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Section 5: Payment of minimum rate of wages

The Code on Wages, 2019 (Act No. 29 of 2019) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter II: Minimum Wages
Competent Labour Forum
Act No. 29 of 2019
Section 4 All 67 Sections of Code on Wages, 2019 Section 6

Legal Commentary & Landmark Judgments: Section 5

Section 5 enacts an absolute, non-derogable statutory prohibition restraining every employer from paying to any employee wages at a rate less than the minimum rate of wages notified by the appropriate Government for the relevant category of employment.

  • Mandatory Wage Floor Obligation: Imposes strict liability upon employers to ensure that total wages paid to an employee never fall below the notified statutory minimum wage rate applicable to the relevant skill level, geographical area, or work class.
  • Inoperability of Freedom of Contract and Waiver: Any individual employment agreement, collective settlement, award, or custom purporting to accept wages lower than the statutory minimum rate is void ab initio under Section 67 and public policy.
  • Irrelevance of Employer Financial Incapacity: Financial hardship, commercial losses, economic depression, or balance-sheet insolvency of the employer cannot be pleaded as a defense against the statutory obligation to pay minimum wages.
Key Landmark Precedents:
  • Crown Aluminium Works v. Their Workmen (1958) AIR 1958 SC 30: A Constitution Bench of the Supreme Court held that an employer who cannot pay minimum subsistence wages has no right to exist in business; financial incapacity is legally impermissible as a justification for underpaying workers below the minimum wage standard.
  • Sanjit Roy v. State of Rajasthan (1983) 1 SCC 525: The Supreme Court held that the payment of wages below the statutory minimum wage constitutes 'forced labour' violating the fundamental right under Article 23 of the Constitution, holding that state welfare or famine relief schemes cannot bypass minimum wage laws.
  • People's Union for Democratic Rights v. Union of India (1982) 3 SCC 235: The Supreme Court held that where a worker provides physical or mental labor for remuneration less than the statutory minimum wage, it amounts to extraction of forced labor under Article 23, giving rise to direct constitutional remedies.
Courtroom Practice & Strategic Litigation Guidance:

In Section 45 recovery proceedings before the Authority, an employer's defense asserting business downturn, worker consent, or market adversity is untenable as a matter of settled constitutional law. Legal counsel must verify monthly pay slips against the latest State Labour Department minimum wage gazette notifications, ensuring that basic plus variable dearness allowance strictly meets the statutory threshold to avoid criminal prosecution and 10x compensation penalties.

Section 4 All 67 Sections of Code on Wages, 2019 Section 6