India Minimum Wages Overview

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Minimum Wages – Structural base for outsourced services
Definition : Section 2(h)of the MW Act.
"wages" means all remuneration, capable of being expressed in terms of money which would, if the terms of the contract of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment [and includes house rent allowance], but does not include- (i) the value of (a) any house accommodation, supply of light, water, medical attendance, or (b) any other amenity or any service excluded by general or special order of the appropriate Government; (ii) any contribution paid by the employer to any Pension Fund or Provident Fund or under any Scheme of social insurance; (iii) any travelling allowance or the value of any travelling concession ; (iv) any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment; or (v) any gratuity payable on discharge;
Key components of MW
Minimum Wages has 3 components

  • Basic
  • DA – Dearness Allowance OR CLA – Cost of Living Allowance OR Special Allowance (Maharashtra)
  • HRA

What State Government Fixes as Minimum Wages !
The Committee(s)/Advisory Board(s) constituted by the State Governments, while fixing/revising minimum wages, based on the basic / essential requirements for a living, CPI index, etc., and to some extent, the cost of house rentals. While some State Governments prescribes the break-up of the minimum wages in terms of Basic and Dearness Allowance(DA)/Cost of Living Allowance/Special Allowance(e.g. Maharasthra), some States prescribes a consolidated rate of MW, including Basic + DA. For instance, the Government of NCT, prescribes a consolidate rate of MW inclusive of BA but keep revising the variable component of DA, once in six months by notification.


HRA:
House Rent Allowance is specifically included in Section 2(h). Generally, if such allowance is part of general conditions of service/employment to the class of employees work to which one belongs to, it becomes payable if the conditions prescribed in the scheme are fulfilled. Some States, e.g., Maharashtra the State has prescribed that the HRA should comprise least 5% of the basic + Special Allowance.
Classification of workmen/employees for determination of minimum wages applicable.
Minimum Wages – Structural base for outsourced services


Skilled- A skilled employee is one who is capable of working efficiently, of exercising considerable 
independent judgment and of discharging his duties responsibly. He must possess a thorough and comprehensive knowledge of the trade, craft or industry in which he is employed.
Semi-skilled- A semi-skilled employee is one who does work generally of a well defined routine nature, where in the major requirement is not so much of the judgment, skill and dexterity, but of proper discharge of duties assigned to him for a relatively narrow job and where important decisions are made by others. His work is thus limited to the performance of routine operations of limited scope.


Unskilled- An unskilled employee is one who does operations that involve the performance of simple duties which require the exercise of little or no independent judgment or previous experience although a familiarity with the occupational environments is necessary. His work may thus require in addition to physical exertion familiarity with a variety of articles or goods.












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