed 325 garments (12.5 per day x 26 working days)
Hope I am clear on this. If you have a different idea, please let me know.

Dear Saswata ji,
Yes, I have different idea. According to you, under-performer should be rewarded with more than his performance. I do not agree with this, with due regards to you sir.
Generally piece rate is decided on how much an average person produces in eight hours of time and what is the minimum wage rate for eight hours. Once this is decided, one can produces as many as, as per his performance capacity or skill. If any person produces less, his minimum wage for eight hours is not protected and he is paid on piece rate only.
If under-performer is rewarded in such a way by protecting his eight hours wages without expected performance then what is the incentive to the performers?
Experts are requested to comment on this to bring clarity.
Please refer to sec 17 of minimum wages act, which states as below :
17. Minimum time rate wages for piece work.- Where an employee is
employed on piece work for which minimum time rate and not a minimum
piece rate has been fixed under this Act, the employer shall pay to
such employee wages at not less than the minimum time rate.

Mr Sreeram

Sec 17 is applicable in a case where minimum piece rate is not fixed by appropriate Govt.Where a minimum piece rate or a guaranteed time rate (sec 3 (2) ) is fixed by your appropriate Govt for garment industry you need to pay only that.Contact MW inspector of your area.
Varghese Mathew
Mr Saxena Please read sec 3 (2) (b) and 17 of the Minimum Wages Act 1948 to find that piece rate is a valid term. Varghese Mathew 09961266966
Hello All,, I want a draft for piecework (piece rate) agreement. Pl share. Regards Sachin Mhaske

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