The Government took a
decisive step towards simplifying and amalgamating the vast mass of
labour laws when it presented before the nation The Code on Wages, 2017,
a Bill which combines features and provisions of four existing labour
laws pertaining to wages. The Bill was introduced in the Lok Sabha
during the Monsoon Session of Parliament on 10th August, 2017. Intended
to bring relief to both employers and employees, the Code amalgamates,
simplifies and rationalises the relevant provisions of the four Central
labour enactments, namely the Payment of Wages Act, 1936; the Minimum
Wages Act, 1948; the Payment of Bonus Act, 1965; and the Equal
Remuneration Act, 1976. The four Acts will stand repealed with the
passage of the Bill. Facilitating easier compliance of the law, the Code
will ultimately create conditions for setting up of more enterprises and
fresh employment opportunities.
The Statement of Objects of the Bill said the amalgamation of the laws
would facilitate their implementation and remove the multiplicity of
definitions and authorities, without compromising on the basic concepts
of welfare and benefits to workers. The proposed legislation would bring
the use of technology in its enforcement and thereby bring transparency
and accountability for effective enforcement of the law. Widening the
scope of minimum wages to all workers would be a big step for equity.
The Bill provides for all essential elements relating to wages -- equal
remuneration, its payment, and bonus. The provisions relating to wages
shall be applicable to all employments covering both organised as well
as un-organised sectors and the power to fix minimum wages continues to
be vested in the Central as well as State Governments, in their
respective spheres. There are clear definitions of employer, employee,
worker, minimum wage and wages.
The Code will enable the appropriate Government to determine the factors
by which the minimum wages shall be fixed for different categories of
employees. The factors shall be determined taking into account the
skills required, the arduousness of the work assigned, geographical
location of the workplace and other aspects which the appropriate
Government considers necessary.
Provisions relating to timely payment of wages and authorised deductions
from wages, which are at present applicable only in respect of employees
drawing wages up to Rs 18,000 per month, shall be made applicable to all
employees irrespective of wage ceiling. The appropriate Government may
extend the coverage of
such provisions to Government establishments also.
Ensuring that there is no discrimination on the basis of gender in the
payment of wages, the Bill incorporates in its first chapter itself
provisions for “Equal Remuneration” in Section 3, which says “There
shall be no discrimination 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 similar nature done by any employee.”
No employer shall pay to any employee wages less than the minimum rate
of wages notified by the appropriate Government for the area,
establishment or work as may be specified in a notification. While
fixing minimum wages in respect of any employment for the first time
under the Code, the appropriate Government, which can be Central or
State Government, will appoint a committee comprising representatives of
employers, employees and independent members, to go into all issues and
make recommendations. This would ensure justice to all stakeholders.
“The appropriate Government shall review or revise minimum rates of
wages at an interval of five years,” says the chapter on minimum wages.
Under the Bill, the Central Government will have the power to fix a
national minimum wage, with a provision that there can be different
national minimum wage rates for different States or geographical areas.
State Governments will not fix any rate lower than the national rate. If
any State Government earlier fixed a rate higher than the national rate,
it will not reduce its wage rate. The Central Government before fixing a
national minimum wage rate will take the advice of a Central Advisory
Board. There is provision for payment of overtime work done.
Under its payment of wages provisions, the Code says “all wages shall be
paid in current coin or currency notes or by cheque or through digital
or electronic mode or by crediting the wages in the bank account of the
employee.” Wage payments can be made daily, weekly, fortnightly or
monthly and the Bill has fixed time-limits for the payments.
The provisions on payment of bonus say that the bonus has to be paid
even to employees who have put in only one month of service. Section 26
says this payment will be “an annual minimum bonus calculated at the
rate of eight and one third per cent of the wages earned by the employee
or one hundred rupees, whichever is higher, whether or not the employer
has any allocable surplus during the previous accounting year.”
The bonus payment will increase proportionately, if the allocable
surplus in any accounting year is higher, subject to a maximum of 20 per
cent of the wages, the Section says. The available surplus for any
accounting year will be gross profits for the year, after permissible
deductions including direct tax on income, profits and gains for the
year. The allocable surplus will be 60 per cent of the available surplus
for banks and 67 per cent for other establishments.
As per Section 39, all amounts payable to an employee by way of bonus
under this Code shall be paid by crediting it in the bank account of the
employees by his employer within eight months from the close of the
accounting year. An employer can get extension of time, but this shall
not exceed, “in any case,” two years.
Doing away with inspector-raj, the Code provides for Facilitators who
will help employers and employees in the proper execution of the law.
The Facilitators can be appointed by the Central or State Governments
and given powers throughout the States or such geographical areas
assigned to them.
Section 51 of the Code says the Facilitator may within the limits of his
jurisdiction, (a) supply information and advice to employers and workers
concerning the most effective means of complying with the provisions of
this Code; (b) inspect the establishment based on an inspection scheme.
The inspection scheme, given by the Government, will provide for
generation of a web-based inspection schedule.
The Facilitators can examine workers, “search, seize and take copies of
such register, record of wages or notices or portions thereof as the
Facilitator may consider relevant in respect of an offence under this
Code and which the Facilitator has reason to believe has been committed
by the employer,” Section 51 says. The Facilitators will be empowered
under IPC and CrPC for their work.
Complaints for offences under the Code can be made by the Facilitator,
employees, registered Trade Unions, or the Government. The Code has
spelt out elaborate penalties for the offences. If an employer pays to
his employee less than the amount due to him under the Code, he shall be
punishable with fine which can go up to Rs 50,000. A repeat offence
within five years can mean imprisonment extending up to three months,
and fine up to Rs 1 lakh, or both.
Contravention of the Code or a rule made thereunder can mean a fine up
to Rs 20,000, and a repeat offence within five years can mean
imprisonment up to one month, or fine up to Rs 40,000, or both. A
Facilitator can give time and opportunity to employer to comply with the
Code, and may not initiate prosecution if there is compliance.
Clause 55 of the Bill provides for composition of offences. Only the
offences for which there is no punishment with imprisonment shall be
compounded. The compounding money shall be a sum of fifty per cent of
the maximum fine. There is no compounding for a similar offence
compounded earlier or for commission of which conviction was made,
committed for the second time or thereafter within a period of five
Under various other Sections, the interests of employees are protected
by the Code. The burden of proof that the due payment has been made, and
without any unjustified deductions, will lie with the employer.
The Code on Wages, 2017 is the first of the four Codes proposed by the
Government to give further boost to ease of doing business. The three
other Codes will cover Industrial Relations; Social Security & Welfare;
and Safety and Working Conditions. While they will bring about a
long-awaited clarity in labour legislation, and minimize its
multiplicity, their ultimate benefit will help working class know its
rights and responsibilities, and look forward to larger employment