· The
Code on Wages, 2019 was introduced in Lok Sabha by the Minister of Labour, Mr.
Santosh Gangwar on July 23, 2019. It seeks to regulate wage and bonus payments
in all employments where any industry, trade, business, or manufacture is
carried out. The Code replaces the
following four laws: (i) the Payment of Wages Act, 1936, (ii) the Minimum Wages
Act, 1948, (iii) the Payment of Bonus Act, 1965, and (iv) the Equal
Remuneration Act, 1976.
· Coverage:
The Code will apply to all employees.
The central government will make wage-related decisions for employments
such as railways, mines, and oil fields, among others. State governments will make decisions for all
other employments.
· Wages
include salary, allowance, or any other component expressed in monetary terms.
This does not include bonus payable to employees or any travelling allowance,
among others.
· Floor
wage: According to the Code, the central government will fix a floor wage,
taking into account living standards of workers. Further, it may set different floor wages for
different geographical areas. Before
fixing the floor wage, the central government may obtain the advice of the
Central Advisory Board and may consult with state governments.
· The
minimum wages decided by the central or state governments must be higher than
the floor wage. In case the existing minimum wages fixed by the central or
state governments are higher than the floor wage, they cannot reduce the minimum
wages.
· Fixing
the minimum wage: The Code prohibits employers from paying wages less than the
minimum wages. Minimum wages will be
notified by the central or state governments.
This will be based on time, or number of pieces produced. The minimum wages will be revised and
reviewed by the central or state governments at an interval of not more than
five years. While fixing minimum wages,
the central or state governments may take into account factors such as: (i)
skill of workers, and (ii) difficulty of work.
· Overtime:
The central or state government may fix the number of hours that constitute a
normal working day. In case employees
work in excess of a normal working day, they will be entitled to overtime wage,
which must be at least twice the normal rate of wages.
· Payment
of wages: Wages will be paid in (i) coins, (ii) currency notes, (iii) by
cheque, (iv) by crediting to the bank account, or (v) through electronic
mode. The wage period will be fixed by
the employer as either: (i) daily, (ii) weekly, (iii) fortnightly, or (iv)
monthly.
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· Deductions:
Under the Code, an employee’s wages may be deducted on certain grounds
including: (i) fines, (ii) absence from duty, (iii) accommodation given by the
employer, or (iv) recovery of advances given to the employee, among
others. These deductions should not
exceed 50% of the employee’s total wage.
· Determination
of bonus: All employees whose wages do not exceed a specific monthly amount,
notified by the central or state government, will be entitled to an annual
bonus. The bonus will be at least: (i)
8.33% of his wages, or (ii) Rs 100, whichever is higher. In addition, the employer will distribute a
part of the gross profits amongst the employees. This will be distributed in proportion to the
annual wages of an employee. An employee
can receive a maximum bonus of 20% of his annual wages.
· Gender
discrimination: The Code prohibits gender discrimination in matters related to
wages and recruitment of employees for the same work or work of similar nature. Work of similar nature is defined as work for
which the skill, effort, experience, and responsibility required are the
same.
· Advisory
boards: The central and state governments will constitute advisory boards. The Central Advisory Board will consist of:
(i) employers, (ii) employees (in equal number as employers), (iii) independent
persons, and (iv) five representatives of state governments. State Advisory Boards will consist of
employers, employees, and independent persons.
Further, one-third of the total members on both the central and state
Boards will be women. The Boards will
advise the respective governments on various issues including: (i) fixation of
minimum wages, and (ii) increasing employment opportunities for women.
· Offences:
The Code specifies penalties for offences committed by an employer, such as (i)
paying less than the due wages, or (ii) for contravening any provision of the
Code. Penalties vary 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.
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