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• The Constitution of India enlists labour-
related legislation under the
concurrent list, which means both the
Central Government and the State
Government are equally competent
and permitted to enact labour
legislations.
• At present, more than 45 central
legislations and over 100 state
legislations have been enacted for
labour welfare, frequently on
overlapping matters.
• Codes on Wages, 2019 ("Wage Code"
or "Code") awaits the notification of its
effective date.

• The objective of the Wage Code is to

consolidate the 4 existing labour laws
relating to wages, into one integrated
code.
COVERAGE AND APPLICABILITY
• The Code will apply to employees, both in
the organised and the un-organised sector.
• Provisions relating to payment of wages
under the Code will extend to all
employees, irrespective of their wage
ceiling and type of employment, whereas
the Payment of Wages Act, 1936 was only
applicable to factories, certain specified
establishments, and to employees who
drew monthly wages up to INR 24,000,
while the Minimum Wages Act, 1948
applied only to scheduled employments.
• Under this Code, the Central Government
will make wage-related decisions for
employments in the railway, mines, and oil
fields, among others, whereas the State
Government will make decisions for all the
other sectors.
• The definition of 'employee' now includes
contractors as well, which will ensure that
even contractors are entitled to be paid
minimum wages as per the Code.
EMPLOYEES VIS-À-VIS WORKERS
• The Code prescribes two separate
definitions of 'employees' and 'workers’.
• The definition of an 'employee' includes
individuals in supervisory, managerial, and
administrative roles, whereas the definition
of 'workers' excludes such individuals, and
excludes indiviuals who are employed in a
supervisory capacity drawing a monthly
salary exceeding INR 15,000 while
specifically including sales promotion
employees and working journalists.
• Since the definition of employees is
wide, it implies that such categories of
employees will also fall under the Wage
Code, unlike the Minimum Wages Act,
1948, which defined 'employee' as any
person who is employed for hire or
reward to do any work, skilled or
unskilled, manual or clerical, in
scheduled employment in respect of
which minimum rates of wages have
been fixed.
• Worker:
• Any person employed in any
industry for hire or reward to do:
• Any manual, unskilled, technical,
operational, clerical or supervisory
work
• 'Working journalist' and 'sale
promotion employees'
• For purposes of Industrial Dispute,
such person who has been dismissed,
discharged or reterenched or
otherwise terminated, or has a
consequence of the above has led to
the dispute
• Any such person:
• Employed mainly in managerial or
administrative capacity
• Employed in a supervisory capacity
drawing a wage exceeding INR
15,000 per month
• Apprentice under the Apprentices
Act, 1961
• Subject to the Air Force Act, 1950,
the Army Act, 1950, and the Navy
Act, 1957
• Employed in the police service or
as an officer or other employee of
a prison
• The Code prohibits gender
discrimination in matters related to
wages and recruitment of employees for
the same work or work of similar nature,
except in cases where employment of
women in such work places is
prohibited/restricted under the laws.
'Work of similar nature' is defined as 'work
for which the skill, effort, experience and
responsibility required are the same'.
EMPLOYER
• The Code has detailed the definition of
'employer' to include an occupier or
manager of a factory, a person having
ultimate control over the company
affairs, managing director, contractor,
and legal representative of a deceased
employer in addition to the regular
definition of a person who employs
employees in its establishments.
• The existing law did not include
such a definition, or only defined it
in relation to factories and
establishments where authorities
have ultimate control over the
company.
• This was insufficient and therefore
created ambiguity with
determining the nature of an
employer.
WAGE

