CODE ON WAGES, 2019

CHAPTER III: PAYMENT OF WAGES

 CODE ON WAGES, 2019

• The Code on Wages, 2019, also known as the Wage

Code, is an Act of the Parliament of India that
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 Code repeals and replaces the Payment of
Wages Act, 1936, the Minimum Wages Act, 1948, the
Payment of Bonus Act, 1965, and the Equal
Remuneration Act, 1976.
 Origin

•The Payment of Wages Act, 1936 (hereinafter referred to as the Act) was enacted during
the period of colonization with the object, as outlined by the preamble of the Act to
regulate the payment of wages to certain classes of employed persons.
•Therefore, it is a labour welfare legislation which is enacted with two fold aim: first, is
to fix the date of payment of wages and secondly, to regulate the deductions from wages
whether as fine or otherwise.

•The Payment of Wages Act, 1936 was passed by the Legislative Assembly on basis of
recommendation of Royal Commission on Labour, when India was under the colonial
rule in the background of circumstances as discussed above that is, due to colonial rule
majority of industries or factories were held by the English Capitalist who operated the
same for prosperity of their own regardless of welfare of the Indian Labour and labour
movement was not strong enough to bargain with the employer.
• Minimum Wages Act 1948

• In 1919 the International labour organization highlighted the importance of minimum wages as a part
of the Treaty of Versailles.
• In 1928, a draft was adopted for minimum wages in the International Labour Conference.
• In 1929, the Royal Commission on labour adopted the subject of minimum wages and discussed
establishing statutory wage-fixing machinery in India.
• Dr. B.R. Ambedkar drafted the Minimum Wages Bill, on 11th April 1946 the bill was introduced and
enforced on 15th March 1948 due to delay by constitutional changes.
• Article 19 ( 1) (g) of Constitution of India provides Right to practice any profession or to carry on any
occupation, trade or business to all citizens but the Supreme Court ruled that the act is based on the
directive principles of state policy provided under Article 43 of Indian Constitution.
• The State shall endeavor to secure, by suitable legislation or economic organization or in any other
way, to all workers, industrial or otherwise, work, a living wage, conditions of work ensuring a decent
standard of life and full enjoyment of leisure and social and cultural opportunities.
Similarly, in U Unichoyi vs State of Kerala, 1963, the question was whether the setting of a
minimum wage through the Minimum Wages Act, 1948 is violative of Article 19 (1) (g) of
the constitution because the act did not define what is minimum wage and did not take into
account the capacity of the employer to pay. It was held that the act is beneficial legislation
and it must be construed in favor of the worker. In an underdeveloped country where
unemployment is rampant, it is possible that workers may become ready to work for
extremely low wages but that should not happen.
• The objective of the Payment of Bonus Act, 1965 is to provide for the payment of bonus to
the persons employed in certain establishments on the basis of profits or production.
• The object of the Payment of Bonus Act was very clearly described the purpose of the Bonus
Act was to maintain peace and harmony between labour and capital by allowing workers to
share the prosperity of the establishment and prescribing the maximum and minimum rates of
bonus.
• Equal Renumeration Act 1976
• An Act to provide for the payment of equal remuneration to men and women workers and for
the prevention of discrimination, on the ground of sex, against women in the matter of
employment and for matters connected therewith or incidental thereto.
 CODE ON WAGES, 2019
• The Code on Wages Bill was introduced in the Lok Sabha on 10 August 2017 by the Minister of
State for Labour and Employment (Independent Charge), Santosh Gangwar. The bill was referred to
a Parliamentary Standing Committee on 21 August 2017. The Committee submitted its report on 18
December 2018. The committee made 24 recommendations, of which 17 were incorporated into the
bill.
• The bill lapsed following the dissolution of the 16th Lok Sabha ahead of the 2019 general
elections. The Code on Wages Bill, 2019 was re-introduced in the House on 23 July 2019.
• Moving the bill for consideration, Gangwar stated that the government had held consultations
with trade unions, employers and State governments, and held tripartite consultations on 10 March
2015 and 13 April 2015. He also stated that a draft of the bill was made available on the Ministry of
Labour and Employment's website and suggestions from the general public were taken into account.
• Gangwar added that existing labour laws only governed payment of wages for about 40% of the
labour force and the Code on Wages would extend coverage to the entire labour force irrespective of
sector or wage ceiling. He noted that provisions on timely payment of wages would bring relief to
workers in the unorganized sector (beedi Worker, Plantation worker, fisherman, leather worker) of
the economy. The bill was passed by the Lok Sabha on 30 July 2019.
• The bill was passed by the Rajya Sabha on 2 August 2019. The bill received assent from
President Ram Nath Kovind on 8 August, and was notified in The Gazette of India on the same
date.
• The Union Ministry of Labour issued draft rules under section 67 of the Act on 7 July 2020 in the
Gazette. The draft rules will remain open for public feedback for 45 days and is expected to
come into force in September 2020. Some provisions of the Act have come into force on 18
December 2020.
• It has total 69.
• Total IX Chapters
No Discrimination between female and Male employee Relating to Wages
3. (1) 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.

