Minimum Wage Confusion: Should We Follow State or Central Rates for Our Contract?

We have signed a contract with a Central Government organization to undertake certain repair jobs. Our company and the Central Government organization are in the same locality. On all working days, we will be deputing our employees to do the job for a period of 3 months. Request clarification on whether our employees should be paid the Minimum Wage of the State or that of the Central Government.

Dear friend,

I believe the Central Government organization should have registered itself as the Principal Employer under the CLRA Act, 1970 with the Registering Authority appointed by the Central Government. Consequently, the contract labor should receive their wages at the minimum rates set by the Central Government only.

Hi, sir,

Possibly, there could be a confrontation as to which should be followed. There could be differences between central and state rates. If so, concerned employees tend to insist on whichever rate is higher, despite the fact that the unit has registration under one domain.

I do agree with you, Mr. Kumar, but what I have indicated is the legal position only. Besides, in the particular contract, the Central Government undertaking would have approved the contract based on the Central minimum wage rates only. Yet, I very faintly remember that certain Central Govt Undertaking, probably BSNL, have standing instructions to adopt whichever higher rate in such disparity between Central and State minimum wages for the same employment.

Determining Applicable Labour Act for Private Organizations

How will we determine if a private organization falls under the State Labour Act or the Central Labour Act?

Thank you.

The term "Appropriate Government" is defined in the Minimum Wages Act 1948 and it reads as follows:

Section 2 (b) "appropriate Government" means -

(i) In relation to any scheduled employment carried on by or under the authority of the Central Government or a railway administration or in relation to a mine, oil field or major port, or any corporation established by a Central Act, the Central Government; and

(ii) In relation to any other scheduled employment, the State Government.

So, as regards any private organization, the Central Government notification would apply only in cases of a mine, oil field, or major port. In all others, it will be the State Government notified rates that will be applicable.