Thursday, 27 April 2017

Minimum Wages – Do NGOs need to comply?

NGOs often raise the question whether they should be paying minimum wages to their employees or whether the Minimum Wages Act applies to NGOs, whether registered as a charitable trust, society under the Act of 1860 or a company u/s 8 of the Indian Companies Act?

While the Minimum Wages Act 1948 does not make any specific reference to NGOs under any of the ‘scheduled employments’, it is applicable besides industries and factories to ‘establishments’ registered under the Bombay shops & establishment Act 1948 or the Factories Act 194, irrespective to the strength of employment. In other words even if an NGO registered under the Bombay shops & establishment Act has just one employee, the NGO must pay Minimum Wage to that employee. 


Minimum wage rates in India are fixed under the Minimum Wages Act, 1948. Since labour is a concurrent subject under the Indian Constitution, minimum wage rates are determined both by the Central Government and the Provincial Governments. Minimum wage rates in India are declared at the National, State, Sectoral and skill/occupational levels.

Minimum wage rates may be established for any region, occupation and sector. Also, minimum wage is established for trainees, youth and piece-rate workers.  Minimum wage is determined by considering the cost of living.

Minimum rate of wages may consist of a basic rate of wages and a cost of living allowance; or a basic rate of wages, with or without the cost of living allowance, and the cash value of concessions in respect of the supply of essential commodities at concession rates (if authorized); or an all-inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of the concessions (if any).

While fixing or revising minimum rates of wages, different minimum rates of wages may be fixed for different scheduled employments; different classes of work in the same scheduled employment; adults, adolescents, children and apprentices; and different localities. The minimum wage rates may be fixed by hour, day, month or any such other larger wage period as may be prescribed.

Minimum wage is announced for 45 scheduled employments in the Central Sphere while the State level minimum wage is determined by every state keeping in view the sectors more dominant in the State.

The term ‘Minimum Wage’ includes the Basic Wage plus Special allowance, as prescribed & published by the Labour Department from time to time for a given schedule of employment.

For example Maharashtra State has brought out the ‘Total Minimum Wages’ Chart for the Period 1st January 2017 to 30th June 2017.

The table for Shops & Commercial Establishments is as follows:
Special Allowance: Rs. 3,256.20

Zone I
Zone II
Zone III
Rs. 9,056.20
Rs. 8,756.20
Rs. 8,456.20
Rs. 8,656.20
Rs. 8,356.20
Rs. 8,056.20
Rs. 8,256.20
Rs. 7,956.20
Rs. 7,656.20

Zone I: Shall comprise of the areas falling within the limits of Municipal Corporation.
Zone II: Shall comprise of the areas falling within the limits of 'A' & 'B' grade Municipal Councils.
Zone III: Shall comprise of all other areas in the state, not included in Zone I and Zone II.

In accordance with the Minimum Wage Act, the employer is obliged to pay wages on regular and timely basis at least once a month.  Wage period may be fixed on hourly, daily, weekly or monthly basis. If the employment of a worker is terminated by or on behalf of the employer, the outstanding wages are paid within two days of employment termination. Wage periods can't be fixed for duration longer than one month.

Write to CAP if you have any queries related to labour law –

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