Section 2 (v) "same work or work of a similar nature" means work in respect of which the skill, effort, experience and
responsibility required are the same, when performed under similar working conditions by employees and the difference if any,
between the skill, effort, experience and responsibility required for employees of any gender, are not of practical importance in
relation to the terms and conditions of employment.
Ashok Kumar Garg v State of Rajasthan (1994) 3 SCC 357 – The burden of proof lie on the person who claim equal pay for
equal work.
(2) No employer shall,— (i) for the purposes of complying with the provisions of sub-section (1), 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.

4. Decision as to disputes with regard to same or similar nature of work.

Where there is any dispute as to whether a work is of same or similar nature for the purposes of section 3, the dispute shall be
decided by such authority as may be notified by the appropriate Government.
5. Payment of minimum rate of wages
No employer shall pay to any employee wages less than the minimum rate of wages notified by the appropriate Government.

6. Fixation of Minimum Rate of Wages

(6) For the purpose of fixation of minimum rate of wages under this section, the appropriate Government,
(a) shall primarily take into account the skill of workers required for working under the categories of unskilled, skilled, semi-
skilled and highly-skilled or geographical area or both; and
(b) may, in addition to such minimum rate of wages for certain category of workers, take into account their arduousness of
work like temperature or humidity normally difficult to bear, hazardous occupations or processes or underground work as
may be prescribed by that Government; and
(c) the norms of such fixation of minimum rate of wages shall be such as may be prescribed.
Mr. Hassan Jan V State of Bihar (1980) II LLJ 358 (Pat)
Employment for which wage has been fixed wage period can not exceed one month
Jyoti Home industries v the State of Karnataka (1989) I LLJ 201 (Karnataka)
Government can fix the guaranteed remuneration if the employer does not offer him raw materials for work
7. (1) Any minimum rate of wages fixed or revised by the appropriate Government under section 8
may consist of–
(a) a basic rate of wages and an allowance at a rate to be adjusted, at such intervals and in such manner as
the appropriate Government may direct, to accord as nearly as practicable with the variation in the cost of
living index number applicable to such workers (hereinafter referred to as "cost of living allowance");
or
(b) a basic rate of wages with or without the cost of living allowance, and the cash value of the
concessions in respect of supplies of essential commodities at concession rates, where so authorized; or
(c) an all-inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of the
concessions, if any.
(2) The cost of living allowance and the cash value of the concessions in respect of supplies of essential
commodities at concession rate shall be computed by such authority, as the appropriate Government may
by notification, appoint, at such intervals and in accordance with such directions as may be specified or
given by the appropriate Government from time to time.
8. (1) In fixing minimum rates of wages for the first time or in revising minimum rates of wages under this Code, the
appropriate Government shall either—
(a) appoint as many committees as it considers necessary to hold inquiries and recommend in respect of such fixation or revision, as
the case may be; or
(b) by notification publish its proposals for the information of persons likely to be affected thereby and specify a date not less than
two months from the date of the notification on which the proposals shall be taken into consideration.

(2) Every committee appointed by the appropriate Government under clause (a) of sub-section (1) shall consist of persons––
(a) representing employers;
(b) representing employees which shall be equal in number of the members specified in clause (a); and
(c) independent persons, not exceeding one-third of the total members of the committee.

(3) After considering the recommendation of the committee appointed under clause (a) of sub-section (1) or, as the case may be, all
representations received by it before the date specified in the notification under clause (b) of that sub-section, the appropriate
Government shall by notification fix, or as the case may be, revise the minimum rates of wages and unless such notification
otherwise provides, it shall come into force on the expiry of three months from the date of its issue.

