In India, the law is clear—every worker has the right to fair wages. However, many subcontractors bypass these rules to cut costs. When a subcontractor pays labourers less than the government-mandated minimum wage, the question arises: Do those workers still have a legal claim to minimum wages? Let’s explore this case step by step with facts, issues, legal principles, and judgment.
Facts of the Case
A public sector company outsourced part of its civil maintenance work to a private subcontractor. The contractor hired over 50 labourers to carry out the work. These workers were promised timely payments but were paid less than the prevailing minimum wage rates set by the state government.
When the workers questioned the pay, the subcontractor responded by citing low margins in the agreement. The workers approached the local labour office and filed a complaint. They demanded full compensation based on the minimum wage rates applicable to their type of work and region.
Issues of the Case
The following issues emerged in this case:
- Are contract workers covered under the Minimum Wages Act, 1948?
- Is the principal employer responsible if the subcontractor fails to pay the minimum wage?
- Can workers employed by a private subcontractor claim the minimum wage from a government-linked project?
- Does lack of profit or budget override legal wage obligations?
These issues need resolution through interpretation of labour laws and legal precedents.
Principles and Related Legal Framework
The Minimum Wages Act, 1948 governs the payment of minimum wages across various industries and employment types in India. It applies to all scheduled employments listed under the Act, whether the work is performed directly or through a contractor.
Key Legal Principles:
- Section 2(h) defines ‘employee’ broadly to include any person employed for hire or reward in any scheduled employment.
- Section 3 empowers the appropriate government to fix minimum rates of wages for scheduled employment. These rates are binding regardless of the nature of the employer (private or public, direct or subcontracted).
- Section 12 mandates that every employer must pay wages not less than the minimum rates fixed under the Act.
In this context, minimum wage entitlement applies uniformly. Whether the worker is employed by the company directly or through a contractor, the law does not permit wages below the notified minimum.
Additionally, under the Contract Labour (Regulation and Abolition) Act, 1970, the principal employer is jointly responsible for ensuring that contract labour receives wages as per law.
Judgment and Conclusion
The court, in several judgments, has consistently upheld the rights of workers to receive minimum wages, regardless of the employment arrangement.
In People’s Union for Democratic Rights vs. Union of India (1982 AIR 1473), the Supreme Court ruled that the right to minimum wage is a fundamental right under Article 23 of the Constitution, as payment below the minimum wage amounts to forced labour.
In this case, the labour court held that the subcontractor violated the Minimum Wages Act, 1948, and directed the payment of wage arrears to the workers. The court also placed the responsibility on the principal employer to ensure compliance with wage laws.
The judgment reaffirmed that financial constraints or profit margins cannot justify non-payment of minimum wages. Workers are entitled to lawful compensation for their labour, and both subcontractors and principal employers must comply with legal standards.
