CODE OF WAGES, 2019
Code of Wages, also known as the Wage Code was passed in August 2019.
The Act consolidates the provisions of four labour laws concerning wage and
bonus payments and makes universal the provisions for minimum wages and
timely payment of wages for all workers in India. The Acts which are
consolidated through the Code of Wages, 2019 are:
Payment of Wages Act, 1936,
Minimum Wages Act, 1948,
Payment of Bonus Act, 1965 and
Equal Remuneration Act, 1976.
The Code of Wages applies to all the establishments irrespective of the
number of employees working in the establishment. This code applies to all
the employees employed in both the organized and the unorganized sector.
However, the requirement of 20 or more employees in an accounting year
has been provided in the code for the application of Chapter IV of the code
governing the payment of bonus to employees. The Wage Code applies to all
categories of employees irrespective of any ceiling limit for the payment of
wages to the employees.
Overview
Amalgamate, Simplify and Rationalize the provisions of the subsumed
legislations
Applies to all establishments, employees and employers as defined
unless specifically exempt in the code
Spread over 9 chapters with 69 sections – as against 115 sections of the
earlier four legislations
Definitions provided in Chapter I – applicable across the code
Chapters II to IV covers Minimum Wage, Payment of Wages and
Payment of Bonus Provisions of Equal Remuneration are contained in
four sections of the first chapter
Specific provisions for Payment of Dues, Claim and Audit, Inspector cum
Facilitator, Offences and Penalties,
Miscellaneous provisions etc.
Key Definitions
Means a person who employs whether directly or through any person or on his behalf or on behalf of any per
EMPLOYEE
Any person other than an apprentice employed on wages by the establishment to do any skilled, semi-skilled,
EMPLOYER
Means any place where any industry, trade, business, manufacture or occupation is carried on and includes Go
ESTABLISHMENT
Any person other than an apprentice employed in any industry to do any manual, unskilled, skilled, technical,
employees
WORKER
Means a person who undertakes to produce a given result for the establishment, other than a mere supply of
CONTRACTOR
Highlights Of The Code And Major Compliances There under
Prohibition Of Discrimination On The Ground Of Gender
The Code on Wages, 2019, states that there shall be no discrimination in
an establishment or any unit thereof among employees on the ground of
gender in matters relating to wages by the same employer, in respect of the
same work or work of a similar nature done by any employee
No employer shall in order to pay equal remuneration:
(i) reduce the rate of wages of any employee; and
(ii) make any discrimination on the ground of sex while recruiting any
employee for the same work or work of similar nature and in the
conditions of employment, except where the employment of women in
such work is prohibited or restricted by or under any law for the time
being in force.
Where there is any dispute as to whether a work is of same or similar
nature, the dispute shall be decided by such authority as may be notified
by the appropriate Government.
Minimum Wages
1. No employer shall pay to any employee wages less than the minimum
rate of wages notified by the appropriate Government.
2. An employee, who works for less than normal working day, shall be
entitled to receive full wages, except where an employee fails to work
due to his unwillingness and in such other circumstances as
prescribed.
3. Where an employee does two or more classes of work to each of which
a different minimum rate of wages is applicable, the employer shall
pay not less than the minimum wage rate for each class of work,
proportionate to the time involved.
4. The overtime wage rate has been fixed at twice the normal rate of
wages for the hours worked in excess of the normal working hours.
Payment of Wages
1. All wages shall be paid in current coin or currency notes or by
cheque or by crediting the wages in the bank account of the
employee or by the electronic mode, except for certain specified
establishments, wages shall be paid only by cheque or by crediting
the wages in his bank account.
2. No wage period in respect of any employee shall be more than a
month.
3. The employer shall comply with the following time limits for
payment of wages for respective wage periods:
(i) For daily basis, at the end of the shift;
(ii) For weekly basis, on the last working day of the week
i.e before the weekly holiday;
(iii) For fortnightly basis, before the end of the second day
after the end of the fortnight;
(iv) For monthly basis, before the expiry of the seventh day
of the succeeding month.
(v) Where an employee has been—
i. removed or dismissed from service; or
ii. retrenched or has resigned from service, or
iii. unemployed due to closure of the establishment,
the wages payable to him shall be paid within two
working days of his removal, dismissal, retrenchment
or, as the case may be, his resignation.