Provided that where the appropriate Government proposes to revise the minimum rates of wages in the manner specified in clause (b)
of sub-section (1), it shall also consult concerned Advisory Board constituted under section 42.
(4) The appropriate Government shall review or revise minimum rates of wages ordinarily at an interval not exceeding five years.
9. Fixing of Floor wages by Central Government
(1) The Central Government shall fix floor wage taking into account minimum living standards of a worker in such manner
as may be prescribed: Provide different floor wage may be fixed for different geographical areas.
(2) The minimum rates of wages fixed by the appropriate Government under section 6 shall not be less than the floor wage
and if the minimum rates of wages fixed by the appropriate Government earlier is more than the floor wage, then, the
appropriate Government shall not reduce such minimum rates of wages fixed by it earlier.
(3) The Central Government may, before fixing the floor wage under sub-section (1), obtain the advice of the Central
Advisory Board constituted under sub-section (1) of section 42 and consult State Governments in such manner as may be
prescribed.

Wages of employee who work for less than Normal Working Day
10. If an employee whose minimum rate of wages has been fixed under this Code by the day works on any day on which he
was employed for a period of less than the requisite number of hours constituting a normal working day, he shall, save as
otherwise hereinafter provided, be entitled to receive wages in respect of work done on that day, as if he had worked for a
full normal working day:
Provided that he shall not be entitled to receive wages for a full normal working day,—
(i) in any case where his failure to work is caused by his unwillingness to work and not by the omission of the employer
to provide him with work;
(ii) in such other cases and circumstances, as may be prescribed.

Pabbojan Tea Co Ltd. V Dy. Commissioner, Lakhimpur AIR 1968 SC 271 – Worker who is unwilling to work cant be
paid the same wages what normal worker working 9 hours a day get.
Wages for Two or More Classes of Work
11. 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 to such employee in respect of the time respectively occupied
in each such class of work, wages at not less than the minimum rate in force in respect of each such class.

Minimum Time Rate Wages for Piece Work

12. Where a person is employed on piece work for which minimum time rate and not a minimum piece
rate has been fixed under this Code, the employer shall pay to such person wages at not less than the
minimum time rate.
Section 13 - Fixing the Hours of Work for Normal Working Day

13. (1) Where the minimum rates of wages have been fixed under this Code, the appropriate Government may —
(a)fix the number of hours of work which shall constitute a normal working day inclusive of one or more specified
intervals;
(b) provide for a day of rest in every period of seven days which shall be allowed to all employees or to any specified
class of employees and for the payment of remuneration in respect of such days of rest;
(c) provide for payment for work on a day of rest at a rate not less than the overtime rate.

(2) The provisions of sub-section (1) shall, in relation to the following classes of employees apply, only to such extent
and subject to such conditions as may be prescribed, namely:—
(a) employees engaged in any emergency which could not have been foreseen or prevented;
(b) employees engaged in work of the nature of preparatory or complementary work which must necessarily be carried
on outside the limits laid down for the general working in the employment concerned;
(c) employees whose employment is essentially intermittent;
(d) employees engaged in any work which for technical reasons has to be completed before the duty is over; and
(e) employees engaged in a work which could not be carried on except at times dependent on the irregular action of
natural forces.
Wages for Overtime Work
14. Where an employee whose minimum rate of wages has been fixed under this Code by the hour, by the
day or by such a longer wage-period as may be prescribed, works on any day in excess of the number of
hours constituting a normal working day, the employer shall pay him for every hour or for part of an hour so
worked in excess, at the overtime rate which shall not be less than twice the normal rate of wages

Y M Mamarde V Authority AIR 1972 SC 1721 - Supreme Court said for overtime work person is entitle to get double
of what person is getting and not only double of minimum wages.
 Section 15. Mode of payment of wages.

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:
Provided that the appropriate Government may, by notification, specify the industrial or other establishment, the employer of which
shall pay to every person employed in such industrial or other establishment, the wages only by cheque or by crediting the wages in
his bank account.
SRT Corporation V Industrial Court AIR 1971 MP 54 – If the person is paid in kind, if notified by the government employer
require to convert it to value and then paid in currency.

Section 16. Fixation of wage period.

