Wage conceptWage Definition under various Labour

Legislation

The term “wages” may be used to describe one of several concepts, including wage rates, straight-time average hourly earnings, gross average hourly earnings, weekly earnings, weekly take home pay, and annual earnings.

The concept “earnings” relates to remuneration in cash and in kind paid to employees, as a rule, at regular intervals for time worked or work done together with remuneration for time not worked Wages, in the widest sense, means any economic compensation met by the employer under some contract to his employees for the services rendered by them Gross earnings may differ from the wage rate not only because of the number of days or weeks on which a worker is able, or willing to secure employment. The two terms often used interchangeably are “wages” and “salary” .

In the Indian context, soon after the independence, Government of India set up a Committee on Fair Wages in 1948 which has defined various concepts of wages which govern the wage structure in the country specially in those sectors which can be termed as underpaid and where workers do not have bargaining power through unions. These concepts are: minimum wage, living wage, and fair wage. Later, the concept of need-based minimum wage was added.

Wage Concept

A minimum wage is one which has to be paid by an employer to his workers irrespective of his ability to pay. According to the above committee,

“Minimum wage is the wage which must provide not only for the bare sustenance of life, but for the preservation of the efficiency of the workers. For this purpose, minimum wage must provide some measure of education, medical requirements and amenities. “

Minimum Wages Act. 1948. does not define the concept of minimum wages but empowers the Central Government as well as State Governments to fix minimum wages from time to time. Wherever this Act applies, the payment of minimum wages is mandatory. In 1957, Indian Labour Conference elaborated the concept of fixation of minimum wars which were termed as need-based minimum wages. For the calculation of wages, the Conference suggested the following guidelines:

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Concepts of Different WagesMINIMUM WAGES:

The standard working class family should be taken to consist of three consumption units for the earner; the earnings of women, children and adolescents should be disregarded.

The minimum food requirements should be calculated on the basis of the net intake of 2.700 calories per adult.

The clothing requirements should be estimated at a per capita consumption of 18 yards per annum per person.

In respect of housing. the norms should be the minimum rent charged by the Government in any area for houses provided under subsidized housing scheme for low-income groups.

Fuel, lighting and other miscellaneous items of expenditure should constitute 20 per cent of the total minimum wage

Industrial Engineering Establishments employee more than 50 workers

Unskilled  I 135.1 81.2 216.30

Semi skilled  I 136.2 81.2 217.40

Skilled B I 138.4 81.2 219.60

Skilled A I 141.3 81.2 222.50

Unskilled  II 134.4 81.2 215.60

Semi skilled  II 135.5 81.2 216.70

Skilled B II 137.6 81.2 218.80

Skilled A II 140.5 81.2 221.70

Unskilled  III 133.6 81.2 214.80

Semi skilled  III 134.7 81.2 215.90

Skilled B III 136.9 81.2 218.10

Skilled A III 139.8 81.2 221.00

Hotel Restaurant & Eating houses

Unskilled  I 135.1 81.2 216.30

Semi skilled  I 136.5 81.2 217.70

Skilled I 137.6 81.2 218.80

Unskilled  II 134.4 81.2 215.60

Semi skilled  II 135.8 81.2 217.00

Skilled II 136.9 81.2 218.10

Unskilled  III 134 81.2 215.20

Semi skilled  III 135.4 81.2 216.60

Skilled III 136.2 81.2 217.40

Current Min Wage in Engineering Industries and Hotels (per day basis)

Class-I-A 

Manager, Head Munim, Secretary, Head Cashier, Stenographer, Head Clerk, Office Superintendent, Head Salesman, Employee who works efficiently by exercising considerable independent judgement discharges his duties with responsibility and possesses thorough and comprehensive knowledge of trade, craft or industry in which he is employed. Employees by whatever name called doing work of the nature done by persons falling under any of the foregoing entries.

Class-I-B 

Junior Clerk, Bill Clerk, Ugharani Clerk, Delivery Clerk, Typist, Munim, Cashier, Accountants, Salesman, Sales Clerk, Compounder, Driver, Employee who does the work of a well defined routine nature and discharges the duties assigned to him independently and with responsibility, Employees by whatever name called doing work of the nature done by persons falling under any of the foregoing entries.

Class-II

Packer, Builder, Tollatas, Shop . Asst., Employees who performs duties assigned to him of a relatively narrow job involving routine operations, Employees by whatever name called doing work of the nature done by persons falling under any of the foregoing entries.

Class-III

Peon, Messenger, Watchman, Mazdoor, Employee who performs duties of simple nature and physical exertion, , Employees by whatever name called doing work of the nature done by persons falling under any of the foregoing entries.

