Highlights of “The Code On Wages, 2019”

When the previous Code on Wages bill got lapsed after the dissolution of 16th Lok Sabha, a new fresh bill named ‘The Code On Wages Bill, 2019’ was introduced in Lok Sabha by the Minister of Labour, Mr Santosh Gangwar on July 23, 2019. The bill was passed in Lok Sabha on 30/07/2019 followed by the Rajya Sabha’s approval on 02/08/2019. And on 08/08/2019, the Code finally received consent from the President of India, embarking a new era of Labour reforms in India.

With the introduction of this new law, the Government is hoping to benefit 50 crore workers in India, ensuring to universalize the provisions of minimum wages & timely payment of wages to all employees.

Now, lets have a look that what The Code on Wages, 2019 is?

The Code on Wages replaces & subsumes four acts:

  1. The Payment of Wages Act, 1936
  2. The Minimum Wages Act, 1948
  3. The Payment of Bonus Act, 1965
  4. The Equal Remuneration Act, 1976

This Act gives common definitions for all acts mentioned above and the effective sections have been merged for easy compliance management.

The subsequent rules which will complement the code have not yet been released. These rules will have the forms and compliance, which will be common across the acts.

Highlights of The Code on Wages, 2019

Chapter 1 Definitions

  • The definition of Employee has been amended to include all category of employees including Managers, Supervisors, Administrative, Operational persons.
  • Earlier there were different definition of wages in different Acts but under the Code, the definition of wages has been simplified. The definition of Wages includes Basic, DA & retaining allowance & does not include HRA, conveyance allowance, bonus, overtime, any commission, gratuity & any retrenchment compensation
  • No discrimination among employees on the ground of gender in the matter of wages for similar work or work of similar nature.

Chapter 2 Minimum Wages

  • The Central Govt shall fix “floor wages” for different geographical area considering the minimum living standards of a worker. And the minimum wage rates fixed by the Central/State Govt shall not be less than the floor wage & if the existing minimum wage rates fixed by the Central/State Govt are more than the floor wage, they cannot reduce such minimum wage rates.
  • For fixing the floor wage, the Central Govt may obtain the advice of the Central Advisory Board & consult with the State Govt.
  • The minimum wages will be revised & reviewed by the Central / State Govt considering factors like skills & difficulty of work, at an interval not more than 5 years.

Chapter 3 Payment of Wages

  • Previously only defined establishments & employees earning less than Rs 24000/- were covered under payment of wages act but now it has been made applicable to all class of establishments & employees.
  • In case of removal, dismissal, retrenchment & also resignation of an employee, the wages has to be paid within two working days.
  • Wages to be deposited in the bank account of employees, electronically or by cheque. Wages can be even paid in cash, only up to an amount notified by the Central Govt.

Chapter 4 Payment of Bonus

  • Bonus will be paid to every employee earning wages below the amount notified by the appropriate Govt.
  • Now the Employer will be responsible in respect of bonus for contract labour.
  • All amounts payable to an employee by way of bonus will be credited in the bank account of the employee within 8 months from the close of the accounting year.
  • If the Employer made an application to the appropriate Govt with sufficient reasons, the period of 8 months can be extended to two years.
  • The employee will be disqualified from receiving bonus if he is dismissed from service on conviction for sexual harassment.

Chapter 5 Advisory Board

  • The Central Govt will constitute the Central Advisory board consisting of persons representing employers, employees, independent persons & 5 representatives of State Govt., and one-third of the members will be women.
  • Similarly, every state govt will constitute a State Advisory Board.

Chapter 6 Payment of Dues, Claims & Audit

  • Every Employer will pay all amounts required to be paid under this Code to every employee employed by him & when such employer fails to make such payment then the company or firm or any other person who is the proprietor of the establishment will be responsible for such payment.
  • The appropriate Govt will appoint one or more authorities to hear & determine the claims arising under the provisions of this Code.

Chapter 7 Inspector-cum-Facilitator

  • The appropriate Govt will appoint Inspector-cum-Facilitators for the purpose of this Code who will exercise the powers throughout the State or such geographical limits assigned in relation to one or more establishments.
  • Assigning Inspector-cum-Facilitators outside their jurisdiction through a random computerized system will de-link inspectors from dedicated geographical regions & thus will lead to transparency, accountability & better enforcement of laws.
  • The Govt through notification can conduct web-based inspection & can call for any information electronically.
  • The appointed Inspector-cum-Facilitator my advice employers & workers relating to compliance & inspect the establishments as assigned by the Govt.

Chapter 8 Offences & Penalties

  • If any employer pays less than the due amount to any employee, will be fined up to Rs 50,000/- & on committing similar offence within 5 years, the employers will be punishable with imprisonment for a term up to 3 months or fine up to one lakh rupees or both.
  • If any employer contravenes any other provision or rule of this Code, will be fined up to Rs 20,000/- & on committing similar offence within 5 years, the employers will be punishable with imprisonment for a term up to 1 months or fine up to Rs 40,000/- or both.
  • In case of non-maintenance & or improper maintenance of records, the employer will be fined up to Rs 10,000/-.

Now with the enactment of this Code, all four acts the Payment of Wages Act, 1936; the Minimum Wages Act, 1948; the Payment of Bonus Act, 1965 & the Equal Remuneration Act, 1976 are repealed.

For the clause-wise detail on The Codes on Wages, 2019, you can download the Gazette of India as published on 8th of August, 2019.

THE CODE ON WAGES, 2019 No. 29 of 2019

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