INSTITUTE OF MANAGEMENT,

NIRMA UNIVERSITY

MBA-HRM (2020-2022)
LABOUR LAW
INDIVIDUAL ASSIGNMENT

SUBMITTED BY:
MANVI GOEL – 208116

DATE: 28th DECEMBER 2020

SUBMITTED TO: PROF. POONAM CHANNIWAL &
PROF. DEEPAK SHUKLA
QUESTION:

As a HR Executive of a Chemical Company Employing about 1,000 employees advise your

Management about the major provisions for Minimum Wages, Payment of Wages and
Payment of Bonus to be complied with under the Code on Wages, 2020.

ANSWER:

As an HR executive of a chemical company, I would like to suggest the management, the

following provisions for 1000 employees related to payment and wages and bonus.

1
CODE OF WAGES 2020

The Wage Code, 2020, which is often known as the Wage Code, is an Act of the Parliament
of India that integrates the provisions of four labour laws relating to wage and bonus
payments and makes the minimum wage and timely payment provisions universal for all
employees in India. It was implemented on July 23, 2019 in Lok Sabha by the Minister of
Labour, Mr. Santosh Gangwar. The Payment of Wages Act, 1936, the Minimum Wages Act,
1948, the Payment of Bonus Act, 1965, and the Equal Remuneration Act, 1976 were repealed
and replaced by the Code.

DEFINITIONS

1. Employee: 'Employee' refers to any person employed by an organization on wages to

perform any skilled, semi-skilled or unskilled, manual, operational, supervisory,
managerial, administrative, technological, or clerical work for hire or remuneration,
whether terms of employment be expressed or implied, and includes a person deemed to
be an employee by the appropriate government but does not include any member of the
Armed Forces of the Union.   

2. Employer: "Employer" refers to a person who hires, either directly or through another
person, or on his behalf or on behalf of the individual, one or more employees in his
organization and where the operation is carried out by any department of the Central
Government or the State Government.

3. Wages: 'Wages' means any remuneration, whether in the form of salaries, benefits or
otherwise, expressed in terms of money or capable of being expressed in terms of money,
which, if the terms of employment were met, would be payable to a person working in
respect of his or her employment or work performed in such employment.

2
4. Contractor: In relation to an organization, "contractor" refers to a person who -
undertakes, by contract labour, to achieve a given result for an organization other than the
mere supply of products or articles of manufacture to that establishment or supplies
contract labour as a mere human resource for any organizational job and requires a sub-
contractor.

5. Contract worker: 'Contract worker' refers to a worker who, with or without the
knowledge of the principal employer, is employed in or in connection with the work of an
organization when, he is hired or in connection with such work by or through a contractor
and includes an inter-state migrant worker, but does not include a worker (other than a
part-time worker) who —

i. is regularly engaged the contractor in any operation of his organization and his work
shall be regulated by mutually accepted standards of conditions of employment
(including permanent employment) and by mutually agreed standards of employment
(including permanent employment), and 

ii. obtain annual increase in wages, social insurance compensation and other health
benefits in compliance with the legislation for the time being in force in such jobs.

6. Inspector-cum-Facilitator: Section 51 of the code states that it is possible to appoint an

inspector-cum-facilitator there. The Inspector-cum-Facilitator are government-appointed
civil servants. He has the right to audit any organization and may also scan, capture or
take copies of registers, pay reports or notices. In an organization, he can inform the
relevant government of defects or violations.

BONUS AND WAGES

3
 Coverage: To all workers, the Code will apply. For jobs such as railways, mining, and oil
fields, the central government would make wage-related choices. For any other jobs, state
governments would take decisions.

Wages include salary, pension, or some other factor expressed in monetary terms. It does
not include a bonus payable to employers or any travel allowance among others. 

 Floor Wage: The central government shall, in compliance with the Code, set the floor
wage, taking into account the living conditions of workers. In addition, different floor
wages for different geographical regions can be set. The central government can seek the
advice of the Central Advisory Board before setting the floor wage and may consult with
state governments.

The minimum wages that the federal or state governments decide must be greater than the
floor wage. In case that the current minimum wages set by federal or state governments
are higher than the floor wage, the minimum wages will not be reduced.

 Fixing the minimum wages: The Code forbids the paying of salaries below minimum
wages by employees. Central or state governments would notify the minimum wages.
This would be dependent on the time or number of manufactured pieces. The minimum
wages shall be amended and reviewed over an interval not exceeding five years by the
central or state governments. Factors such as skills of employees and the difficulty of
working can be taken into account by federal or state governments while deciding
minimum wages.
 Overtime: The number of hours which constitute a normal working day may be set by
the central or state government. In case people work longer than the normal working day,
they shall be entitled to overtime pay, which shall be at least double the normal wage rate.

 Payment of Wages: Wages are payable in coins, currency notes, by cheque, by bank
account credit, or by electronic means. The employer shall fix the wage period as either:
daily, weekly, fortnightly, or monthly.

4
 Deduction: The salary of an employee may be deducted under the Code on such grounds,
including fines, absence from duty, lodging offered by the employer, or recovery of
advances given to the employee, among others. Such deductions do not exceed 50 percent
of the gross wages of the employee.

 Determination of Bonus: An annual bonus will be given to all workers whose salaries do
not exceed a particular monthly sum notified by the central or state government. The
bonus would be at least: 8.33 percent of his wages, or Rs 100, whichever is better. 
Furthermore, the employer will share to the workers a portion of the gross income. This
would be allocated in proportion to an employee's annual salary. A cumulative bonus
of only 20% of his annual salary can be received by an employee.

 Advisory Boards: Advisory committees would be appointed by the central and state
governments. The Central Advisory Board shall be composed of employees, employers,
independent individuals, and five state government representatives. State Advisory
Committees will consist of employers, employees, and independent individuals. In
addition, women would be one-third of the total members of both the Central and State
Boards. The Boards will advise the respective governments on various issues including
fixation of minimum wages, and growing job prospects for women.

 Offences and Penalties: The Constitution stipulates penalties for offences committed by
an employer, such as paying less than the salary due, or for violating some provision of
the Code. Penalties vary depending on the nature of the crime, with incarceration for three
months and a fine of up to one lakh rupees being the maximum penalty.

LATEST JUDGEMENT

“Ashok Hotel Mazdoor Union vs Mr. G. Kamala Vardhna”

In Delhi, High Court has been filled by the union because the management is directed to pay
Rs. 15,000 per month as wages according to the minimum wages act. However, due to
pandemic the service of the workmen was not required. To ensure that all the workmen were
not jobless the contractor decided to cut down the working days of these workmen by half

5
and accordingly salary of Rs. 6600 was released. The High Court decided that contractor
must pay entire payment along with arrears even for the lockdown period.