Code of Wages, 2019 : An Overview

INTRODUCTION

The Code on Wages, 2019 also known as the Wage Code is an act of parliament which unified the provisions of four labour laws that are:

  1. The Payment of Wages Act, 1936
  2. The Minimum Wages Act, 1948
  3. The Payment of Bonus Act, 1965
  4. The Equal Remuneration Act, 1976

After the enactment of the code on wages 2019, all the above-mentioned acts stand repealed.

BACKGROUND

The Code on Wages Bill was introduced in Lok Sabha by the Minister of Labour on July 23, 2019. This Bill was originally introduced on August 10, 2017 by Minister of State for Labour and Employment “Santosh Gangwar”. The Code on Wages, 2019 passed in Lok Sabha on July 30, 2019 and in Rajya Sabha on August 02, 2019.

On August 8, 2019 the bill received the assent from Honourable President Ram Nath Kovind and was published in The Gazette of India on the same date.

DEFINITION OF WAGES UNDER THE CODE ON WAGES 2019

the definition of wages has been simplified under this code and is defined under section 2(y)[1] as:

(y) “wages” means any remuneration whether by way of salaries, benefits or otherwise, expressed in terms of money or capable of being so expressed which would, if the conditions of employment, express or implied, were met, would be payable to a person working in respect of his employment or of work done in such employment, and includes, —

(i) base salary;

(ii) dearness allowance; and

(iii) retaining allowance, if any,

but does not cover ––

(a) any bonus payable under any legislation that is in force for the time being, which is not part of the remuneration payable under the terms of employment;

(b) the value of any house-accommodation, or light supply, water, medical treatment or other facilities or of any service exempt from the computation of wages by a general or special order of the appropriate Government;

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(c) any contribution made to any pension or provident fund by the employer and any benefit that may have accumulated thereon;

(d) any conveyance allowance or the value of any travelling concession;

(e) any amount paid to the employed person to defray special expenses entailed

on him by the nature of his employment;

(f) an allowance for house rent;

(g) remuneration payable under any award or settlement between the parties or order of a court or Tribunal;

(h) any overtime allowance;

(i) any commission payable to the employee;

(j) any gratuity payable on the termination of employment;

(k) any retrenchment compensation or other retirement benefit payable to the employee or any ex gratia payment made to him on the termination of employment:

Provided that, for the purpose of calculating the wages under this clause, if payments made by the employer to the employee under clauses (a) to (i) exceeds one-half, or such other per cent. as may be notified by the Central Government, of the all remuneration calculated under this clause, the amount which exceeds such one-half, or the per cent. so, notified, shall be deemed as remuneration and shall be accordingly added in wages under this clause:

Provided the emoluments mentioned in clauses (d), (f), (g) and (h) shall be used for the measurement of wages for the purpose of fair wages for all genders and for the computation of wage.

FEATURES OF CODE ON WAGES 2019

  • It defines various definitions such as accounting year, contractor, contract labour, employee, employer, worker, etc. It also defines wages in a very understandable and simplified way. (section 2)
  • It talks about prohibition of discrimination by the employer on the ground of gender. (section 3)
  • Universalization of minimum wage regulations and quick and efficient payment of wages to all workers regardless of sector and salary limit. The provisions of both the Minimum Wages Act and the Payment of Wages Act currently apply only to workers working in Scheduled Employments below a particular wage ceiling.
  • Number of registers, returns, forms etc. may not only be filed and maintained electronically, but no more than one template may be prescribed via rules.
  • Many improvements in inspection schemes have been made, including web-based randomized computerized inspection schemes, jurisdiction-free inspections, electronic calling for inspection, fines composition, etc. Each of these improvements would be conducive to labor law enforcement with openness and accountability.
  • The limitation period was extended to 3 years and made universal for the submission of claims for minimum wages, bonuses, fair remuneration, etc., as opposed to the current ranging period from 6 months to 2 years.
  • The minimum wage rates set by the government concerned shall not be below the floor wage and, if the minimum wage rates set by the government concerned earlier surpass the floor wage, the governments concerned shall not lower the minimum wage rates set by the government earlier. (section 9)
  • Government can, by notification, determine payment of wages by an industrial or other institution only by cheque or by crediting the wages in its bank account.
  • The employer shall set the wage period for employees on a regular or weekly basis, or on a fortnightly or monthly basis, provided that no wage period for any employee extends one month, provided that specific wage periods may be fixed for different establishments. (section 16)
  • The wage payable shall be granted within 2 working days of its, dismissal, withdrawal or, as the case may be, resignation. Appropriate government that, if it considers fair in view of the circumstances in which the wages are to be paid, grant some other time limit for payment of wages. (section 17)
  • Deductions from the wages can be made on the grounds of fine, absence from duty, damages or loss of goods, recovery, income tax, subscription, recovery of losses sustained by the railway, etc. (section 18)
  • Overall bonus of 20 per cent. An employer who has paid an employee part of the bonus payable under this Code before the date on which that bonus is payable shall be entitled to subtract the bonus sum so paid from the bonus sum payable to the employee under this Code for that accounting year and the employee shall be entitled only to collect the balance.
  • All sums payable by bonus under this Code to an employee shall be compensated by crediting it to their bank account within 8 months of the close of the accounting year. (section 39)
  • Employee will be disqualified from receiving bonus if he is dismissed from service for any fraud, riotous or violent behaviour, theft, sexual harassment, etc. (section 29)
  • Every Central Government must constitute Central Advisory Board and every State Government must constitute a State Advisory Board for advising the State Government for fixing or revising minimum wages, increasing employment opportunities, extent of women employment, any other matter related to the code. (section 42)
  • Appeal to the appellate authority within 90 days from the date of order. (section 49)
  • Penalties: – (section
  1. Less payment to the employee by the employer – Fine up to 50,000
  2. Any employer who have been convicted again for similar offence as specify above within 5 years – Imprisonment up to 3 months or Fine up to 1 lakh
  3. Any employer who contravenes the provisions of the code – Fine up to 20,000
  4. Any employer who have been convicted again for similar offence as specify above within 5 years – Imprisonment up to 1 months or Fine up to 40,000
  5. Non maintenance or improper maintenance of record by the employer – Fine up to 10,000
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[1] http://egazette.nic.in/WriteReadData/2019/210356.pdf (visited on 19th May, 2020)

Author: Bahaar,
Amity Law School, Noida 3rd Year Student

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