What Happens if a Company Ignores Minimum Wage Laws? Seeking Legal Insights

Understanding Legal Consequences of Non-Compliance with Minimum Wages Act

I just want to understand if any company is not following the Minimum Wages Act rules, then what are the consequences, problems, or issues that will arise in legal terms. Also, we are unable to identify the industry type of our company, which would help us determine the appropriate minimum wage rate. We are manufacturers of Composite flats, a new technology in India. We use German-based technology for manufacturing and designing the readymade flats.

Looking forward to an early reply.

Regards,
Suchita Bangera
Manager - HR & Admin

The employee can file an application under Sec. 20 of the Minimum Wages Act for the recovery of minimum wages. Alternatively, he can also file an application under Sec. 33(C) of the Industrial Disputes Act for the recovery or computation of minimum wages. The employer will be liable for penal consequences like a sentence, fine, or both for failure to pay the minimum wages prescribed by the appropriate government.

Regards,
B. Saikumar
HR & Labour Law Advisor
Mumbai
[Phone Number Removed For Privacy Reasons]

Consequences of Not Following the Minimum Wages Act

In the case of a claim for the payment of the difference between the actual amount paid to the workmen (which is less than the notified minimum wages) and the notified minimum wages, filed before the Authority under the Minimum Wages Act, then that Authority can, in addition to directing the employer to pay the difference between the minimum wages payable and the wages actually paid, also direct the employer to pay compensation not exceeding ten times the difference between the notified minimum wages paid and the wages actually paid. Please see Section 20(3)(i) of the Minimum Wages Act. This compensation could be in addition to any other penalty that could be imposed on the employer.

Regards,

Consequences of Not Following the Minimum Wages Act

The information provided above is correct. Additionally, the respected Labour Commissioner from the Labour Department will conduct annual inspections to check the records and registers under the Act. If any faults are found within your organization, the following consequences will apply:

- Punishable under the Minimum Wages Act,
- Imprisonment of up to 6 months,
- Fine of up to Rs. 500,
- Difference amounts should be payable to labor.

Regards,
Seetarama