New HR Manager Facing Pressure to Ignore Minimum Wages – What Should I Do Next?

Hi, this is Bharath here. I recently joined as an HR Manager in the retail industry. My question is, my boss is instructing me not to follow the minimum wages. What will be the next procedure?

Minimum Wages Compliance in the Industry

Tell your boss that if he does not pay the statutory minimum wages fixed for any employment in his industry, he has no right to continue his venture in the industry.

Apart from that, if any claim is instituted under Section 20 of the Minimum Wages Act, 1948 before the authority by any workman himself, any trade union, or any inspector under the Act on behalf of the affected workman, if the claimant is successful, the authority can order the payment of the claim amount together with compensation not exceeding ten times the amount claimed.

Additionally, if any prosecution is launched, the employer can be fined with imprisonment under Section 22 of the Act.

Bharath, this could be because of a huge cost impact arising from the increase in minimum wages. Please discuss this with him in detail.

Ways on how to address the issue:

- Work on improving productivity.
- Study real-time manpower requirements. Sometimes, we may have excess manpower.
- Consider the impact on costs if revisions have not been made in the past.
- Conduct a study of neighboring industries to support the ROI of the cost impact.
- Lastly, consider the legal implications if these steps are not followed. Just a few points to consider.

Though it is impertinent here, why is he emphasizing you to be non-compliant? Also, why not convince your boss of the implications and repercussions he would face for not paying the minimum wage? That is what you can do. Ask him how he would represent the statutory departments if they do not pay minimum wages to employees because any enforcement officer or inspector from the labor departments will come and check the company records.

Beyond the cost impact, following statutory guidelines is very important for the company to run smoothly, as rightly said by the learned senior Mr. Umakanthan. Failure in ethics also leads to disrepute in the market.

Handling Verbal Orders Against the MW Act

Following the MW Act is mandatory. Any boss who gives verbal orders to disregard the MW Act is being very clever and putting the ball in the court of the junior employee, who could get into trouble as soon as labor authorities come to know of the breach of the MW Act. As a subordinate receiving an illegal order in verbal form, your role becomes difficult and requires tactful handling with your boss.

You could highlight the relevant sections of the MW Act and document it for your boss, so that he is aware of the legal consequences, which include monetary fines and/or jail time. I am sure he will have a different tone when his own neck is on the line. By following the verbal order, currently, your neck is on the line. Tactful handling is essential in such matters.

Expert of a judgement of the Hon'ble Apex Court in the case of Workmen v. Management of Reptakos Brett and Co. Ltd, and another (192 SCC (1) 290), whereby it is held that "the employees are entitled to the minimum wages under all circumstances and an employer who cannot pay the minimum wage has no right to engage labour and no justification to run the industry."

Take a copy of this citation and pass it on to the Boss for his perusal as an interesting landmark judgment.

You follow the instructions of your boss as you are earning bread & butter, but inform your boss that "without paying them minimum wages constitutes a criminal offense."

Delhi High Court's Observation

The Delhi High Court said: “This court is, therefore, constrained to observe that any reluctance on the part of an employer to award minimum wages for a workman for the period during which he had admittedly worked is not only illegal and immoral but also invites criminal liability. Such an attitude erodes the very foundations of a socialist society which the preamble of the Constitution professes us to be, and belies the promises held out to every citizen by the Constitution.”

While agreeing with seniors' views on the citations and employee role in convincing the employer as suggested by me in the earlier post, the employer is certainly bound to know that following MW is a must. He cannot do away with the enactments pushing the onus on the employee (though through verbal or written instructions); ultimately, he is responsible for compliance with all laws pertaining to labor. As the law states, ignorance of facts can be excused, but not ignorance of the law.

Handling Verbal Orders Against Minimum Wage Compliance

1. Receiving verbal orders from your boss to not comply with the Minimum Wages Act might seem like a strategic move on their part, possibly due to the significant impact on the organization's profitability from increased minimum wages. This action could make you liable in case of any notice or action from labor unions, labor department authorities, or the competent court of law, potentially putting you in a difficult position.

2. As an HR Manager, compliance with the Minimum Wages Act is mandatory for you.

3. However, you cannot directly disregard the orders given by your boss as it may affect your livelihood. Therefore, you need to handle the matter tactfully. Your approach should be as follows:

- Highlight the relevant sections of the Minimum Wages Act and present them to your boss in writing, so that he is aware of the legal consequences, which include monetary fines and/or jail terms. Simultaneously, discuss these details with him.
- Conduct a real-time study of the workforce requirements. Sometimes, there may be excess manpower that can be utilized to improve productivity, thereby reducing overall manpower costs while maintaining wage levels within the existing framework.
- Study the practices followed by other industries in your area.
- Analyze the practices of competitor industries in your field.
- Explore other strategies to strike a balance between compliance with the Minimum Wages Act and organizational profitability.

Hi Prashant, Bharath, you may have tried your best to convince your boss through all or some of the above-mentioned ways. When you found no positive response from the boss, only then you may have posted it here. This is my assumption.

You can write an email and state two points:

a. If he lacks knowledge of MW: Elaborate in detail.

b. If he knows the MW Act but denies due to financial burden: Share case laws that attract significant penalties, interest, and punishment if a violation occurs.

c. Check if the lack of convincing power to top management to implement the MW Act is due to financial concerns and provide confidence to your boss positively.

All the best.

With Best Regards,
Prashant