Code On Wages Act

The Ministry of Labour and Employment introduced the
code on wages bill, 2019 in Lok Sabha to amend and

consolidate the laws relating to wages and bonus and
matters connected therewith.
The Code on Wages ,2019 seeks to regulate wage and
bonus payments in all employments where any industry,
trade, business, or manufacture is carried out.
 The central government will make wage-related
decisions for employments such as railways, mines,
and oil fields.
 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.
 According to the Code, the central government will fix a
floor wage, taking into account living standards of
workers.
 Different floor wages for different geographical areas.
 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.
 The Code prohibits employers from paying wages
less than the minimum wages.
 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.
 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.
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.
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.
Deductions not to exceed
50% of the employee’s total wage.
 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.
 An employee can receive a maximum bonus of 20%
of his annual wages.
 The Code prohibits gender discrimination in matters
related to wages and recruitment of employees for the
same work or work of similar nature.
 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 lakhs
rupees.
 At present, many of the states have multiple minimum
wages. Through Code on Wages, the methodology to
fix the minimum wages has been simplified and
rationalized by doing away with type of employment
as one of the criteria for fixation of minimum wage.
 Many changes have been introduced in the inspection

regimes including web based randomised computerised
inspection scheme, composition of fines etc will be
conducive for enforcement of labour laws with
transparency and accountability.
 Act would ensure "Right to Sustenance" for every
worker and intends to increase the legislative
protection of minimum wage from existing about 40%
to 100% workforce.
 This will prove to be a milestone and give respectable

life to 50 crore unorganized sector workers who will
get minimum wage thereby increasing the purchasing
power of the worker thereby giving fillip to growth in
the economy as well as quality of life
 Multiplicity of minimum wage rates to be fixed on the
basis of skill, arduousness and hazardousness of work,
geographical regions and other norms as may be
prescribed by the governments is confusing .
 There should be a single statutory minimum wage

applicable to all sectors of workers and regional
differences can be taken care of by adjusting the cost
of living allowance. This will make it simple.
 Bill defines 'worker' and 'employee' differently
 A common and comprehensive definition of

employee/worker is required to avoid discrimination
between employees and workers for the purpose of
minimum wages.

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The Ministry of Labour and Employment introduced the

code on wages bill, 2019 in Lok Sabha to amend and

 In case employees work in excess of a normal working

The wage period will be fixed by the employer as either:

 Many changes have been introduced in the inspection

 This will prove to be a milestone and give respectable

 There should be a single statutory minimum wage

 A common and comprehensive definition of

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