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Legislations

The Code on Wages, 2019

By: Naman Yadav, 3rd Year Student at University Five Year Law College.

Introduction

The Code on Wages, 2019 was notified by the Ministry of Law and Justice, Government of India on August 8, 2019, and seeks to amend the laws related to wages and bonus and subsumes the provisions of the Payment of Wages Act, 1936, the Equal Remuneration Act, 1976, the Payment of Bonus Act, 1965 and the Minimum Wages Act, 1948.

The provisions of timely payment of wages and minimum wages to all employees irrespective of the wage ceiling and sector will have uniform applicability under the Code.

Definition of wages under the Code:

As per the Code components of wages include: (a) basic pay (b) dearness allowance (c) retaining allowance.

As per the Code components of wages include: (a) basic pay (b) dearness allowance (c) retaining allowance.

Following components are excluded from the definition of wages: (a) conveyance allowances; (b) house rent allowance; (c) overtime allowance; (d) gratuity payments; (e) bonus payments (f) employer contribution to any pension or provident fund; (g) value of the house- accommodation, medical attendance, supply of light or other amenity or of any service excluded from the computation of wages by an order of the appropriate Government; (h) sums paid to the employee to defray special expenses on him by the nature of his employment; (i) remuneration payable under award or settlement between the parties or order of court or tribunal; (j) commission payable to employee; (k) retrenchment compensation or other retirement benefit payable to the employee or any ex- gratia payment made to the employee on the termination of his employment.

Highlights of the Code

Coverage: This code will be applicable to all employees. The decision for employments such as mines, railways and oil fields will be taken by central government and decision for all other employments will be taken by state government.

Fixing the minimum wage: Under the Code employers are prohibited from paying wages less than the minimum wages. Central or state government will notify and also review and revised Minimum wages.

Under the Code employers are prohibited from paying wages less than the minimum wages.

Two factors are taken into account while fixing minimum wages by the central or state government (a) skill of workers and (b) difficulty of work.

Floor wage: According to the living standards of workers the central government will fix a floor wage. The central government may consult with Central Advisory Board and State governments before fixing the floor wage. The minimum wage must be higher than the floor wage.

Overtime: The number of hours constituting a normal working day may be fixed by the central or state government. The employees are entitled to overtime wage, which must be at least twice the normal rate of wages if they work in excess of a normal working day.

The number of hours constituting a normal working day may be fixed by the central or state government.

Gender discrimination: Under the Code gender discrimination is prohibited in matters related to recruitment of employees and wages for the same work.

Payment of wages: Wages will be paid in (i) currency notes (ii) by cheque (iii) coins (iv) through electronic mode (v) by crediting to the bank account. The employer shall fix the wage period as either (i) daily (ii) weekly (iii) fortnightly, or (iv) monthly

Deductions: Employee’s wages may be deducted on certain grounds including: (i) accommodation given by the employer (ii) fines (iii) absence from duty (iv) recovery of advances given to the employee, among others.

Advisory boards: Advisory boards shall be constituted by the central and state governments. The Central Advisory Board will consist of: (i) employers, (ii) employees, (iii) independent persons, and (iv) five representatives of state governments. Further, one-third of the total members on both the central and state boards will be women.

Advisory boards shall be constituted by the central and state governments. The Central Advisory Board will consist of: (i) employers, (ii) employees, (iii) independent persons, and (iv) five representatives of state governments.

Offences: Under the code the penalties are specified for offences committed by an employer, such as (i) contravening any provision of the code (ii) paying less than the due wages. Nature of offence decides penalties, the maximum penalty being imprisonment for three months along with a fine of up to one lakh rupees. 

Analysis

Under the code the definition of ‘wages’, is unified which is a step towards providing better clarity. Separate definitions for ‘worker’ and ’employee’ and their usage under the Code are very confusing. Further, under the code ‘Inspector Raj’ perception is changed in relation to the Government’s regulation of labor by introducing inspectors-cum-facilitators instead of merely inspectors.

A pivotal transformation has been created under the Code with respect to offences and penalties. The Code also adopted new technology in matters such as mode of payment of wages, inspection procedures, which are aimed at achieving its digitalization goals in governance.

A pivotal transformation has been created under the Code with respect to offences and penalties. The Code also adopted new technology in matters such as mode of payment of wages, inspection procedures, which are aimed at achieving its digitalization goals in governance.

Conclusion

The aim of the legislation is to balance the interests of employer and the employee. It makes an attempt to replace its obsolete provisions. The Code has provided an impetus for trade unionism by allowing a registered trade union to make complaints for offences under the Code. It also provides confidence among business community.

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