THE CODE ON WAGES

2019
What is the purpose of enactment of this Code?
The main purpose of the enactment of this Code is to universally regulate the provisions
for minimum wages and to ensure a well timed payment of minimum wages for all workers
in india.
What is the applicability of Code on Wages?
• The Code on Wages is applicable to all employees in both the organised and
unorganised sector.
• The provisions of the Code covers all the employers and employees of all sectors except
the members of the Armed Forces of the Union and apprentices engaged under the
Apprentices Act, 1961 are excluded from the Code.
Introduction

Codes of Wages:
The Code on Wages, 2019 was introduced in Lok Sabha by the Minister of Labour, Mr.Santosh
Gangwar on July 23, 2019, passed in Raijya sabha on 2 August, 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: (1) 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 Code seeks to universalise the provisions of minimum wages and timely payment of wages to all
employees irrespective of the sector and wage ceiling
The consolidation, rationalisation and simplification of labour related regulations is on track with the
Code on Wages
Objective and Applicability

1. An Act to amend and consolidate the laws relating to wages and bonus and
matters connected therewith or incidental thereto.
2. This Act may be called the Code on Wages, 2019.
3. It extends to the whole of India.
4. It shall come into force on such date as the Central Government may, by
notification in the Official Gazette appoint; and different dates may be appointed
for different provisions of this Code and any reference in any such provision to the
commencement of this Code shall be construed as a reference to the coming into
force of that provision.
Definition of wages Section 2y
• (i) basic pay, ii) dearness allowance and (iii) retaining allowance have been included as component of wages
• Code excludes the following components from the definition of wages:
• (a) bonus payments;
• (b) value of the house-accommodation, supply of light, water, medical attendance or other amenity or of any
service excluded from the computation of wages by an order of the appropriate Government;
• (c) employer contributions to any pension or provident fund;
• (d) conveyance allowances;
• (e) sums paid to the employee to defray special expenses on him by the nature of his employment;
• (f) house rent allowance;
• (g) remuneration payable under award or settlement between the parties or order of court or tribunal;
• (h) overtime allowance;
• (i) commission payable to employee;
• (j) gratuity payments; and,
• (k) retrenchment compensation or other retirement benefit payable to the employee or any ex-gratia payment
made to the employee on the termination of his employment.
Floor wage:

• 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.
Conditions for fixing the minimum wages
Under Section 6 of the code, the appropriate government (central or state) shall fix
a minimum rate of wages based on time work or piece work. While fixing the
minimum wages, the governments may take into account factors such as, skill of
workers, and difficulty of work.
•Also by Section 8 of the code, the minimum wages shall be revised and reviewed
by the central or state governments at intervals of not more than five years.
Section 10 Refer bare act
Overtime:
• Under Section 14 of the code, if an employee works for overtime than the
normal working time he will be entitled to get overtime wages which is twice the
rate of normal wages
modes of payment of wages Section 15
• Section 15 of the Code, all the wages shall be paid in the following mode:
• coin; or
• currency notes; or
• by cheque; or
• by crediting wages in the bank accounts of employee; or
• by electronic mode
wage period fixed Section 16
• The wage periods shall be fixed by the employer for the employees by Section 16 of the code,
either as daily or weekly or fortnightly or monthly subject to conditions and the wage period must
not exceed more one month. Different wage periods must be fixed for different establishments.
Section 17 Time limit for payment of wages
Deduction can be made from wages: Section 18
• According to Section 18 of the code, there shall be no deductions from the wages of the employee's.
But on the following cases deduction can be made, which is explained in Section 18(2) of the code they are:
• fines imposed on him; or
• absence from duty; or
• damage to or loss of goods which was entrusted to him for custody: or
• house accommodation provided by the employer; or
• for amenities and services provided for the employee.
• These deductions should not exceed 50 percent of the employee's total wage.
Payment of bonus is determined under the Code:
• 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.
Equal remuneration
• Section 3 of the code prohibits discrimination based on gender. As per this section the employer
s reduce the rate of wages of any employee and make any discrimination based on the ground of
sex while recruiting employees.
definitions of 'worker' and 'employee
• The definition of 'employee' is broader than that of 'worker' as it includes persons carrying out
managerial and administrative work. The definition of 'worker,' however, expressly includes
working journalists and sales promotion employees.
Inspectors-cum-Facilitators
• The code provides the appropriate government to appoint Inspectors-cum-Facilitators (in the
place of Inspectors), to carry out inspections. Such Inspectors-cum-Facilitators may advise
employers and employees for better compliance.
• This has been done with the objective of removing the arbitrariness and malpractices in
inspection. The quantum of penalties specified under the code is also significantly high which
varies depending on the nature of the offence. The maximum penalty being imprisonment
Advisory Boards
• Section 42 of the Code deals with the advisory boards. The Central and State governments constitute
advisory boards.
• The Central Advisory Board by the Central government consists of following persons:
• representing employers;
• representing employees, which shall be in equal numbers as that of the employers;
• independent persons not exceeding one third of the total members of the board;
• five representatives of the state governments as nominated by the Central government.
• The State Advisory Board by the State government consists of following persons:
• representing employers;
• representing employees which shall be equal in numbers as that of the employers;
• independent persons, not exceeding one-third of the total members of the board or committee or sub-
committee.
• Also one-third of the total members on both the Central and State Advisory Boards will be women.
Duties of Central and State Advisory Boards
• The duties of Central and State Advisory board is to advice the respective
governments on issues relating to:
• fixation or revision of minimum wages and other connected matters;
• providing and increasing employment opportunities for women;
• the extent to which women may be employed in such establishments or
employments as the Central and the State Government may specify it by
notification and
• any other matter relating to this Code
Activity
Section 26 and section 29
Section 45 and section 49
Section 50
Section 51
Section 52
Section 54
Section 56
Thank you