Dear Esteemed Friends,
This is indeed a very pertinent question regarding the enforcement of the Minimum Wages Act, 1948, which captures the attention of numerous HR personnel. Employers who already provide a daily wage or a consolidated monthly wage need not dwell on this issue. This question only arises for those employers intending to pay wages based on the basic wage with various types of allowances.
The primary point causing confusion in this matter is the definition of 'wage' [sec. 2(h)] and 'Minimum Rate of Wages' [sec.4] of the MW Act, 1948. As per the wage definition, it encompasses all remunerations, including HRA, while also specifying exclusions. In my view, we should first analyze section 4 of the MW Act, which outlines three methods of fixing/declaring minimum wage rates by the appropriate Government. Subsequently, we should examine the notification on the fixation of minimum wage rates issued by the respective State to determine the relevant section under which the rates have been set. For instance, in Haryana State, the notification indicates that the rates are all-inclusive, allowing for wage head bifurcation, and thus, the rates are announced in accordance with para (iii) of section 4. If such bifurcation is not permitted, the necessity of including this clause arises. There are already two clauses, namely sec.4 (i) and (ii) of the aforementioned Act. If confusion persists, the Government should step in to clarify the situation and explicitly state in the notification the section under which they are issuing it.
I also invite other esteemed members to share their thoughts on situations where bifurcation is permissible.
Regards,
R.N.Khola
(Labour Law & Legal Consultants)
09810405361