2019 SUBMITTED BY

RAJAT DUBEY
PRIYANSHU MISHRA
PRASHANT PARASHARI
SUBMITTED TO
AKHILESH PANDEY
Dr. ANITA SINGH
AATISH RANJAN
ABHISHEK KUMAR
ABHISHEK
ATIQUL
GARVIT
 Code on wages 2019

• The Ministry of Law and Justice, Government of India has notified the Code on
Wages, 2019 on August 8, 2019, which seeks to amend and consolidate the laws
relating to wages and bonus.
• The Ministry of Law and Justice, Government of India has notified the Code on
Wages, 2019 (the "Code") on August 8, 2019, which seeks to amend and
consolidate the laws relating to wages and bonus.
• The Code intends to simplify and rationalise the relevant provisions of the
following four central labour enactments relating to wages, namely:–
 The Payment of Wages Act, 1936
 The Minimum Wages Act, 1948
 The Payment of Bonus Act, 1965
 The Equal Remuneration Act, 1976
 Highlights of the code
Coverage
The Code extends:-
• To all establishments where any industry, trade, business, manufacturing or
occupation is carried out which includes Government establishments.
• To all kinds of employees irrespective of wage limit whether skilled, un-skilled,
manual, supervisory, managerial, administrative, technical or clerical across all
sectors whether organised or un-organised.
• To all kinds of employers i.e. any person who employs one or more employees.
• For instance, the wage limit of INR 24,000 per month for the applicability of the
Payment of Wages Act, 1936 has been removed.
• Many unorganised sector workers who were out of the ambit of minimum
wages Act will now get legislative protection of minimum wages under the
Code.
 Floor wage

• The Code proposes a floor wage to be set by the Central Government

after taking into account the minimum living standards of the workers.
• The Code provides that different floor wage may be fixed basis
different geographical areas and/or the skill of the workers.
• The floor wage will be fixed and shall constitute the minimum base,
below which the state government cannot prescribe minimum wages
 Penalties and fines

• The penalties for non-compliances are proposed to be enhanced under

the Code. It provides for graded penalty for different types of
contraventions of the provisions of the Code.
• The Code has introduced provisions for compounding of offences
which are not punishable with imprisonment.
• Where an employee has been paid an amount that is lesser than the
amount due to the employee under the Code, the employer is
punishable with a fine of Rs. 50,000 for the first contravention.
• If the employer is again convicted for a similar offence within 5 years
from the date of commission of the first offence, then on such second
or subsequent offence the employer shall be punishable with
imprisonment for a term that may extend to 3 months or with a fine of
up to Rs. 1 Lakh or with both.
Overtime
The Central or state government shall fix the number of hours that
constitute a normal working day. Overtime rate is proposed to be
not be less than twice the normal rate of wages. Presently, the
employer is liable to pay overtime for hours worked in excess at a
rate fixed by the Government.

Payment of bonus
The Code empowers the appropriate government to determine the
ceiling of wage limit for the purpose of eligibility of bonus and
calculation of bonus, by notification, which will make it easier to
revise the ceilings.
Limitation period for claims

The period of limitation for filing of claims by an employee has

been enhanced to 3 years as against existing time period varying
from 6 months to 2 years, to provide more time to file their
claims.
 Digitisation of payment of wages

• The Code provides that the wages to employees may also be paid by
cheque or through digital or electronic mode or by crediting it in the
bank account of the employee.
• In this era of the gig-economy where monthly basis payments are less
relevant and increasingly more number of employees are migrating
out of the formal sector, this is a welcome inclusion.
• This scheme departs from the one under the Payment of Wages Act
which merely mentions that a wage period shall not exceed one
month, and prescribes two different time limits for payment of wages
based on the number of employees in an establishment.
Equal Remuneration

• Consistent with the Equal Remuneration Act, the Code, inter-alia, includes
provisions prohibiting discrimination on grounds of gender-
• (i) with respect to wages by employers, with respect to same work or work of a
similar nature done by employees .a
• (ii) with respect to recruitment of employees for same work or work of a similar
nature.
 Advisory Boards

• Advisory Boards are proposed to be constituted by the Central and state

government.
• The Central Board shall constitute representatives from employees,
employers, independent persons and representatives from state
government.
Deductions

• Under the Code, an employee’s wages may be deducted on certain

grounds including fines, absence from duty, accommodation given by
the employer, or recovery of advances given to the employee, among
others.
• These deductions should not exceed 50 per cent of the employee’s
wage
Provision for inspectors-cum-facilitators

• The Code provides for appointment of inspectors-cum-facilitators and

their powers.
• These authorities would have a dual function – providing compliance
advisory to employers and workers and conducting inspections.
• Further, as per the Code, the appropriate Government may lay down
an inspection scheme, which may also contain web-based inspection
processes.
• Many changes have been introduced in the inspection regimes,
including web based randomised computerised inspection scheme,
calling of information electronically for inspection etc. These changes
have been brought about to ensure enforcement of labour laws with
transparency and accountability.
Analysis
• The Code attempts to unify the definition of 'wages', which is a step
towards providing better clarity. However, the provision of separate
definitions for 'worker' and 'employee' and their usage within the Code
leaves room for confusion.
• Further, the Code seeks to change the 'Inspector Raj' perception in relation
to the Government's regulation of labour by introducing inspectors-cum-
facilitators instead of merely inspectors.
• The Code has created a pivotal transformation with respect to offences
and penalties. Substantial rationalisation and proportionality, with an
intent to support rather than hamper the conduct of business is evident
from the penal provisions.
• he Code encourages technology adoption in matters such as mode of
payment of wages, inspection procedures, which are aimed at achieving its
digitalisation goals in governance.
Conclusion
• The Code promotes ease of doing business by simplification and
consolidation of compliances which will induce investor confidence.
• The Code is a well-intentioned piece of legislation which aims to
balance the interests of the employer and the employee.
• Hence, the pressing need for reforms to bring simplicity, flexibility,
use of technology in the enforcement, transparency and accountability
seems to be addressed in the Code.
• It would also be interesting to gauge how the other codes relating to
social security, industrial safety and welfare, and industrial relations
will interact with the Code of Wages once they are passed.