The employer shall fix the wage period for employees either as daily or weekly or fortnightly or monthly subject to the condition
that no wage period in respect of any employee shall be more than a month:
Provided that different wage periods may be fixed for different establishments.
Section 17. Time limit for payment of wages.
(1) The employer shall pay or cause to be paid wages to the employees, engaged on—
(i) daily basis, at the end of the shift;
(ii) weekly basis, on the last working day of the week, that is to say, before the weekly holiday;
(iii) fortnightly basis, before the end of the second day after the end of the fortnight;
(iv) monthly basis, before the expiry of the seventh day of the succeeding month.
(2) Where an employee has been—
(i) removed or dismissed from service; or
(ii) retrenched or has resigned from service, or became 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.
(3) Notwithstanding anything contained in sub-section (1) or sub-section (2), the appropriate Government may, provide
any other time limit for payment of wages where it considers reasonable having regard to the circumstances under
which the wages are to be paid.
(4) Nothing contained in sub-section (1) or sub-section (2) shall affect any time limit for payment of wages provided in
any other law for the time being in force.
Section 18. Deductions which may be made from wages.
(1) Notwithstanding anything contained in any other law for the time being in force, there shall be no deductions from the wages of the employee, except those
as are authorized under this Code.
Explanation.––For the purposes of this sub-section,—
(a) any payment made by an employee to the employer or his agent shall be deemed to be a deduction from his wages;
(b) any loss of wages to an employee, for a good and sufficient cause, resulting from—
(i) the withholding of increment or promotion, including the stoppage of an increment; or
(ii) the reduction to a lower post or time-scale; or
(iii) the suspension,
shall not be deemed to be a deduction from wages in a case where the provisions made by the employer for such purposes are satisfying the requirements
specified in the notification issued by the appropriate Government in this behalf.
(2) Deductions from the wages of an employee shall be made in accordance with the provisions of this Code, and may be made only for the following
purposes, namely:—
(a) fines imposed on him;
(b) deductions for his absence from duty;
(c) deductions for damage to or loss of goods expressly entrusted to the employee for custody; or for loss of money for which he is required to account, where
such damage or loss is directly attributable to his neglect or default;
(d) deductions for house accommodation supplied by the employer or by appropriate Government or any housing board set up under any law for the time being
in force, whether the Government or such board is the employer or not, or any other authority engaged in the business of subsidizing house-accommodation
which may be specified in this behalf by the appropriate Government by notification;
(e) deductions for such amenities and services supplied by the employer as the appropriate Government or any officer specified by it in this behalf may, by
general or special order, authorise and such deduction shall not exceed an amount equivalent to the value of such amenities and services.
Explanation.––For the purposes of this clause, the expression "services" does not include the supply of tools and raw materials required for the purposes of
employment;
Cont.
(f) deductions for recovery of —
(i) advances of whatever nature (including advances for travelling allowance or conveyance allowance), and the interest due in
respect thereof, or for adjustment of overpayment of wages;
(ii) loans made from any fund constituted for the welfare of labour, as may be prescribed by the appropriate Government, and the
interest due in respect thereof;
(g) deductions for recovery of loans granted for house-building or other purposes approved by the appropriate Government and the
interest due in respect thereof;
(h) deductions of income-tax or any other statutory levy levied by the Central Government or State Government and payable by the
employee or deductions required to be made by order of a court or other authority competent to make such order;
(i) deductions for subscription to, and for repayment of advances from any social security fund or scheme constituted by law
including provident fund or pension fund or health insurance scheme or fund known by any other name;
(j) deductions for payment of co-operative society subject to such conditions as the appropriate Government may impose;
(k) deductions made, with the written authorization of the employee, for payment of the fees and contribution payable by him for
the membership of any Trade Union registered under the Trade Unions Act, 1926;
(l) deductions for recovery of losses sustained by the railway administration on account of acceptance by the employee of
counterfeit or base coins or mutilated or forged currency notes;
(m) deductions for recovery of losses sustained by the railway administration on account of the failure of the employee to invoice,
to bill, to collect or to account for the appropriate charges due to the railway administration whether in respect of fares, freight,
demurrage, wharfage and cranage or in respect of sale of food in catering establishments or in respect of commodities in grain
shops or otherwise;
Cont.
(n) deductions for recovery of losses sustained by the railway administration on account of any rebates or refunds
incorrectly granted by the employee where such loss is directly attributable to his neglect or default;
(o) deductions, made with the written authorization of the employee, for contribution to the Prime Minister’s National
Relief Fund or to such other fund as the Central Government may, by notification, specify.
(3) Notwithstanding anything contained in this Code and subject to the provisions of any other law for the time being
in force, the total amount of deductions which may be made under sub-section (2) in any wage period from the wages
of an employee shall not exceed fifty per cent. of such wages.
(4) Where the total deductions authorized under sub-section (2) exceed fifty per cent. of the wages, the excess may be
recovered in such manner, as may be prescribed.
(5) Where any deduction is made by the employer from the wages of an employee under this section but not deposited
in the account of the trust or Government fund or any other account, as required under the provisions of the law for the
time being in force, such employee shall not be held responsible for such default of the employer.
Section 19. Fines.

