Salient Features of Wages Code Bill, 2019

Salient Features of Wages Code Bill, 2019

The Code on Wages Bill, 2019 was passed by Rajya Sabha on 02/08/2019 after being passed by Lok Sabha on 30/07/2019. 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. The preamble of the code explains the objective of legislation “To amend and consolidate the laws relating to wages and bonus and matters connected therewith or incidental thereto.”. The Code extends to whole of India including the union territory of Jammu and Kashmir and Ladakh. The following are the salient features of this new enactment:

1) Fixing of Floor Wages:

Section 9 of The Code allows the Central Government to fix floor wage taking into account minimum living standards of a worker in such manner as may be prescribed. It further provides that different floor wage may be fixed for different geographical areas. The minimum rates of wages fixed by the appropriate Government under section 6 shall not be less than the floor wage and if the minimum rate of wages fixed by the appropriate Government earlier is more than the floor wage, then, the appropriate Government shall not reduce such minimum rates of wages fixed by it earlier.

2) Fixing of Minimum Wages:

Under Section 5, No employer shall pay to any employee wages less than the minimum rate of wages notified by the appropriate Government. Such wages shall be fixed both for a time work and for a piece work. The minimum rate of wages on time work basis may be fixed in accordance with any one or more of the following wage periods, namely (i) by the hour; or (ii) by the day; or (iii) by the month.

3) Wages of Employee who works for less than Normal Working Day:

If an employee whose minimum rate of wages has been fixed under this Code by the day works on any day on which he was employed for a period of less than the requisite number of hours constituting a normal working day, he shall, save as otherwise hereinafter provided, be entitled to receive wages in respect of work done on that day, as if he had worked for a full normal working day.Provided that he shall not be entitled to receive wages for a full normal working day,—

(i) In any case where his failure to work is caused by his unwillingness to work and not by the omission of the employer to provide him with work; and

(ii) in such other cases and circumstances, as may be prescribed

4) Overtime Wages:

Where an employee whose minimum rate of wages has been fixed under the Code by the hour, by the day or by such a longer wage-period as may be prescribed, works on any day in excess of the number of hours constituting a normal working day, the employer shall pay him for every hour or for part of an hour so worked in excess, at the overtime rate which shall not be less than twice the normal rate of wages.

5) Payment Mode of Wages:

All wages shall be paid in current coin or currency notes or by cheque or by crediting the wages in the bank account of the employee or by the electronic mode. The code also states that the government can by notification ask the employer to pay the wages only in cheque or through bank transfer. Also the wage period can be daily, weekly, fortnightly or monthly. In any case it cannot be extended for a period over a month.

6) Time of Payment of Wages:

The employer shall pay or cause to be paid wages to the employees, engaged on—

(i) Daily basis, at the end of the shift;

(ii) Weekly basis, on the last working day of the week, that is to say, before the Weekly holiday;

(iii) Fortnightly basis, before the end of the second day after the end of the Fortnight;

(iv) Monthly basis, before the expiry of the seventh day of the succeeding month.

(v) Where an employee has been removed or dismissed from service; or retrenched or has resigned from service, or became unemployed due to closure of the establishment, the wages payable to him shall be paid within two working days of his removal, dismissal, retrenchment or, as the case may be, his resignation.

7) Deductions From Wages:

The code states that employee’s wages may be deducted on grounds of (a) fines, (b) absence from duty, (c) accommodation given by the employer, or (d) recovery of advances given to the employee, among others.  These deductions should not exceed 50% of the employee’s total wage.

8) Equal Treatment of All Genders:

There shall be no discrimination in an establishment or any unit thereof among employees on the ground of gender in matters relating to wages by the same employer, in respect of the same work or work of a similar nature done by any employee.

9) Bonus:

All employee’s whose wages are below a specified sum shall be entitled to a bonus of (i) 8.33% of his wages, or (ii) Rs 100, whichever is higher. Also, the employer will distribute a part of the gross profits amongst the employees.

10) Offence under The Code:

Under The Code the maximum penalty is fine up to Rs. 1 Lakh along with an imprisonment of 3 months for contravention of any provision.