REPORT ON LABOUR LAWS IMPACTING COMPENSATION (PSDA 1)

COMPENSATION MANAGEMENT
FACULTY – Ms DIPANWITA BISWAS
COURSE CODE – HR212
RAKSHIT SHARMA, A3221521099
4th Semester, BBALLB (H), AMITY LAW SCHOOL NOIDA
 PAYMENT OF WAGES ACT 1936

The Payment of Wages Act makes an effort to unify the definition of “wages,” which is a step
toward providing more clarity. However, there is room for misinterpretation given how the terms
“employee” and “worker” are used within the Act and how their separate definitions are arranged.

It’s no longer a problem, though. It is anticipated that the newly passed Labour Code, which will
be put into effect soon nationwide, will close any gaps left by the country’s prior labour laws. By
describing observers as facilitators rather than just inspectors, the Code also seeks to alter the
impression of the “Inspector Raj” in relation to the government’s work guidelines.

There have been significant changes made to the offences and penalties under the new Code. The
reformative measures make a strong case for their necessity and proportionality, with the
intention of assisting rather than impeding corporate leadership.

The Code encourages creativity in decisions about topics like wage payment methods and
assessment procedures that are intended to help it achieve its administrative digitalisation goals.

Hence, it will be exciting to see how the new labour code (which is inspired by the previous
labour laws such as the Minimum Wages Act, Payment of Wage Act, Factories Act, etc.) will
improve the prevalent situation of labourers across the country.

MINIMUM WAGES ACT 1948

The Minimum Wages Act, 1948 was enacted to safeguard the rights and interests of the
workers working in some scheduled class of employment which is laid down under the Act.
The Act seeks to provide equal employment opportunities and adequate remuneration for
maintaining a decent standard of livelihood for the workers. The provisions under the Act
such as revision of wages at an interval of every five years and fixing working hours in a
normal working day portray how the Act prevents undue exploitation of the workers. The Act
further establishes advisory boards and committees that the workers can approach to seek
redressal regarding cases concerning non-payment of wages or delay in the payment of wages
by their employers. The Act also grants adequate powers to the inspectors to look after the
welfare of the workers. Therefore, this Act plays a crucial role in providing the basic needs of
the workers of a scheduled category of employment, to grant adequate wages to the workers
to survive with their livelihood and also to promote the Directive Principles of State Policy
laid down under Article 43 of the Constitution of India.
 PAYMENT OF BONUS ACT 1965

The Payment of Bonus Act, 1965 seeks to legally regularise the practice of paying bonus by
different establishment. It offers an objective way to calculate the bonus based on profit and
productivity. It enables the employees to earn over and above their minimum wages or salary.
This Act provides different procedures for different establishments like banking companies,
public organisations and also for the establishments which are not a company or a
corporation. Apart from the procedure, this Act also defines a robust redressal mechanism. 

PAYMENT OF GRATUITY ACT, 1972

The Payment of Gratuity Act, 1972, is a welfare statute provided for the welfare of the
employees, who are the backbone of any organisation, company, or start-up. The gratuity
amount encourages the employee to work efficiently and improve productivity. Recently, by
the Payment of Gratuity (Amendment) Act, 2018, the central government has tried to
promote social welfare by providing leverage to female employees who are on maternity
leave from ‘twelve weeks’ to ‘twenty-six weeks.’ 

However, the scope of this Act is limited to large-scale companies or organisations and is not
applicable to organisations where the number of employees is less than 10. Yet, the Act in its
entirety is complete, and therefore it overrides other Acts and statutes in relation to gratuity.
The only need of the hour is to change or modify the implementation of the Act as this Act is
still not followed by many companies or corporations.

Maternity Benefit Act, 1961

The Amendment Act has come into force with effect from 1 April 2017. All establishments
covered under the Amendment Act were supposed to amend their existing maternity benefit
policies to bring it in line with the Amendment Act with effect from 1 April 2017. The changes
brought through the Amendment Act are applauded by everyone. However, there are different
aspects of the Amendment Act that require clarity. It is not clear whether increased maternity
benefits will also be applicable to women who are currently undergoing maternity leave.
Furthermore, the justification for having separate effective date for implementing “work from
home” option is not clear, for the reason that works from home is an enabling provision brought
into force to inspire employers to provide such choice to a woman depending upon the nature of
work being handled by her and not a statutory requirement under the MB Amendment Act. The
requirements like creche facilities require more capital and operating expenditure on the part of
the employer. The establishments will have to bear the whole cost of providing leave to
employees. In most countries, the cost of maternity leave is shared by the government, employer,
insurance agency and other social security programs.