(1) No fine shall be imposed on any employee save in respect of those acts and omissions on his part as the employer
with the previous approval of the appropriate Government or of such authority as may be prescribed, may have
specified by notice under sub-section (2).
(2) A notice specifying such acts and omissions shall be exhibited in such manner as may be prescribed, on the
premises in which the employment is carried on.
(3) No fine shall be imposed on any employee until such employee has been given an opportunity of showing cause
against the fine or otherwise than in accordance with such procedure as may be prescribed for the imposition of fines
(4) The total amount of fine which may be imposed in any one wage-period on any employee shall not exceed an
amount equal to three per cent. of the wages payable to him in respect of that wage-period.
(5) No fine shall be imposed on any employee who is under the age of fifteen years.
(6) No fine imposed on any employee shall be recovered from him by instalments or after the expiry of ninety days
from the day on which it was imposed.
(7) Every fine shall be deemed to have been imposed on the day of the act or omission in respect of which it was
imposed.
(8) All fines and all realizations thereof shall be recorded in a register to be kept in such manner and form as may be
prescribed; and all such realizations shall be applied only to such purposes beneficial to the persons employed in the
establishment as are approved by the prescribed authority.
 Section 20. Deductions for absence from duty.
(1) Deductions may be made under clause (b) of sub-section (2) of section 18 only on account of the absence
of an employee from the place or places where by the terms of his employment, he is required to work, such
absence being for the whole or any part of the period during which he is so required to work.
(2) The amount of such deduction shall in no case bear to the wages payable to the employed person in
respect of the wage-period for which the deduction is made in a larger proportion than the period for which he
was absent bears to the total period within such wage-period during which by the terms of his employment he
was required to work:
Provided that, subject to any rules made in this behalf by the appropriate Government, if ten or more
employed persons acting in concert absent themselves without due notice (that is to say without giving the
notice which is required under the terms of their contracts of employment) and without reasonable cause, such
deduction from any such person may include such amount not exceeding his wages for eight days as may by
any such terms be due to the employer in lieu of due notice.
Explanation.––For the purposes of this section, an employee shall be deemed to be absent from the place
where he is required to work if, although present in such place, he refuses, in pursuance of a stay-in strike or
for any other cause which is not reasonable in the circumstances, to carry out his work.
Case Law : Management of Jawahar Mills Ltd v Industrial Tribunal AIR 1965 Mad 92
Where the workmen took part in an illegal strike in public utility service under Section 22 of the Industrial
Disputes Act, there was no 'reasonable cause' for such a strike. Deduction can be made.
Section 21. Deductions for damage or loss.
(1) A deduction under clause (c) or clause (n) of sub-section (2) of section 18 for damage
or loss shall not exceed the amount of the damage or loss caused to the employer by
negligence or default of the employee.
(2) A deduction shall not be made under sub-section (1) until the employee has been
given an opportunity of showing cause against the deduction or otherwise than in
accordance with such procedure as may be prescribed for the making of such deductions.
(3) All such deductions and all realizations thereof shall be recorded in a register to be
kept in such form as may be prescribed.
Section 22. Deductions for services rendered.
A deduction under clause (d) or clause (e) of sub-section (2) of section 18 shall not be
made from the wages of an employee, unless the house-accommodation amenity or
service has been accepted by him as a term of employment or otherwise and such
deduction shall not exceed an amount equivalent to the value of the house-
accommodation amenity or service supplied and shall be subject to such conditions as the
appropriate Government may impose.
Section 23. Deductions for recovery of advances.
Deductions under clause (f) of sub-section (2) of section 18 for recovery of advances
given to an employee shall be subject to the following conditions, namely:––
(a) recovery of advance of money given to an employee before the employment began
shall be made from the first payment of wages to him in respect of a complete wage-
period but no recovery shall be made of such advances given for travelling expenses;
(b) recovery of advance of money given to an employee after the employment began
shall be subject to such conditions as may be prescribed;
(c) recovery of advances of wages to an employee not already earned shall be subject to
such conditions as may be prescribed.
Section 24. Deductions for recovery of loans.
Deductions under clause (g) of sub-section (2) of section 18 for recovery of loans granted
to an employee, regulating the extent to which such loans may be granted and the rate of
interest payable thereon, shall be such as may be prescribed.
Section 25. Chapter not to apply to Government establishments.
The provisions of this Chapter shall not apply to the Government establishments unless
the appropriate Government, by notification, applies such provisions to the Government
establishments specified in the said notification.