Can We Legally Pay Less Than the State Minimum Wage? Seeking Guidance

Hello seniors,

Our state minimum wage is 7200 PM. Please guide us on whether we can pay wages less than the minimum wage as applicable in the state.

Regards,
Kumar

You cannot pay wages to any class of employees under the scheduled employment less than the minimum wages fixed by the appropriate government, as it is a punishable offense with a fine, imprisonment, or both, as per Section 12 of the Act. Apart from this, if any claim is filed by the aggrieved workman, union, or an inspector under the Act under Section 20 before the Authority, Section 20(3) empowers the Authority to impose compensation of a sum not exceeding 10 times the amount of the difference claimed. The Supreme Court categorically observed some 50 years ago that no employer has the right to remain in the industry if they cannot pay the minimum wages to their employees.

Sir, I have seen so many establishments openly paying wages less than the minimum wages fixed by the state government. In that case, why is no legal action being taken against such establishments?

Sir, a question arises as to why no authority initiates imposing penalties on establishments that do not pay wages to their employees in accordance with the Minimum Wages Act. In practice, I have observed many organizations not paying wages as per the minimum wages, yet no action is taken against them.

Minimum Wage Compliance Issues

In the case of minimum wages fixed by the government, the employer is bound to pay the same. However, as no authority is strictly enforcing the implementation and the authorities are more concerned about their own interests, employers are often paying less than the minimum wages. They manage to keep officials on one side and the workforce on the other side, discouraging them from approaching labor authorities regarding inadequate payment. In instances where someone does approach, they are often threatened with termination.

In today's world, the cost of living is high, forcing employees to accept lower wages just to sustain their livelihood due to various personal reasons. This cycle continues, and the existing legislation does not effectively address the issue.

Dear Friends,

Yes, you are right. There are certain industries that are not paying as per the Minimum Wages Act. When the Labour Inspector visits the establishment and records the disparity, things go against the Factory Manager/Occupier. Until that time, rest and wait.

Regards