Minimum Wage Compliance: Are Companies Really Paying What They Should Be?

Minimum Wage Compliance Issues

Dear experts,

It has been observed that despite minimum wage rules and regulations set by both state and central authorities, many companies do not provide wages in accordance with the Minimum Wage Act. In numerous companies, salaries are significantly below the minimum wages outlined in the notification.

I have several questions:

1. Is it mandatory to pay the minimum wages as specified, considering that many companies do not adhere to this in practice?
2. Are the minimum wages mentioned in the notification referring to basic or gross salary?
3. Do minimum wages vary based on the skill level of employees?
4. A lot of small companies struggle to meet the minimum wage requirements. How common is this issue for companies to face?

Kindest regards,

Is it compulsory to pay minimum wages as prescribed since many companies are not following it in practice?

Reply: Under The Minimum Wages Act 1948, it is mandatory to pay minimum wages as per the class of industries defined under the schedules of the Act. No company can avoid this. It will be illegal, and the Courts/Labour Department may take serious action against non-compliant companies.

The minimum wages prescribed in the notification are basic or gross salary?

Reply: The minimum wages are different for different classes of industries as notified by respective state governments from time to time. The minimum wages are BASIC; there will also be a column specifying Special Allowance (DA). These together become minimum wages. Thereafter, the addition of allowances such as HRA, PF, ESIC, and any other allowance, etc., is added to arrive at the gross salary.

Do minimum wages change as per the skill level of employees?

Reply: Yes. The minimum wages are notified as per the class of industries, category of workmen, i.e., skilled, semi-skilled, and unskilled (only three categories), and the different zones in which the establishment operates (e.g., Zone I, II, III as defined by the state).

Many small companies do not afford to pay the salaries as per the minimum wages act.

Reply: It is mandatory for all companies/employers to pay salaries as per the Minimum Wages Act. It does not matter if the size of the company is big or small or a question of affordability. Further, any contravention of the same may open up the employer to penal consequences under the Act or IDA or any other provisions of law.

As discussed above, it is mandatory to pay salaries as per minimum wages as applicable to the establishment/industry, and there is no way out of the same.

Hope this answers your query.

Regards

Dear Mr. Amar, Paying less than minimum wages is an offense. It is also the duty of one to bring the violation to the notice of the authority for action. The salary is something different from wages. Salaried people receive various allowances in their payment, whereas people are being paid as per the rate declared by the appropriate government, whether central or state.

Is it compulsory to pay minimum wages?

The minimum wages prescribed in the notification are basic wages.

Minimum wages are based on the skill level of employees.

Companies, whether small or large, are bound to pay minimum wages. It is the mentality of the employer not to pay, but it is wrong to say that it is not affordable. To run a company/business, one cannot violate the rules and regulations of the land in force.