‘The Code on Wages’, 2019 strives to consolidate, regularise, rationalise and simplify the laws relating to wages, bonus and matters connected therewith.
The labour ministry has decided to amalgamate 44 labour laws into four codes — on wages, industrial relations, social security, and safety, health and working conditions. The push to merge all 44 labour laws into four codes, comes from finance minister Nirmala Sitharaman’s budget statement that, the government proposed to streamline the multiple labour laws into a set of four labour codes.
The Code on Wage, 2019 is the first in a series of four labour codes proposed in the government’s labour reform initiative covering and amalgamating four statutes namely, the Minimum Wages Act, 1948, the Payment of Wages Act, 1936, the Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976. By the introduction of the code, the minimum wage shall be fixed by the Centre and will no longer be based on employment but on the basis of geography and skills of the employee.
Among, the large scheme of earlier labour laws, 17 are more than 50 years old and others belong to the pre-Independence era, thereby, this code will provide freshness to pre-existing laws. The Code on Wages was introduced in Lok Sabha by Labour and Employment Minister, Shri. Santosh Kumar Gangwar on July 23, 2019, and was passed on July 30, 2019. The bill was then passed by the Rajya Sabha on 2 August 2019. The bill received assent from President Ram Nath Kovind on 8 August 2019 and was duly notified in the Official Gazette of India on the same date.
The Code on Wage, 2019 (also known as Wage Code) is applicable to both organised and unorganised sector. The Wage Code specially provides that the central government will make wage-related decisions for employees employed in the field of railways, mines, and oil fields, among others and the state governments will make decisions for all other employments.
Moreover, the code strives to be gender-neutral. The Code prohibits gender discrimination in matters related to wages and recruitment of employees for the same work or work of similar nature. By adding this provision, the government has fulfilled its duty as described under Clause (a) of Article 39 of the Constitution.
Earlier, there were 12 definitions of wages in different labour laws which made its implementation difficult, but, with the introduction of Wage Code, a unified definition has been prescribed to the term, which will be universally applicable in respect of all labour codes. The definition has been more simplified. Now, Wages include salary, allowance, or any other component expressed in monetary terms. This does not include bonus payable to employees or any travelling allowance, along with others.
In respect of fixing the floor wage, the central government may obtain the advice of the Central Advisory Board and may consult with state governments and such wage shall be fixed taking in account the living standards of workers. As per the new Code, The central or state government may fix the number of hours that will constitute a normal working day and if an employee works in excess of a normal working day, they will be entitled to overtime wage, which must be at least twice the normal rate of wages.
The Wage Code has also specified the mode of payment, which shall include, coins, currency notes, cheque, credit to the notified bank account or through any verified electronic means. The wage period will be fixed by the employer as either: (i) daily, (ii) weekly, (iii) fortnightly, or (iv) monthly.
To balance the benefits given to employees, certain deductions have also been mentioned in the Wage Code. Under the Code, an employee’s wages may be deducted on grounds such as fines, absence from duty, accommodation given by the employer or recovery of advances given to the employee, among others. These deductions should not exceed 50% of the employee’s total wage.
Sometimes, there may be a clash between the employer and employee in regard to payment or deduction or any other matter therein. There were many instances that due to smaller limitation period, the claims of the workers could not be raised. To protect this interest of the workers, the limitation period has been raised to 3 years, uniform with regard to the filing of claims for minimum wages, bonus, equal remuneration etc., as against existing varying period between 6 months to 2 years.
The Code has also introduced changes in the inspection regimes. It has included web-based random computerised inspection, jurisdiction-free inspections, calling of information electronically for inspection, the composition of fines etc. All these changes have brought to bring more transparency.
The central and state governments will constitute advisory boards. The Central Advisory Board will consist of – employers, employees (in equal number as employers), independent persons, and five representatives of state governments. State Advisory Boards will consist of – employers, employees, and independent persons only. Further, one-third of the total members on both the central and state Boards will be women. The Boards will advise the respective governments on various issues including, fixation of minimum wages, and increasing employment opportunities for women.
The Code specifies penalties for offences committed by an employer, in case, he pays less than the due wages, or contravene any provision of the Code. In such a case penalties will depend on the nature of the offence, with the maximum penalty being imprisonment for three months along with a fine of up to one lakh rupees.
With all these changes set forth, it can be said that a historical step has been taken for ensuring the interest of the employees. Unified statutory protection is given to more than 60 crore workers and employees in the country in respect of timely payment for their minimum wages through this Wage Code.