Deductions from Wages
1. The employer shall not make any deductions from the wages of an
employee except those as are authorized under the code.
2. The total amount of deductions in any wage period shall not exceed
50% of such wages otherwise the excess deductions may be recovered
in such manner, as may be prescribed.
3. All such deductions and all realisations thereof shall be recorded in a
registers may be prescribed.
Imposition of fines on the employee
1. The employer, with the previous approval of the appropriate
government/ prescribed authority, shall exhibit on the premises of the
employment, a notice specifying the acts and omissions for which fine
may be imposed on any employee.
2. The total amount of fine which may be imposed in any one wage-
period on any employee shall not exceed an amount equal to 3% of
the wages payable to him in respect of that wage-period.
3. No fine shall be imposed on any employee who is under the age of 15
years.
4. No fine imposed on any employee shall be recovered from him by
installment or after the expiry of 90 days from the day on which it was
imposed.
5. All fines and all realisations thereof shall be recorded in a register as
may be prescribed; and all such realisations shall be applied only for
the welfare of persons employed as approved by the prescribed
authority.
Payment of Bonus
1. An annual bonus shall be paid to employees of the establishments in
which 20 or more persons are employed or were employed on any day
during an accounting year, drawing wages not exceeding the notified
threshold and who have put in at least 30 days work in an accounting
year.
2. In cases where the wage of an employee exceeds the notified
threshold, the bonus payable shall be calculated as if his wage were
such amount, so determined by the appropriate government or the
minimum wage fixed by the appropriate government, whichever is
higher.
3. The amount of minimum bonus has been fixed at rate of 8.33% of the
wages earned by the employee or Rs. 100, whichever is higher,
whether or not the employer has any allocable surplus during the
previous accounting year.
4. Bonus shall be paid by crediting it in the bank account of the employee
within a period of 8 months from the close of the accounting year.
Records, Returns and Notices
1. Every employer shall maintain a register containing the details with
regard to persons employed, muster roll, wages and such other details
in such manner as may be prescribed.
2. Every employer shall display a notice at a prominent place of the
establishment containing the abstract of this Code, category-wise
wage rates of employees, wage period, day or date and time of
payment of wages, and the name and address of the Inspector-cum-
Facilitator having jurisdiction.
3. Every employer shall issue wage slips to the employees in such
manner as may be prescribed.
4. The above provisions shall not apply in respect of the employer to the
extent he employs not more than 5 persons for agriculture or domestic
purpose.
Provisions relating to equal remuneration
The Wages Code prohibits discrimination 'on grounds of gender', and thus
making it gender neutral, allowing a third category of gender i.e.
transgender to also be protected from discrimination in matters of payment
of wages, recruitment and conditions of employment.
Floor Wages
The Central Government shall fix floor wage taking into account minimum
living standards of a worker and geographical areas. Where existing
minimum wages are higher than the floor wages, the same shall be retained.
The minimum rates of wages fixed by the appropriate Government shall not
be less than the floor wage. The appropriate Government shall review or
revise minimum rates of wages at an interval not exceeding 5 years.
The minimum wages shall be revised by the appropriate Government in
consultation with the Advisory Board constituted in accordance with the
Code.
Inspector-cum-Facilitator
With the intent to remove arbitrariness and malpractices in inspection, the
appropriate Government may, by notification, appoint Inspector-cum-
Facilitators, who shall have dual responsibility of advising employers and
workers relating to compliance with the provisions of this Code and also to
inspect the establishments as assigned to them.
The Code also provides for an Inspection Scheme introducing a web-based
inspection and calling of information relating to the inspection under this
Code electronically.
Penalties on Offences:
The Code provides for varying penalties depending on the nature of offence,
with the maximum penalty being imprisonment for three months along with
a fine of up to one lakh rupees.
Compounding of Offences
The offence not being an offence punishable with imprisonment only or with
imprisonment and also with fine have been made compoundable under the
code. Such offences may be compounded by a notified Gazetted Officer, for
a sum of 50% of the maximum fine provided for such offence in the manner
as may be prescribed
CONCLUSION
With its broad based applicability and uniform definition of wages, the code
surely promotes the aim of ease of doing business under the “Make in India”
policy of the Government of India. The Code has made it easier for
employers to understand and thereby comply with the provisions of law.
