Maximum Penalty for Not Paying Minimum Wages: What Can Employers Face?

Dear seniors, what penalty can the labor authority impose at maximum under the Minimum Wages Act if an employer does not pay the minimum wages to the workmen?

Regards,
Paramjeet Singh

The authority can award the difference in Minimum Wages. Additionally, the authority under the Minimum Wages Act has the discretion to impose a penalty of 10 times the total difference in wages in accordance with section 20(3) of the Minimum Wages Act, 1948.

With best wishes,

Regards,
B. LAKSHMAN RAO
Head-HR, Ramky Pharma City [India] Limited, Visakhapatnam [AP]

High Court Rulings on Penalties

The Allahabad High Court has declared a ten times penalty unjustified. In contrast, the Madras High Court has justified a penalty three times.

Regards,
Kamal

Why do you want to pay less than the minimum wages fixed by the appropriate government? If you pay properly, then obviously you can extract the required work from the workforce. If you pay less, then you must pay the same with retrospective effect and a three times penalty. In addition to that, you must spend your valuable time in the Labour Office and Labour Court, and you must take care of Labour Department Officials as well. Furthermore, your company's name and fame will also be questioned, which will have an undue impact on your career too.

Please explain the same to your management. To resolve the issue, please discuss with the labour department official and explain that you are providing food for them, which costs Rs.____, and accommodation & transportation to all the workmen. Additionally, you are sending money to their homes as well (for which you must have some proof).

Kind regards