Minimum Wages are the lowest rates of remuneration that an employer is legally required to pay workers engaged in "scheduled employments," as fixed and notified by the appropriate government. Under Indian law, minimum wages are governed by the Minimum Wages Act, 1948, which empowers both the Central and State Governments to fix, review, and revise minimum wage rates under Section 3.
Legal definition
The Minimum Wages Act, 1948 does not define "minimum wages" in its definitions section but operationalises the concept through Section 3:
Section 3(1): The appropriate Government shall, in the manner hereinafter provided, — (a) fix the minimum rates of wages payable to employees employed in an employment specified in Part I or Part II of the Schedule and in an employment added to either Part by notification under section 27.
Section 4 further provides that any minimum rate of wages fixed under the Act may consist of: (i) a basic rate of wages and a special allowance (cost of living or dearness allowance); (ii) a basic rate of wages with or without the cost of living allowance, and the cash value of concessions in respect of essential commodities; or (iii) an all-inclusive rate allowing for the basic rate, the cost of living allowance, and the cash value of concessions.
The Schedule to the Act lists "scheduled employments" — categories of employment to which the Act applies. These are divided into Part I (employments in respect of which the Central Government is the appropriate government, such as mines, railways, and ports) and Part II (employments in respect of which the State Government is the appropriate government, such as agriculture, construction, and shops and establishments).
New law equivalent: The Code on Wages, 2019 — intended to consolidate the Minimum Wages Act, 1948, the Payment of Wages Act, 1936, the Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976 — introduces a national floor wage under Section 9 and extends minimum wage coverage to all employments (not merely scheduled employments) under Section 6.
How courts have interpreted this term
U. Unichoyi v. State of Kerala [AIR 1962 SC 12]
The Supreme Court upheld the constitutional validity of the Minimum Wages Act and established a foundational hierarchy of wages. The Court distinguished between three levels: the "bare subsistence" or "floor wage" (the absolute minimum needed for survival), the "minimum wage" (which must include a margin above bare subsistence to provide for education, medical care, and some measure of comfort), and the "fair wage" (which approaches the living wage). The Court held that the minimum wage fixed by the government must exceed mere bare subsistence and include provision for essential human needs.
Bijay Cotton Mills Ltd. v. State of Ajmer [AIR 1955 SC 33]
The Supreme Court held that an employer who cannot pay minimum wages has no right to engage labour. The payment of minimum wages is an absolute obligation, and the employer's financial incapacity or inability to make profits is no defence. If an industry cannot sustain itself while paying minimum wages, it has no right to exist.
Reptakos Brett & Co. Ltd. v. Its Workmen [(1992) 1 SCC 290]
The Court expanded the components of minimum wage beyond the norms laid down in the 15th Indian Labour Conference (1957). The Court held that children's education allowance, minimum medical requirements, and expenditure on festivals and ceremonies should be treated as components of the minimum wage, adding approximately 25% to the basic figure derived from food, clothing, and shelter calculations.
Why this matters
Minimum wages represent the most fundamental labour protection in India — the statutory guarantee that no employer may pay less than a specified rate for work performed. The Act's significance extends beyond factory workers: with states progressively adding employments to their schedules, minimum wage coverage now extends to agricultural labourers, domestic workers, construction workers, shop and establishment employees, and dozens of other categories.
For employers, minimum wage compliance is non-negotiable. Section 22 of the Act makes it a criminal offence to pay less than the notified minimum wage, punishable with imprisonment up to six months and a fine up to Rs 500. Practical challenges arise from the fragmented nature of the system: each state fixes its own rates for Part II scheduled employments, rates vary by skill level (unskilled, semi-skilled, skilled, highly skilled), and revision cycles differ. An employer operating across multiple states must track and comply with different minimum wage schedules in each jurisdiction.
For workers, the practical challenge is enforcement. Despite the statutory mandate, widespread non-compliance persists, particularly in the unorganised sector, agriculture, and domestic work. The appointment of inspectors under Section 19 and the claims mechanism under Section 20 provide enforcement tools, but their effectiveness varies dramatically across states.
The Code on Wages, 2019 — once notified — will simplify the framework significantly by introducing a national floor wage (below which no state can fix its minimum wage) and by removing the concept of "scheduled employment," thereby extending minimum wage coverage universally to all workers.
Related terms
Broader concepts:
Related statutory benefits:
Related concepts:
Frequently asked questions
How are minimum wages fixed in India?
Under Section 5 of the Minimum Wages Act, the appropriate government may fix or revise minimum wages through either of two methods: (a) by appointing a committee and sub-committees to advise on the rates, or (b) by publishing a gazette notification of proposed rates and inviting objections within a specified period. Minimum wages must be reviewed at intervals not exceeding five years. In practice, most states revise rates every one to two years, linked to the Consumer Price Index (CPI).
Is the minimum wage the same across all states in India?
No. Minimum wages in India vary significantly by state, employment type, and skill level. Each state government fixes its own minimum wage rates for Part II scheduled employments. For example, the daily minimum wage for unskilled workers in Delhi (currently around Rs 713) is substantially higher than in some northeastern states (around Rs 290-350). The Code on Wages, 2019 proposes a national floor wage to establish a uniform minimum below which no state can fix its rates.
Can an employer pay less than minimum wages by mutual agreement?
No. The Supreme Court in Bijay Cotton Mills (1955) established that the payment of minimum wages is an absolute statutory obligation. Any agreement, contract, or custom that provides for payment below the minimum wage is void under Section 24 of the Act. The employer's inability to pay or the worker's willingness to accept less does not override the statutory mandate.
What is the difference between minimum wage and living wage?
The Supreme Court in U. Unichoyi (1962) distinguished three tiers: (i) the bare subsistence wage (absolute floor for survival), (ii) the minimum wage (includes provision for education, medical needs, and a measure of comfort beyond bare subsistence), and (iii) the living wage (provides for a standard of comfort including insurance, amenities, and reasonable leisure). The minimum wage under the Act falls between bare subsistence and the living wage.
This entry is part of the Veritect Indian Legal Glossary, a comprehensive reference of Indian legal terminology grounded in statutory text and judicial interpretation.
Last updated: 2026-03-27. Veritect provides this content for informational purposes and does not constitute legal advice.