Food Services Management

Wages – Definition of minimum wage, Objectives, Components of wage, Income not included in the minimum wage, Fixation of minimum wages, Revision of minimum wages, Advantages

Definition of minimum wage

Minimum wage has been defined as “the minimum amount of remuneration that an employer is required to pay wage earners for the work performed during a given period, which cannot be reduced by collective agreement or an individual contract.


☆To provide minimum wages to theworkers working in organized sector.

☆To stop exploitation of the workers

☆To empower the government to take steps for fixing minimum wages and to revise it in a timely manner.

☆To safeguard the interests of the workers engaged in the unorganized sector.

☆To provide for the appointment of Advisory Committees and Boards having equal number of representatives of both employers as well as workers.

Components of wage

The statutory minimum wage is based on the gross wage payable for a normal working week (i.e.) before overtime payments.

Gross wage can consist of:

■The basic wage agreed in the contract

■Performance related payments and allowances for shift work, irregular hours

■Weekly or monthly fixed payments for the turnover generated

■Work-related payments by third parties, (E.g.) tips or payments agreed between the employee and the employer.

Income not included in the minimum wage

Some income components are not included in the calculation of the minimum wage.

■Overtime pay

■Leave allowance

■Profit shares

■Special payments, (e.g.) incidental payments received for reaching sales targets

■Future payments (e.g. Pension and saving schemes)

■Expense allowances

■End-of-year allowances

Fixation of minimum wages

Revision of minimum wages

The minimum rates of wages will be revised, every five years, by the government.


■Helps in reducing tax burden on communities

■Helps in setting small business budgets

■Serves as an employment incentive

■It is a common reference when hiring

■Protects workers from exploitation by unscrupulous employers

■Motivates employees to improve their skills

■Improves the economy

■Provides social stability within communities

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