The concept of fair wage is linked with the capacity of the industry to pay. The Committee has defined fair wage as follows:

“Fair wage is the wage which is above the minimum wage but below the living wage. The lower limit of the fair wage is obviously the minimum wage: the upper limit is to be set by the capacity of the industry to pay. “

Thus, fair wage depends on different variables affecting wage determination. Such factors are :

• labour productivity prevailing wage rates• the level of national income and its distribution• the capacity of industry to pay

At present, the concept of fair wages is followed by the most business organisations.

Fair Wage

Along with the minimum wage the Committee on Fair Wages has given the concept

of living wage which has been defined as follows: “A living wage is one which should enable the earner to provide for himself

and his family not only the bare essentials of food, clothing and shelter but a measure of frugal comfort including education for his children, protection against ill-health, requirements of essential social needs and a measure of insurance against the more important misfortunes including old age. “

Living wage is more than the concept of minimum wage. Such a wage is determined keeping in view the national income and paying capacity of industrial sector.

The Committee also observed that since the national income did not support the payment of living wage. It should be implemented in three phases.

In the initial stage the wages to be paid to the entire working class were to be established and stabilized.

In the second phase fair wages were to be established in the community and industry.

In the final phase the working class was to be paid the living wage.

Living Wage

Under of Payment of wages Act.: "wages" means all remuneration (whether by way of salary, allowances or otherwise)

expressed in terms of money or capable of being so expressed which would, if the terms 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

a. any remuneration payable under any award or settlement between the parties or order of a Court;

b. any remuneration to which the person employed is entitled in respect of overtime work or holidays or any leave period.

c. any additional remuneration payable under the terms of employment (whether called a bonus or by any other name)

d. any sum which by reason of the termination of employment of the person employed is payable under any law, contract or instrument which provides for the payment of such sum, whether with or without deductions, but does not provide for the time within which the payment is to be made.

e. any sum to which the person employed is entitled under any scheme framed under any law for the time being in force;

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Wage Definition under various Labour Legislation

but does not include:

a. any bonus (whether under a scheme of profit sharing or otherwise) which does not form part of the remuneration payable under the terms of employment or which is not payable under any award or settlement between the parties or order of a Court;

b. the value of any house-accommodation, or of the supply of light, water, medical attendance or other amenity or of any service excluded from the computation of wages by a general or special order of the State Government.

c. any contribution paid by the employer to any pension or provident fund, and the interest which may have accrued thereon;

d. any travelling allowance or the value of any travelling concession

e. any sum paid to the employed person to defray special expenses entailed on him by the nature of his employment; or

f. any gratuity payable on the termination of employment in cases other than those specified in sub-clause

Under Minimum Wages 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,1*[and includes house rent allowance], but does not include.

1. 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

2. any contribution paid by the employer to any Pension Fund or Provident Fund or under

any scheme of social insurance

3. any travelling allowance or the value of any travelling concession

4. any sum paid to the person employed to defray special expenses entailed on him by the

nature of his employment; or

5. any gratuity payable on discharge

Under Employee State Insurance Act:

wages ” means all remuneration paid or payable in cash to an employee, if the terms of the contract of employment, express or implied, were fulfilled and includes 1[any payment to an employee in respect of any period of authorised leave, lock-out, strike which is not illegal or layoff and] other additional remuneration, if any, 2[paid at intervals not exceeding two months], but

does not include —

a. any contribution paid by the employer to any pension fund or provident fund, or under this Act ;

b. any travelling allowance or the value of any travelling concession ;

c. any sum paid to the person employed to defray special expenses entailed on him by the nature of his employment ; or

d. any gratuity payable on discharge

Under EPF & MP Act:

“basic wages” means all emoluments which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him,

but does not include

a. the cash value of any food concession

b. any dearness allowance that is to say, all cash payments by whatever name called paid to an employee on account of a rise in the cost of living, house-rent allowance, overtime allowance, bonus, commission or any other similar allowance payable to the employee in respect of his employment or of work done in such employment

Under Gratuity Act:

“wages” means all emoluments which are earned by an employee while on duty or on leave in accordance with the terms and conditions of his employments and which are paid or are payable to him in cash and includes dearness allowance but does not include any bonus, commission, house rent allowance, overtime wages and any other allowance.

Under Contract Labour Act:

"wages" shall have the meaning assigned to it in clause (vi) of section 2 of the Payment of Wages Act, 1936 (4 of 1936).

Under Workmen Compensation Act:

"wages" includes any privilege or benefit which is capable of being estimated in money other than a travelling allowance or the value of any travelling concession or a contribution paid by the employer of a workman towards any pension or provident fund or a sum paid to a workman to cover any special expenses entailed on him by the nature of his employment;

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