• The definition of 'wages' has been

included within the Code to include
all remuneration that can be
expressed in terms of money,
including salaries, allowances, etc.
FIXING THE MINIMUM WAGE
• The Code prohibits employers from paying
wages lesser than the prescribed minimum
wage. Minimum wages will be notified by the
Central and State Governments.
• These minimum wages shall be determined
taking into account the skills of workers,
geographical areas, hours of work or piece of
work, arduousness of work such as
temperature, humidity, hazardous
occupations, or processes etc.
• The Code uniformly applies to all employees
across an organisation.
• The minimum wages will be revised and
reviewed by the Central or State Governments
at intervals of not more than 5 years.
• The new concept of 'floor wages' is
introduced through this Code. According
to the Code, the Central Government
will fix a floor wage, considering the
living standards of workers as well as
the geographical areas.
• Based on the floor wage rate, the
appropriate Government (Central or
State) can fix the minimum wage rates.
The minimum wages prescribed by the
appropriate government cannot be
lesser than the floor wage. In case the
existing minimum wages fixed by the
appropriate government are higher than
the floor wage, they cannot reduce the
minimum wages.
PAYMENT OF WAGES
• A new clause on payment of wages has
been introduced, which allows payment to
be made in current coin, currency notes, by
cheque, by crediting the wages in the bank
account of the employee or by electronic
mode.
• Under the Code, the wage period is now
fixed by the employer either as daily or
weekly or fortnightly or monthly, in order to
ensure that the wage period does not
exceed 1 month.
• The time limit for payment of wages
has also been prescribed.
• In a case where an employee is
removed, dismissed, retrenched,
resigns, or becomes unemployed due
to closure of an establishment, the
wages shall be paid within 2 working
days of such removal, retrenchment, or
resignation.
• This definition now also includes
'resignation' which is an important
consideration for the employer to keep
in mind.
• The appropriate government may fix
the number of hours that constitute
a normal working day.
• In case the employees work in
excess hours of a normal working
day, they will be entitled to overtime
wage, which must be at least twice
the normal rate of wages.
• Under the Code, an employee's wage
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 shall not exceed 50%
of the employee's total wage.
• In case the deductions exceed 50%, the
excess can be recovered, as provided in
the rules formulated under the Wage
Code. In case the deductions made by
the employer are not deposited with
the trust or in a Government fund, the
employee cannot be held responsible
for such default of the employer.
PAYMENT OF BONUS
• Provisions on payment of bonus under the Code
are applicable to all employees whose wages do
not exceed a specific monthly amount as notified
by the appropriate government. Bonus will be
paid out of allocable surplus (calculated in
respect of any accounting year, after deductions
for depreciation, direct taxes or such other sums
prescribed by Central Government from gross
profits for that year), which is at least: (i) 8.33%
of wages; or (ii) Rs. 100, whichever is higher.
• Bonus payable shall be equal to 60% of the
allocable surplus in the case of banking
companies, and 67% of the allocable surplus in
the case of other establishments.
• An employee can receive a maximum bonus of
20% of his annual wages, in a financial year.
• The Code also lays down the calculation of set
on and set off for the allocable surplus post the
5 th accounting year in which the employer
sells the goods produced or manufactured or
services provided.
• All departments or undertakings or branches
of an establishment shall be treated as part of
the same establishment for the purposes of
computation of bonus under the Code.
• The bonus shall be proportionately reduced in
the event the employee has not worked for all
working days in an accounting year, by
adjusting the minimum bonus if such bonus is
higher than 8.33% of the salary or wage of the
days such employee has worked in that
accounting year.
INSPECTOR-CUM-FACILITATOR
• The Code provides for the appointment of
an Inspector-cum-Facilitator to carry out
inspections of employers and employees
for better compliance. Further, the
Inspector-cum-Facilitator will also reserve
the right to examine any person on the
establishment premises and seize, search,
or take copies of wages, as he/she may
consider necessary if the employer has
committed an offence.
• The inspection shall be conducted based
on a scheme decided by the appropriate
government.
• The Inspector-cum-Facilitator can only
initiate an action under the Code, after
giving the employer an opportunity to
comply with the provisions of the Code.
• If during the time period, the employer
complies with the written instructions of
the Inspector-cum-Facilitator, he/she
cannot proceed against the employer.
This will ensure that the employer has a
right to be heard. However, in case of
repetition of offence within 5 years of the
first violation, such opportunity will not be
provided.
OFFENCES AND PENALTIES
• The Code specifies the following
penalties for offences committed by the
employer, such as (i) paying less than
the due wages; or (ii) contravening any
provision of the Code. Penalties vary
depending on the nature of the offence,
with the maximum penalty being
imprisonment for 3 months along with a
fine of up to INR 1,00,000.
• The compensation payable for any
default in payment of wages, minimum
wages, bonus, etc. could be up to 10
times the claim amount as may be
determined by the relevant authority.
• In case of a subsequent offence, within 5
years from the first offence, the penalty
will be imprisonment for 1 month or a
fine up to INR 40,000 or both.
• If the offence is committed by a
company, then every person who at the
time of the commission of the offence
was the in-charge and responsible for
the conduct of the company, will be
responsible and deemed to be guilty.